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Lord Kingsland: I am still not entirely clear about what the Minister intends. If we are to have the opportunity to consider and table amendments to this document, or to find some way of doing that--for example, by making the document a schedule to the Bill and then amending it--I am, for the moment, content.

Lord McIntosh of Haringey: I used to do it all the time in opposition. The then government objected very strongly.

Lord Kingsland: I am shocked to hear the latter. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 46 not moved.]

Clause 30 agreed to.

Clause 31 [Regulations]:

On Question, Whether Clause 31 shall stand part of the Bill?

Lord Kingsland: In view of the exchanges that took place in the course of the debate on the previous amendments, I do not need to speak on this matter.

Baroness Hamwee: I should like to say a few words. I did not intervene on the previous grouping because it seemed to concern both how documents such as the commonhold community statement were presented to the Committee and the specific point raised by the noble Lord, Lord Kingsland.

Before I ask my question--I suspect that I am making the point for other noble Lords--perhaps I may say that we are genuinely grateful to the Government for circulating documents to us. However, it would be useful if those who were charged with circulating them realised that we are not all full time in this building. I received this morning the letter of 21st February with the drafts which were referred to at the previous day of Committee stage. The final

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paragraph of the letter said that a second edition of the draft would be available today. I opened the envelope when I was in another building and did not have an opportunity to obtain the other set of drafts. Although it is extremely helpful to have the documents, it would be a step forward if those who circulated them understood that noble Lords are not always in the building to receive them.

My question on the commonhold community statement is based on the previous draft which to me looked very much like a lease and contained many of the provisions that I would expect to see in a residential lease. A good many of them are in square brackets and it is suggested that they should be optional. They relate to such matters as noise: no nuisance is to be created by playing musical instruments, and no pets are permitted without the consent of the commonhold association. Those are important issues. The over-loud playing of musical instruments, radios and so on can be very disturbing to neighbours, but the Government have told us that they hope that commonhold will be as close as possible to freehold. If one lived in a freehold house, possibly a terraced dwelling, close to neighbours who played the radio loudly one would be disturbed. I do not quite follow the Government's approach in the commonhold community statement.

3.45 p.m.

Baroness Gardner of Parkes: I have not had time to study my document. I am pleased to say that I had three copies and I was delighted to see that the last one shows the second draft, which means that I can put the first two aside. But they all came simultaneously. At least they are well labelled.

I am not clear about the noise. I recall the legislation on local authorities and the situation mentioned by the noble Baroness of two neighbouring houses. But there is recourse in law. Is she saying that there is or is not such recourse in commonhold? Normally one would expect to respect other people's peace and quiet within their own dwelling and it would be perfectly normal to have such a clause, whether in a lease or in a commonhold. I see no reason why it would not be there to protect others. It is usually enforced only if there is a quite outrageous case.

I can give an example. I left my unit for a time and the young man who took it decided that on Mardi Gras day he would put up a notice in the street saying that all were welcome to come to a party. Hundreds poured into his unit, and the other residents were very unhappy. I received a letter from the commonhold management--and rightly so. It is important, therefore, to have good conditions included. However, I have not yet been able to read them.

Baroness Hamwee: Perhaps I may give a further explanation. The noble Baroness makes my case for me. I entirely agree that one should not disturb one's neighbours but the legislation to which she has referred seems to me to be the kind that one would expect to apply in a freehold situation. To have a clause creating a particular relationship within

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commonhold such as one would see in a lease has led me to ask how closely the Government are trying to replicate leasehold rather than freehold.

Lord Bach: The interesting comments made by the noble Baronesses, Lady Hamwee and Lady Gardner, strengthen our view that it is appropriate that the commonhold community statement is not on the face of the Bill but is subject to regulation. It is a standard document but each commonhold, when it is set up, will have its own commonhold community statement. It is the distinction that there will be between them that will be critical for the living conditions that those in the commonhold have to agree.

I am very sorry that the noble Baroness, Lady Hamwee, did not receive the draft statement in time and that other noble Lords have not had a chance to read it. We would welcome having the best address for any noble Lord for such correspondence so that we can get it to them as quickly as possible. But I hope that the Committee will give us credit for doing our very best to get these regulations out, as we promised at Second Reading. On many Bills in the not too distant past the Government have come under severe criticism--sometimes justified--for not having done what we have done on this occasion. While we take the criticism on the chin, we think that we have done rather well on this occasion.

I return to the point made by the noble Baroness, Lady Hamwee. The draft commonhold community statement is a template intended to provide the basic framework with room for flexibility for individual commonholds. It is getting that balance right between standardisation and covering the wide variety of circumstances that will occur.

The thinking behind the use of regulations to establish and control the CCS is much as it was for the establishment and control of the memorandum and articles. The document will contain a great deal of detailed information about such matters as hanging out washing, as well as more important matters to do with the rules relating to how default of duties will be dealt with, the setting and collection of commonhold assessments, and so on. Other items that will be dealt with in detail in individual commonholds will be, for example, putting out the rubbish for collection, or, as has already been pointed out, the keeping of pets.

The bulk of the document will be the plans and description of the development, much of which will be dictated by regulations issued by the Land Registry. We think that that kind of detail should be dealt with in regulations. It will allow us to keep up with the market, to amend the rules if they are found in some respects to be unworkable or if times change and circumstances require. We have provided the model documents as invited to by the Delegated Powers and Deregulation Committee.

Lord Hodgson of Astley Abbotts: Before the Minister sits down, I should like him to clarify two points. First, is what is contained in the commonhold community statement a template of best practice or a requirement? Secondly, in the draft that I have certain paragraphs

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are in square brackets. Are those particularly significant? For example, are those the ones that are best practice and are the rest requirements? I am not clear whether there is any significance in the different typeface and the way that some paragraphs are put in square brackets.

Lord Bach: Like the noble Lord, we are feeling our way. We are trying week by week to give a fresh draft of this important statement so that when it comes to putting a final draft to the House, which we will have to do in due course if the Bill becomes law, we have it right. I hope the noble Lord will indulge me by not insisting on an answer to his very direct questions. We are trying to get it right; it is supposed to be a template; they are supposed to be the kind of regulations that will assist, some of which will be standard and others will be open to flexibility.

The Earl of Caithness: On the first day of Committee, the noble Lord, Lord McIntosh, said that there were areas on the statement out of which one could not contract. I think that followed up my point that we wanted as simple and standard a document as possible. Perhaps I may suggest to the Minister that for the third draft that he presents to us the items that cannot be changed between the parties, the ones that are absolutely standard for every unit, should be in one typeface, and items that can be changed between the parties and additions should be in another typeface.

Lord Bach: I thank the noble Earl for that suggestion, which we will certainly take on board. I am very grateful to him.

Clause 31 agreed to.

Clause 32 agreed to.

Clause 33 [Constitution]:

Lord Kingsland moved Amendment No. 47:

    Page 14, line 37, leave out subsection (2).

The noble Lord said: In moving Amendment No. 47, I shall speak also to Amendment No. 48. The Minister's response to my noble friend Lord Caithness in the dying moments of the last series of interchanges has helped me to shorten my own contribution to the debate on these amendments.

From what the Minister said, I take it that he is prepared to reconsider the balance between what is in the schedule to the Bill and what might be dealt with by regulations in the content of the memorandum of association and the commonhold community statement. I profoundly agree with my noble friend Lord Caithness that it is very important to have some clear standard provisions on the face of the Bill--even if they are only in a schedule-- rather than to leave them to regulations which can be changed from month to month or from year to year by a procedure which does not allow your Lordships' House to table amendments to any document proffered by the government of the day.

Behind the amendments that I have tabled to Clause 33 and Schedule 3 lies a wider concern. It is whether the Government are using too powerful an

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instrument--that is to say, the memorandum and articles of association under the Companies Acts--to deal with a series of problems that may more simply be dealt with by a tailor-made form of association and set of rules.

Some commonhold associations will cover a very small number of unit-holders, where the management problems they face are relatively straightforward. Is it right that they should be faced with the full panoply of the Companies Acts as a framework within which to pursue their management responsibilities? I would go further than that. If the Government insist on using the Companies Acts as the basic framework for the management of a commonhold association, would it not be better to adopt the model of a company limited by shares rather than a company limited by guarantee?

I can see in that situation at least two advantages that would accrue to the commonhold association. First, the association would be able to differentiate between unit-holders who had different degrees of interest in the association, perhaps by having some shares as category A shares and other shares as category B shares.

Secondly, it would provide a simple solution to the problem that I raised when we discussed the first set of amendments; that is, the problem of requiring individual unit-holders to meet their obligations with respect to the common property. A simple provision which prevented the transfer of a share from vendor to purchaser until the vendor had met all his obligations could achieve the same result as a forfeiture provision, or a provision similar to forfeiture of the kind I sought to describe in my earlier amendment. I beg to move.

4 p.m.

Lord Goodhart: Before I speak to Amendments Nos. 78 and 79, which have been included in this group, I shall touch briefly on what the noble Lord, Lord Kingsland, said about the corporate structure. I know this will come up in subsequent amendments but as the noble Lord has raised it now, it might be convenient to deal with it briefly.

I strongly disagree with him about the suitability of company limited by shares, since the whole nature of a commonhold association is that it should be on a one member, one vote basis. There should not be votes weighted by shares or share capital; nor should there be different kinds of shares. However, I wonder whether the Government have considered the possibility of allowing CHAs to be set up--as an alternative to a company limited by guarantee--as a limited liability partnership, under the Limited Liability Partnerships Act passed in the previous Session. It was set up as a "cheap and cheerful" form of incorporation, suitable for small businesses and with very considerable simplification as compared with the ordinary company. This might be suitable for small CHAs, where only four or five people are involved, all of whom wish to take part in the running of the organisation. I would like to think about the matter further and possibly to bring it back at Report stage.

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I turn to Amendments Nos. 78 and 79. The former deals with the fact that under Clause 31(1), regulations make provision for the content of commonhold community statements and many "permit, require or prohibit" the inclusion of certain provisions. Under paragraph 2 of Schedule 3, the regulations require to make provision about the form and contents of the memorandum and articles of the company.

The memorandum and articles of the CHA and the commonhold community statement are obviously of central importance to the future of commonhold. I welcome the production of drafts but these are still at a very early stage. They will need a good deal of further consultation and working out. The House will need an opportunity to give them a proper debate.

I accept, and again disagree with the noble Lord, Lord Kingsland, that it is more appropriate to have these matters in regulations than on the face of the Bill. The memorandum and articles and the community statements will require modification from time to time. Indeed, since the Companies Act 1985, even the standard table A (they are now tables A to G) of the various types of company is contained in regulations, rather than being set out in a schedule to the Companies Act. That seems a perfectly suitable precedent for the memorandum and articles of a company of this kind.

However, I have some concern about the memorandum in particular. This seems too long, compared with normal memoranda, and too broad. For example, taking together paragraphs 3.21, 3.22, 3.40 and 3.41, a commonhold association could set up in business as the developers of a beach resort in the Canary Islands or of an office building in Hong Kong, without doing anything contrary to the memorandum.

The community statement also needs vetting. For instance, Article 58, which is obligatory, states that except with the consent of the directors of the CHA, no unit-holder can have in the unit any,

    "mechanical, scientific or electrical apparatus other than ordinary domestic electrical appliances".

Thus, permission would be necessary for, for example, a disabled person to keep an electric powered wheelchair in his flat, that clearly not being an ordinary domestic electrical appliance. It would also cover any apparatus that was mechanical but not electrical; for instance, a hand-powered coffee grinder. At least in the second draft the ban on having pets without the consent of the association has been downgraded from a compulsory to an optional provision.

In the draft, of course, some provisions are obligatory and some are optional. I am concerned--in this I follow what was said in the previous debate by my noble friend Lady Hamwee, the noble Lord, Lord Hodgson of Astley Abbotts, and the noble Earl, Lord Caithness--about the status of these optional provisions. Can they be modified? For example, would it be possible to include a requirement that cats could be kept without the consent of the commonhold association but that consent would be required to keep dogs on the grounds that they are noisier and messier?

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Can the CHA decide that the community statement should include other provisions--in addition to those that are set out in the drafts--provided that they are not inconsistent with the obligatory rules? That is a very important point. There is no indication on the face of the Bill and we do not know what the regulations will say about that. Is everything prohibited from inclusion in the community statement which is not either required or expressly permitted by the rules?

We need a proper discussion of these matters. I strongly suggest that, although we have had a chance to see them, because of the early state of both the memorandum and articles and the community statement, it would be appropriate for the first set of them to be subject to the affirmative resolution procedure in order that we may, in due course, discuss them properly.

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