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Lord Bassam of Brighton moved Amendment No. 36:
- Page 37, line 22, leave out "in connection with the making of a claim" and insert "for ascertaining the particulars required by or by virtue of section 79 to be included in a claim notice for claiming".
The noble Lord said: My Lords, I shall speak also to Amendment No. 37. The noble Lord, Lord Kingsland, has truly been a bountiful source of inspiration this afternoon. Once again, these amendments have been inspired by his arguments in Committee.
As the noble Lord and others no doubt recall, Clause 77 gives RTM companies rights to obtain information that they need for the purposes of claiming the right to manage. The noble Lord, Lord Kingsland, argued that the right, as it stands, is drawn too broadly. We reflected on that sensible argument and are persuaded that there is merit in clarifying the application of the clause. Amendment No. 36 makes it clear that the power granted by the clause may be used only to obtain information that the RTM company is required to include in the claim notice by virtue of Clause 79. That is similar to Amendment No. 113, which stood in the name of the noble Lord, Lord Kingsland, at the Committee stage. Amendment No. 37 is consequential as the clause will now follow the requirements imposed by Clause 79. It makes more sense for this clause to stand after Clause 79, to make the revised provisions easier to follow. I beg to move.
Lord Kingsland: My Lords, I thank the noble Lord for the compliment he paid this side of the House and I reflect, admiringly, on his wisdom.
On Question, amendment agreed to.
Lord Bassam of Brighton moved Amendment No. 37:
- Transpose Clause 77 to after Clause 80.
On Question, amendment agreed to.
Clause 79 [Contents of claim notice]:
Lord Kingsland moved Amendment No. 38:
- Page 38, line 35, at end insert—
The noble Lord said: My Lords, the problem of handover troubled your Lordships repeatedly in Committee, on Report and at Third Reading during the previous passage of the Bill. Any landlord of a block is likely to have in place a number of contractual arrangements, from something as simple to employing a residential caretaker to retaining a building firm to undertake major structural works.
In Committee, before the general election, the noble Lord, Lord Whitty, indicated that he would seek greater clarification of transitional arrangements for the handover of contracts. The Bill has not taken matters any further than the measure that was presented to the House before the general election.
Under normal contract law, a contract will be frustrated only if an event occurs that the parties could not reasonably have foreseen. However, certainly after contracts entered into after the Bill becomes law, that will never be the case. Any landlord and any contractor with a landlord will be aware of the possibility of the tenants exercising their right to manage.
Lord Goodhart: My Lords, I am sorry to interrupt the noble Lord but he appears to be moving Amendment No. 44.
Lord Kingsland: My Lords, that is not so—for reasons that will become evident. I ask the noble Lord to be patient.
One solution might be a form of a statutory novation of any contract between contractors and landlords, so that the RTM company would automatically take over the contractual obligations from the landlord. The Government have set their face against such a provision. There are serious practical difficulties with such a novation—not least, that building contractors may be unwilling to have a new, possibly inexperienced and undercapitalised employer, foisted upon them.
Since RTMs will have no share capital, builders may be unwilling to allow the contract to be moved and simply walk off site. Moreover, the RTM company will be coming completely fresh to any project in progress. Admittedly there are provisions in the Bill for information to be transferred between the landlord and the RTM company; but anyone who has been involved in building works knows that it is almost impossible to take them over mid-flow.
As the Government are not willing to entertain detailed provisions for how and when existing contracts should be transferred or otherwise dealt with, the only practical solution is to allow reasonable time for existing contracts to be run off and for sensible handover arrangements to be made. Six months would ordinarily be a suitable period. One month is inadequate. Nonetheless, there may be cases where a shorter period would be appropriate, such as when urgent works are needed and it is sensible that the RTM company undertakes them rather than the landlord. The amendment gives the company the option to request an earlier handover date, with the Leasehold Valuation Tribunal left to decide in a dispute.
I appreciate that tribunals are currently overworked and that steps would need to be taken to ensure that they decide handover dates quickly. Nonetheless, steps are currently being taken to appoint additional
Lord Falconer of Thoroton: My Lords, I venture to suggest that speech had nothing to do with Amendment No. 38, which is about liability insurance, but with Amendments Nos. 39, 40 and 41—and it has a connection with Amendment No. 44. The noble Lord was talking about handover arrangements, including what happens to a contract, and was saying that more time than one month is required—not just in connection with the specifics of Amendment No. 39 but also with the transfer of contracts. The same point was made by the noble Lord in Committee, where his alternative to transferring contracts was to make the time allowed six months.
Lord Kingsland: My Lords, I am much obliged to the Minister.
Lord Falconer of Thoroton: On that basis, I shall speak not to Amendment No. 38, because in effect the noble Lord was addressing Amendments Nos. 39, 40 and 41.
I hope that the noble Lord will be pleased to know that we are sympathetic. When he spoke to the comparable amendments in Committee, he referred to the arrangements for handing over management responsibilities and contracts in particular. He advanced similar arguments today. We have reflected on the noble Lord's remarks and are persuaded that there is a need for some movement.
The Bill provides in a number of places for the acquisition of the right to manage to take place a minimum of one month after the date on which it becomes apparent that the right will definitely be acquired. A longer period could apply if the RTM company wishes but it is not unreasonable to assume that one month will apply in many cases.
The gap between determination and acquisition serves a number of purposes. One is to allow for a period of negotiation over contracts following the service of the notices provided for in Clauses 89 and 90. Other amendments propose alternative approaches to contracts, so I will not dwell on that issue.
The noble Lord, Lord Kingsland, suggested that one month is not long enough for the purposes of sorting out contracts and invited me to,
We are not initially attracted to a period as long as six months, which could create problems of its own. We propose to take the issue to those who deal with
We shall be happy to involve the noble Lord, Lord Kingsland, and, indeed, any other noble Lord in our discussions on this issue. We shall certainly let noble Lords who do not wish to be involved in the discussions know the outcome. Therefore, we accept the principle which lies behind the noble Lord's amendment and shall look very carefully at how we might amend the Bill in another place in order to address this important matter. I hope that, in the light of the undertaking to bring forward an amendment in another place, the noble Lord will be content not to press his amendment at this time.
Lord Kingsland: My Lords, the noble and learned Lord will not be surprised to hear that I am most grateful to him for his response. I shall certainly take the opportunity, as and when he gives it to me, to talk to him again about the details of the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 39 to 41 not moved.]
Lord Bassam of Brighton moved Amendment No. 42:
The noble Lord said: My Lords, in moving Amendment No. 42, I wish to speak also to the long list of other amendments which appear in this group.
This group should properly be known as the "Law Society group of amendments". Peers will recall that in Committee the noble Lord, Lord Goodhart, tabled several amendments on behalf of the Law Society. We agreed to consider a number of them and also offered to meet to discuss some further Law Society amendments which it had not been possible to table in time for the relevant Committee day. That meeting duly took place. Sadly, neither we nor the noble Lord, Lord Goodhart, were able to be present. However, I understand from officials that both sides found the discussions highly productive.
This group contains the Law Society-inspired amendments which relate to the right to manage. I should also acknowledge that some amendments in the group were inspired by earlier queries raised by one member of the Law Society's delegation, Philip Freedman of Mishcon de Reya. We are grateful both to him and to all Law Society members who have taken an interest in the Bill.
I shall speak as briefly as possible to each amendment. Amendment No. 43 is required to ensure that a claim for the right to manage is not struck out accidentally because a landlord withdraws his
Amendments Nos. 46 to 52 all ensure that a request for information, documents and so on under Clause 91 must be made by giving a notice to the relevant person. By virtue of Clause 109(1), such a notice, and, indeed, any other notice given under this Chapter of the Bill, must be made in writing.
Amendment No. 54 clarifies that the landlord must be given 30 days' notice where the RTM company proposes to grant approval for structural alterations. As the noble Lord, Lord Goodhart, pointed out in Committee, it is not at all clear that that is already covered by the general reference to improvements in Clause 96(4)(a). We had always envisaged that alterations would be covered by that provision and, therefore, we are happy to make properly clear that that is the case.
Amendment No. 55 allows a leasehold valuation tribunal to make an order for the cessation of the right to manage. As, I believe, my noble friend Lord McIntosh explained in Committee, it is already possible to seek the replacement of an RTM company under Part II of the Landlord and Tenant Act 1987. Paragraph 8 of Schedule 7 makes such variations as are required for that right to be properly applicable where an RTM company is the manager of the premises in question.
This amendment makes a further variation to Part II of the 1987 Act so that an LVT can be asked not only to make an order appointing a new manager to replace the RTM company but also to make an order which causes the right to manage to cease. Where such an order is made, the cessation will cause the management to revert to the landlord. Applications for a cessation order would be on the same grounds as for one appointing a manager, and the LVT would enjoy the same discretion to consider whether it was just and convenient to make such an order in the circumstances.
Amendments Nos. 58 and 59 are consequential to the introduction of the cessation order. They ensure that the making of an order is one of the circumstances in which the right to manage ceases to be exercisable. Finally, Amendments Nos. 56 and 57 correct minor drafting errors in Schedule 7 to the Bill.
Before I move on, I want to speak to two related matters which were also raised in Committee. First, the noble Baroness, Lady Hamwee, queried the derivation of the term "alterations of use" in Clause 96(4)(a). As she rightly said, nowadays we would more generally refer to "changes of use". However, we have sought to be consistent with the provisions on
Secondly, the noble Lord, Lord Goodhart, speaking, I believe, on behalf of the Law Society, queried whether there was an interconnection between paragraph 3(4) of Schedule 7 and Clause 101 of the Bill. It was suggested that arguably paragraph 3(4) would release a landlord from some of the liability imposed by virtue of Clause 101. At that time we agreed that that was not what was intended and we undertook to take away the matter for consideration.
We have now taken advice on the issue and are satisfied that the problem that was suggested does not occur. Clause 101 confers a statutory obligation on the landlord. That is not fettered or limited by the operation of Section 11 of the Landlord and Tenant Act 1985, as varied by Schedule 7 to this Bill. For such a limitation to be effected, the Bill would have to make a specific provision in that regard. It does not, and the undesired effect suggested by the Law Society does not arise. Therefore, in our view there is no need for an amendment. However, we felt that it was important to put on the public record an explanation as to why that might be the case.
In closing, I thank all those who have helped to inspire these amendments and say how much we value their contribution. I beg to move.
"( ) It must include an offer of cover to provide for the RTM company directors' and officers' liability insurance, fidelity guarantee and professional indemnity insurance."
"reflect on introducing a longer period of notice than that suggested in the Bill so that at least parties will have an opportunity to consider a whole range of options".—[Official Report, 22/10/01; col. 847.]
We have duly followed that advice. On reflection, we found that the noble Lord—the inspiration for much of today's proceedings—was right. One month is undoubtedly not long enough. By the time notices are sent, received and responded to, the first week of the month would probably have been lost.
6 p.m.
Page 40, line 30, leave out from "given" to "in" in line 32 and insert "agrees, or the persons by whom the counter-notices were given agree,".
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