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Lord Kingsland: I am most grateful to the Minister for his reply. I am partly reassured by his comments and will look carefully at Hansard to see whether I want to raise these matters again at Report stage. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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[Amendment No. 260 not moved.]

Lord Kingsland moved Amendment No. 261:

    Page 97, line 9, after ("pay") insert ("the whole or part of").

The noble Lord said: In moving Amendment No. 261, I wish to speak also to Amendments Nos. 262 to 264. Paragraph 10 of Schedule 11 would, for the first time, provide leasehold valuation tribunals with powers to award costs; but only where an application is dismissed on the ground that it is frivolous, vexatious or an abuse of process, or where the party in question has acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably in connection with the proceedings. Even then the amount payable cannot exceed £500.

It would perhaps be wrong, bearing in mind the perception of the leasehold valuation tribunal as an informal, inexpensive tribunal, to empower such tribunals to award costs following the event in all cases. However, there must be a greater power to impose sanctions where a party has failed to comply with directions--thereby occasioning an adjournment--or where, although a party's conduct of the proceedings themselves might not have been unreasonable, that party, nevertheless, acted unreasonably in bringing the proceedings at all or in pursuing them after a reasonable offer is made by the other party; or where a party has been forced to take proceedings because of the unreasonable conduct or stance of the other party. Examples of unreasonable action might be: specifying a ridiculously high or low enfranchisement price; or, in the case of a landlord, by shocking mismanagement, or by a tenant, in refusing to pay service charges without any justification, thereby throwing the costs of recovery onto his fellow tenants through the service charge provisions. Only when the leasehold valuation tribunal has the powers envisaged by the amendment will there be a proper deterrent from "playing the system", as it is often called.

Furthermore, a costs limit of £500 is both arbitrary and too low to operate as a sanction in the case of wealthy parties. Tribunals should be empowered to award costs at such level as they think fit up to the full amount incurred by the innocent party, subject only to an obligation to have regard to the paying party's needs.

Finally, under Clause 85 of the Bill an RTM would be liable for a landlord's costs before the tribunal if the tribunal dismissed its application for a determination that it was entitled to the right-to-manage premises. As things stand, such a power would be anomalous in the context of the tribunal's limited powers as to costs, and paragraph 10(4) of Schedule 11 would appear to be inconsistent with Clause 85. This group of amendments would reduce the anomaly and remove the inconsistency. I beg to move.

Lord McIntosh of Haringey: These amendments take me back to my days as a borough councillor in the 1960s. They were the great days of Rachmanism. I hope that we do not follow this route because it would take us back, not to the 1960s, but to some of the

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problems that we experience under the existing legislation. The noble Lord, Lord Kingsland, has correctly described the function of paragraph 10 of Schedule 11. The present position is that leasehold valuation tribunals sometimes find it difficult to deal with parties who refuse to comply with directions or who act abusively at a hearing. The power in paragraph 10 would enable them to control the parties more effectively. If the noble Lord is worried about the £500 limit, the maximum sum payable could be increased through legislation. However, that could be done only with the approval of both Houses.

The grounds on which costs might be awarded are deliberately expressed in very broad terms. In Amendment No. 262 the noble Lord, Lord Kingsland, tries to particularise them and be more explicit. The danger of that approach--I am not allowed to use lawyers' Latin since lawyers themselves cannot use it--is that the inclusion of one implies the exclusion of others. These are good examples of the kinds of behaviour that we believe should be subject to a cost penalty, but we believe that the provisions as they stand encompass all the specific grounds that the amendment seeks to introduce. If we accepted Amendment No. 262 we might encourage the courts to interpret paragraph 10 more narrowly and exclusively than we would wish. We cannot accept this amendment.

I referred to the issue of the maximum amount because the noble Lord, Lord Kingsland, wishes to empower LVTs to award costs without limits. Even allowing for the precaution in Amendment No. 263 that the tribunal should have regard to the financial resources of the party who is to pay the costs, it would still disadvantage leaseholders. When service charge disputes were still a matter for the county courts, landlords would intimidate leaseholders with the threat of large bills for costs since they could afford the best legal advice. Leaseholders were concerned about their ability to win their case even when they felt that they were clearly justified, and they often decided not to take their case to court. That is why we provided a cap. If we did not, they might fear that even an innocent mistake in interpreting directions or a failure to meet a deadline could lead to a very large bill for costs. Those fears would be exaggerated if they were not familiar with the LVT proceedings. Unscrupulous landlords could encourage those fears and use them to discourage leaseholders from exercising their rights.

When it comes to the suggestion of considering the financial resources of the offending party, we do not consider it right to fetter the discretion of the tribunals in this way. We would not want tribunals to feel inhibited from punishing unreasonable behaviour merely because that could cause a little hardship.

I can be more accommodating with Amendment No. 264--indeed, much more accommodating--because it addresses the conflict between Clause 85 and paragraph 10 of the schedule. It may be that when we look at it more closely, the conflict will be more apparent than real, but we are willing to consider this matter further.

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7 p.m.

The Earl of Caithness: I found the Minister's reply to my noble friend's Amendment No. 263 very disappointing, in particular his comment that legislation through both Houses could change the £500. Members of the Committee know how difficult it is to get legislation at any time, let alone get it through both Houses.

Lord McIntosh of Haringey: I did not say legislation; I said regulation.

The Earl of Caithness: I stand corrected, but regulation is equally difficult to get, and it is impossible to amend unless one prays against it and it is thrown out.

I am concerned about this, as is my noble friend Lord Kingsland. Some of the Minister's replies seem totally to ignore subsection (b) of Section 2. Given some of the points that the noble Lord mentioned in defence of tenants and against an unscrupulous landlord, I would have thought that the leasehold valuation tribunal would have seen fit to put many of those into the category of Section 2(b). I hope that my noble friend Lord Kingsland does not go away and forget about this; I hope he will come back with renewed vigour at another stage, when I shall certainly support him.

Lord Kingsland: I am grateful to my noble friend Lord Caithness for the support he has given me. I thank the Minister for agreeing to look at Amendment No. 264, but I must confess to being extremely disappointed at his reaction to Amendment No. 263.

It is my impression, standing back and trying to look objectively at my own amendments, that far from being pro-landlord, these amendments discriminate strongly against the landlord--because it is the landlord's financial power that enable him to spin things out at a tribunal in a way that quickly exhausts the resources available to the leaseholder.

Amendment No. 263, by taking into account ability to pay, will assist the leaseholder in resisting that kind of conduct from the landlord. That is a crucial part of the framework I am trying to put in place here.

I hope that the Minister will reflect on this between Committee and the Report tage, because I assure him that I shall return to this matter again when we get there. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 262 to 264 not moved.]

Schedule 11 agreed to.

Clause 149 [Appeals]:

Lord Hodgson of Astley Abbotts moved Amendment No. 264A:

    Page 68, line 22, at end insert--

("( ) Leave to appeal under subsection (2) shall only be given if--
(a) the appeal would substantially affect the rights of one or more of the parties, and
(b) the decision is at least open to serious doubt.").

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The noble Lord said: I have the feeling that the Committee is rounding the final bend and approaching the finishing post, so I will be brief.

The amendment is concerned with potentially capricious appeals to the Lands Tribunal against decisions of the leasehold valuation tribunals. We should be seeking wherever possible to reach a speedy resolution to disputes, particularly where they concern such sensitive matters as exist between landlords and tenants. The bitterness of disputes can increase in direct proportion to the length of time that they last.

I am told that a practice has grown up whereby when landlords receive unwelcome decisions from the LVT there is a knee-jerk reaction to reach for the lands tribunal and to appeal. Apart from the delay that this causes, there must also be potential inequality between the parties as to both financial resources and readiness to take risks involving further professional fees and further costs. The landlords may have nothing to lose; the tenants may be concerned about increasing their financial liabilities and their exposure.

The amendment seeks to restrict appeals to bona fide cases as laid out in the amendment and the wording broadly follows Section 69(3) of the Arbitration Act 1996, which does not seem to be a bad precedent for us to follow. I beg to move.

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