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Lord Williams of Elvel: My Lords, I am sorry to interrupt. The noble Lord has spent 26 minutes giving the House the benefit of his undoubtedly sensible views. Perhaps he might feel it appropriate--and I make only a suggestion--that he draws his remarks to a conclusion to allow my noble friend to respond to the debate. I think that there are other matters which need to be taken on the Floor of the House.

Lord Kingsland: My Lords, I thank the noble Lord for his observations. I hope that the noble Lord agrees that in normal circumstances I am, on the whole, a speaker who takes up very little of your Lordships' time. On this occasion we had no opening speaker; this is a highly technical Bill that involves matters which, in my view, ought to be on the face of the Bill, but are not; I think I am entitled to draw the attention of the noble Lord, Lord Bach, to these issues. They affect the fundamental rights of property owners, whether on the side of the landlord or of the tenant, and therefore are matters of great personal interest to them. I am entitled to point out the flaws in the Bill where I see them. The Bill involves complex issues of law and, therefore, my explanation of where those flaws lie is sometimes likely to take slightly longer than normal.

In one sense, the noble Lord has had great success, however, because I cannot remember where I was.

Paragraph 10 of Schedule 11 to the Bill would provide for the first time that a tribunal may award costs against a party in proceedings before it, but only if an application is dismissed on the ground that it is frivolous, vexatious or an abuse of process, or where the party in question had acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably in connection with the proceedings. The amount payable cannot exceed 500.

In my submission, the tribunal should be given a broader discretion as to both the circumstances in which costs may be awarded and the amount of such costs. At the very least there should be an express power to award costs occasioned by an adjournment. In high value matters, at any rate, there is no reason why the tribunal should not be able to award costs related to the outcome, particularly given that much of its jurisdiction is now devolved from the county court. In exercising its power the tribunal could have regard to the financial resources of the party.

More generally, the Explanatory Notes to the Bill say that it provides a power to make regulations enabling the tribunal to exclude the whole or parts of cases of parties who fail to comply with directions. No such power appears in Chapter 6 or Schedules 11 to 12. Tribunals ought to have such a sanction, either instead of or in addition to the costs sanction to which I have referred.

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Paragraph 8 of Schedule 11 provides for procedure regulations to include provision for the determination of applications or transferred proceedings without an oral hearing and by a single panel member. It is not known what sort of application is envisaged to be appropriate for determination in this way. At the very least, in order to satisfy the human rights convention's right to a fair and public trial, it should be stipulated that any such regulations should include provision entitling an aggrieved party to a hearing before a full tribunal. In the circumstances, it is to be doubted whether the regulations envisaged by paragraph 8 will have any real use.

I had intended to go on to consider the provisions on forfeiture, but in the circumstances I think I will sit down.

6.30 p.m.

The Parliamentary Secretary, Lord Chancellor's Department (Lord Bach): My Lords, I first declare an interest as a leaseholder of a London flat. I am grateful to all noble Lords who have taken part in this debate. In their different ways, individually and collectively, they have all shown enormous expertise in this difficult but important matter. The debate has highlighted large and small issues, which, of course, will have to be teased out in the normal way as the Bill progresses. I hope that the House shares the Government's view that the policy aims of the Bill are good and that the Bill itself is a suitable vehicle by which to achieve those aims.

If I were to attempt to deal with even one-third of the good points made during the debate, I would succeed only in making myself even more unpopular than I already am on all sides of the House. I do not intend to do that. I intend to limit myself to 20 minutes. I have no doubt that I shall be reminded by those behind and in front of me if I exceed that estimate. I shall try in due course to deal with some of the major points that have been raised. That is not to say that those which I omit are not major, but it seems to me that there are some essential Second Reading points that need to be dealt with. The others can wait until another day, perhaps not very far off, when we meet again in Committee.

As my noble and learned friend the Lord Chancellor said in opening, the concept of commonhold goes back many years. Noble Lords will recall that the previous government twice consulted on draft commonhold Bills during the 1990s. In that regard, I should like to say what a pleasure it was to hear, albeit shortly, from the noble and learned Lord, Lord Mackay of Clashfern, who played such an important part in drafting that proposed legislation. Your Lordships will not be surprised to hear that our Bill achieves its end with greater simplicity than did previous draft attempts. Having heard the debate today, I may have to revise that assumption. However, we are speaking only about matters of detail and angles of approach. At base--and this is very important--all the schemes that have been developed are very similar, and I believe that there is widespread support for the principle of commonhold.

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We are also grateful for the support for our objectives in relation to leasehold reform in Part II of the Bill. Our reforms are intended to address the current imbalance that exists between landlords and their leaseholders, and to provide leaseholders with greater security and control over their own homes. We are confident that those objectives will be achieved by this Bill. A number of very interesting suggestions have been made. We do not have a closed mind on these matters. We shall give them proper consideration. It is a complex subject. We want to make sure that it is correct. However, our view is that some of the aspirations of some leaseholders are unrealistic. We have to recognise the legitimate interests of landlords. We shall not be able to accept some of the more radical changes that leaseholders have demanded. On the other hand, I am sure that some less reputable landlords would prefer that we did not legislate at all on this issue. In drawing up our proposals, we have tried to strike a fair balance.

Before dealing with the specific points that have been raised, I should like to make a general point. The Bill has been described by some as a missed opportunity. They believe that we should now act to prevent the building of any new, residential leasehold developments. I shall return to that point. Others take a harder view, namely, that we should act now to, in effect, abolish leasehold tenure and hand existing properties to their leaseholders in a gigantic windfall. We have tried to strike a balance. We therefore do not have much sympathy for that view. We believe that even to follow the less extreme view would be irresponsible.

We have been described, as have all governments in their time, as arrogant. It would be unforgivably arrogant to do away with a historic tenure, however open it is to criticism, without being certain that the replacement scheme will work at least as well. We believe that the Bill does the trick. First, it introduces commonhold, which, under a variety of names, is a well tried and trusted means of managing co-operative living all over the word. The speech of the noble Baroness, Lady Gardner of Parkes, is living proof of that. Her experiences in New South Wales were of particular interest to the House. Secondly, it greatly improves the lot of those living in leasehold properties, by giving them a much easier route to enfranchisement and a no-fault right to manage their developments. We believe that those two innovative sets of provisions will work well. However, we must allow for fine tuning. To act precipitately would be to take risks with a fundamental part of the lives of millions of people.

First, I deal shortly with why we believe that the requirement for conversion from leasehold to commonhold should be 100 per cent. We may, of course, return to that point. The Government take a firm view on this. We recognise that it is a high hurdle to jump. However, the alternative would be to allow conversion with anomalous leaseholders remaining. One of the fundamental tests of commonhold governing its establishment, operation and management is that all unit holders have an equal

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interest in the commonhold. If conversion with less than 100 per cent agreement were permitted, the resulting residents' group would not be a commonhold.

I turn to the speech made by the noble Lord, Lord Selsdon, for which I thank him. We shall need to consider many of his points. However, I deal at this stage with only a couple of them. First, with regard to finance for leaseholder management companies, we cannot dictate to lenders. That is because leasehold management companies may have little to offer as security, but we shall be very willing further to explore the issue with representatives of those lenders.

A further, general point made by the noble Lord, Lord Selsdon, was that the Bill should go further to harmonise the rules for houses and flats--for example, that the valuation date for the enfranchisement of flats should be the date of the initial notice. We agree that it would be desirable to bring the rules governing the enfranchisement of houses and flats more in line. We are glad to say that Clause 122 of the Bill already meets the noble Lord's specific point in relation to flats. As for houses, the valuation date will now be the date of the initial notice.

I turn to the general point raised by a number of noble Lords--latterly, and perhaps with most feeling, by the noble Lord, Lord Kingsland--about why there is a need for so many regulations. The noble Lord will recall, not because he was there but because of his knowledge of history, the monolithic nature of the 1925 legislation. The Land Registration Act, sections of which have been much criticised, relies to an enormous extent on the regulations associated with it. We believe that a completely new Bill is required to bring about the changes necessary for the new century. We are incorporating into the regulations the changes that we believe may need to be made over time. I can tell the House that we hope to have a model CCS, a memorandum and articles, available for Committee stage. The most significant matters relating to the formation, operation and winding up of commonholds will be detailed in those model documents.

Commonhold will provide a new way of holding property in England and Wales. For most people, the Bill will be an introduction to commonhold terms and concepts. Therefore, it is appropriate to strive as best we can for simplicity and brevity on the face of the Bill. It must be stressed that the Bill is a fully comprehensive framework for the establishment and management of commonhold. We have made significant progress in drafting the main regulations, taking into account the welcome comments made during the consultation process. We are on track for having drafts available by the time the Bill reaches Committee stage. That was one of the matters raised by the noble Lord, Lord Goodhart, in his helpful speech.

I turn now to the rights of landlords to be members of the right to manage company; in other words, an RTM. We recognise that leaseholders will often be prompted to exercise the right to manage by some degree of dissatisfaction with the landlord's

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management. However, to exercise that right--this is an important change in the Bill--they will not have to prove that the landlord is at fault in any way. Therefore, the presumption must be that, as someone with an interest in the property, the landlord is entitled to a continued say in the management of the block, alongside leaseholders. That is why we believe it is only right that he or she should be entitled to be a member of the right to manage company.

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