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Lord Kingsland: My Amendment No. 265 is grouped with Amendment No. 264A in the name of my noble friend Lord Hodgson of Astley Abbotts. It seeks to limit the nature of the appeal to the lands tribunal as being by way of a review rather than a full hearing.
The success of the amendment will in part depend upon the success of the noble Lord's regulations under Schedule 11. One of the reasons why review has not been as successful a way of dealing with matters that have come from the tribunals, is because of the varying quality both of the evidence and of decisions that have emerged from the LVTs. The reason why that quality has varied has had nothing to do with the ability of the individuals sitting on those tribunals, which has been mercifully very high, but because the rules have been so broadly based that they have allowed a wide variety of approaches by panel members.
Lord Whitty: I shall deal with the amendments in reverse order. The amendment to which the noble Lord, Lord Kingsland, has spoken seeks to limit the circumstances in which an appeal, if granted, should involve a full hearing of the lands tribunal.
As with one or two of the earlier groups, one of the difficulties is that it strays into realms that are operated in this area, stemming from the procedures of tribunals in general, and we already have an independent review under Sir Andrew Leggatt which is still going through the process of conducting a strategic determination of
Amendment No. 264A from the noble Lord, Lord Hodgson, again gets into this territory. It seeks to clarify the circumstances in which a party to an LVT decision should be given leave to appeal against it. It is our view that an appeal to the lands tribunal is justified where a case raises important or novel issues of principle or where there are grounds for arguing that the LVT itself has erred in law or erred in fact. However, there is a widespread concern that in the past some landlords have abused the unfettered right of appeal and enfranchisement in lease renewal cases with a view to persuading leaseholders to settle at a higher price. It is that abuse that we wish to bring to an end in this section of the Bill.
In service charge cases, the right to appeal is already subject to a leave filter; that is, the need to obtain the leave of the LVT or the Lands Tribunal. The relevant statute does not set out the circumstances in which leave should be granted, but rather gives the tribunal wide discretion to decide whether an appeal would serve the interests of justice. We feel that in that area it has worked well. We therefore wish to apply similar arrangements extending the right to appeal against any LVT decision. For the sake of consistency, we wish to do that in the way provided in the Bill.
I repeat that it would be premature to consider any move--especially in relation to the grounds on which appeals maybe granted--in advance of the general review of this process for tribunals by Sir Andrew Leggatt. We will await his report before enacting legislation on that basis. In the light of that explanation, I hope that the noble Lord will withdraw his amendment.
Lord Hodgson of Astley Abbotts: I am grateful to the Minister. I have listened carefully to what he said. I understand his desire to include this matter in a wider review. I see the force of the argument and, in those circumstances, I beg leave to withdraw the amendment.
The noble Earl said: We now come to the last amendment on which we shall speak. Having put my name to the first amendment, perhaps it is appropriate that I should speak to the last one. It seems a long, long time ago that we discussed Amendment No. 1 with the noble Lord, Lord Bach.
This is a technical amendment, but an important one. Clause 115 provides for the removal of the requirement for two-thirds of the qualifying tenants to participate in enfranchisement. Clause 123 fixes the freeholder's share of the marriage value at 50 per cent in all cases. The effect of reducing the qualifying number for enfranchisement and the repeal of Section 18 of the Leasehold Reform, Housing and Urban Development Act 1993 simply compounds the issue. The result will be to ensure that only the minimum number for eligibility rather than all tenants who wish to participate in enfranchisement will apply in the first instance.
With the marriage value fixed at 50 per cent, it effectively means that the landlord's value falls to 25 per cent. That, I believe, is unfair to the landlord. It also indicates that Clause 123 is misleading when it mentions 50 per cent. It is for that reason that I believe that Section 18 of the 1993 Act should be retained. That is the purpose of my amendment. I beg to move.
Lord McIntosh of Haringey: We certainly agree with the noble Earl, Lord Caithness, that it would be unfair to the landlord if a group of qualifying tenants conspired together so that only the bare minimum number participated in the enfranchisement--thus keeping the price down--and then all the others climbed aboard afterwards. I think that that is the fear he expressed.
It is true that Section 18 of the 1993 Act was intended to address the problem. Unfortunately, it is unlikely to be effective. It would be very difficult for landlords to prove that agreements with non-participating leaseholders existed at the relevant time and, as a result, the provision would be unenforceable. Therefore, we decided to repeal it. Apart from that, we believed that the existence of Section 18, combined with its unenforceability, could serve as an advertisement for the very malpractice at which it was aimed. We do not have any evidence that abuse of this kind is perpetrated on any scale. That possibility will arise only in cases where the unexpired terms of the lease are relatively short, since the potential abuse relates only to the marriage value component of the purchase price.
Although in theory there might be a temptation for people to conspire in the way that the noble Earl, Lord Caithness, and I described, surely that would be restricted by the fact that a conspiracy would require the others not to participate in the enfranchisement in order to join in afterwards to keep down the marriage value. They might be reluctant to do that, and they might believe that there were risks in not participating. Therefore, at the moment we are not convinced that there is any reality in this threat. However, if it can be shown that there is a real risk--so much so that it
The Earl of Caithness: I am grateful for the way in which the Minister answered the point and for the courtesy with which he and all the Ministers have responded throughout the proceedings on the Bill. I am a little surprised by the noble Lord's answer. When we debated Amendment No. 263 moved by my noble friend Lord Kingsland, the Minister put forward an argument about landlords being oppressive, threatening and beastly to tenants. Yet here we have a situation where the Government open a Pandora's box and tenants behave in an extremely nasty way to a landlord. I can visualise some of the tenants with whom I have dealt ganging up against a landlord and having a side agreement that some of them will not participate in order to reduce the marriage value and settle the matter later. That would not be beyond the wit of a good number of tenants, and there must be some way to stop that happening. By the time we get legislation to correct it, it will be too late: many landlords will have had their interests and assets taken away from them without compensation, which I believe to be totally wrong.
There must be a method by which the landlord is entitled to hope value, or those who do not subscribe in the first instance cannot receive enfranchisement without payment. The Minister might even consider that the landlord could take an overriding lease of the non-participating flats, which would solve the problem. We can get round the problems of the service charge, because the landlord would be obliged to pay the service charge for the non-participating flats, whether or not he had received the money from the occupying lessee.
I believe that this problem needs to be addressed by the Government before the Bill is enacted, because if we do not deal with it now it will be too late. The Government open a Pandora's box by the removal of Section 18. I take the point that it may be unenforceable and difficult to implement. If that is the case, let us find another way to tackle it.
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