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Lord Falconer of Thoroton: My Lords, the amendment would provide that where a lease was assigned by a member of an RTE company, the assignee would automatically become a member of the company. I recall the concern expressed by the noble Lord, Lord Goodhart, in Committee about the ability of assignees to become members of an RTE company. My noble friend Lord Bassam then explained why we could not provide for membership of the company to transfer automatically to assignees. I subsequently wrote to the noble Lord clarifying the position.

Company law does not provide for the automatic transfer of membership of a company limited by guarantee. Section 22 of the Companies Act 1985 sets two conditions which have to be satisfied to constitute a person as a member of such a company. First, the person must agree to become a member and, secondly, the member's name should be entered on the register. Both those conditions must be met and are cumulative. Unless both conditions are satisfied, the person in question will not have acquired the status of a member. The Government would be very reluctant to override that key principle in this particular case.

As I explained, although Part 1 of the Bill, and regulations to be made under it, make provisions which are intended to ensure that all purchasers of commonhold units must agree to become members of the commonhold association, the situation with RTE companies is rather different. Unlike the commonhold association, where the Bill envisages ongoing regulation, we are proposing to regulate RTE companies only during the enfranchisement process.

13 Nov 2001 : Column 525

We consider that the operation of the company after enfranchisement should be a matter for the enfranchised leaseholders to agree among themselves. We do, however, agree that the RTE company should be able to admit new members after completion. This would include assignees of participating members or leaseholders who did not participate in the original enfranchisement. We accept that the draft of the memorandum and articles, which we provided to your Lordships, did not provide for that and we shall include appropriate changes in revised drafts which we expect to produce shortly.

As we have said previously, in practice, where a participating member assigns his lease, the premium would reflect the benefits of membership. It is unlikely that the prospective assignee would agree to the purchase without being satisfied that membership of the RTE company was an integral part of the package. This happens now with both the existing nominee purchaser arrangements under the 1993 Act and in other circumstances where there is a leaseholders' management company and we are not aware of any problems.

Furthermore, it would not be in the leaseholders' interests to exclude assignees from the RTE company where assignors had previously been members. Evidence of such behaviour could discourage prospective purchasers so that the leaseholders concerned might have difficulties selling their flats in the future.

I hope that that explanation gives the noble Lord the assurances he sought and that he feels able to withdraw his amendment.

Lord Goodhart: My Lords, I am not sure that it goes quite as far as I wish. Effectively, I should like to see a prohibition on the assignment of the lease by a member of an RTE company, except on the basis that the assignee is entitled to take membership in the company if he or she wishes to do so. I recognise, however, that commercially it is likely that in the great majority of cases something of that kind will take place, and certainly this is progress towards that objective. In the circumstances, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause 120 [Invitation to participate]:

Lord Falconer of Thoroton moved Amendment No. 67:

    Page 61, line 40, at end insert—

"(6) A notice of invitation to participate shall not be invalidated by any inaccuracy in any of the particulars required by or by virtue of this section.

On Question, amendment agreed to.

Schedule 8 [Enfranchisement by company: amendments]:

Lord Falconer of Thoroton moved Amendments Nos. 68 and 69:

    Page 102, line 20, leave out "RTE company" and insert "company (referred to in this Chapter as a RTE company)"

    Page 108, line 24, leave out "section" and insert "sections 1(1) and"

13 Nov 2001 : Column 526

On Question, amendments agreed to.

Clause 123 [Valuation date]:

Lord Kingsland moved Amendment No. 70:

    Page 62, line 9, leave out from "payable)," to end of line 10 and insert "in paragraph 1(1), for the definition of "the valuation date" substitute—

""the valuation date" means the date of service of the reversioner's counter-notice.""

The noble Lord said: My Lords, I spoke to Amendment No. 70 some two weeks ago, and what I said then is to be found at cols. 865 to 866 of the Official Report of Monday 22nd October 2001. I am sure that that is fresh in the memory of the Minister, and I have nothing to add to what I said. I beg to move.

Lord Falconer of Thoroton: My Lords, the noble Lord, as he rightly acknowledged, raised these issues in Committee and in debate on the previous Bill. While I admire his persistence, I am sure he will not be surprised to learn that the speech that he has just delivered fails to persuade us. In those circumstances, both we and the noble Lord remain in the same position as then. I ask the noble Lord, therefore, to withdraw his amendment.

Lord Kingsland: My Lords, I am sad but not surprised by the response of the noble and learned Lord. This issue has been between the Opposition and the Government for some time, and, in the circumstances, I should like to test the opinion of the House.

7.23 p.m.

On Question, Whether the said amendment (No. 70) shall be agreed to?

Their Lordships divided: Contents, 52; Not-Contents, 123.

Division No. 1


Astor, V.
Astor of Hever, L.
Attlee, E.
Blackwell, L.
Brooke of Sutton Mandeville, L.
Buscombe, B.
Byford, B.
Caithness, E.
Carlisle of Bucklow, L.
Carnegy of Lour, B.
Colwyn, L.
Cope of Berkeley, L. [Teller]
Dean of Harptree, L.
Dixon-Smith, L.
Elliott of Morpeth, L.
Elton, L.
Fookes, B.
Gardner of Parkes, B.
Glentoran, L.
Gray of Contin, L.
Hayhoe, L.
Henley, L.
Howe of Aberavon, L.
Jopling, L.
King of Bridgwater, L.
Kingsland, L.
Lindsay, E.
Lyell, L.
Marlesford, L.
Noakes, B.
Northesk, E.
Oxfuird, V.
Park of Monmouth, B.
Perry of Southwark, B.
Powell of Bayswater, L.
Renton, L.
St John of Fawsley, L.
Seccombe, B. [Teller]
Selsdon, L.
Sharples, B.
Shaw of Northstead, L.
Shrewsbury, E.
Skelmersdale, L.
Stewartby, L.
Stodart of Leaston, L.
Strathclyde, L.
Thatcher, B.
Thomas of Gwydir, L.
Vivian, L.
Waddington, L.
Wade of Chorlton, L.
Willoughby de Broke, L.


Acton, L.
Alton of Liverpool, L.
Andrews, B.
Archer of Sandwell, L.
Barker, B.
Bassam of Brighton, L.
Bernstein of Craigweil, L.
Bradshaw, L.
Bragg, L.
Brennan, L.
Brookman, L.
Brooks of Tremorfa, L.
Burlison, L.
Campbell-Savours, L.
Carlile of Berriew, L.
Carter, L. [Teller]
Clark of Windermere, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Corbett of Castle Vale, L.
Crawley, B.
Davies of Oldham, L.
Derby, Bp.
Desai, L.
Dholakia, L.
Dixon, L.
Dormand of Easington, L.
Dubs, L.
Elder, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Fyfe of Fairfield, L.
Gibson of Market Rasen, B.
Goldsmith, L.
Goodhart, L.
Gordon of Strathblane, L.
Gould of Potternewton, B.
Grabiner, L.
Grocott, L.
Hamwee, B.
Hardy of Wath, L.
Harris of Haringey, L.
Harris of Richmond, B.
Harrison, L.
Haskel, L.
Hayman, B.
Hogg of Cumbernauld, L.
Hollis of Heigham, B.
Howells of St. Davids, B.
Hoyle, L.
Hughes of Woodside, L.
Irvine of Lairg, L. (Lord Chancellor)
Jacobs, L.
Janner of Braunstone, L.
Jeger, B.
Jenkins of Putney, L.
Jones, L.
Judd, L.
Kilclooney, L.
King of West Bromwich, L.
Kirkhill, L.
Layard, L.
Livsey of Talgarth, L.
Lockwood, B.
Lofthouse of Pontefract, L.
McCarthy, L.
Macdonald of Tradeston, L.
McIntosh of Haringey, L. [Teller]
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
Mackie of Benshie, L.
Mason of Barnsley, L.
Massey of Darwen, B.
Merlyn-Rees, L.
Milner of Leeds, L.
Morris of Aberavon, L.
Newby, L.
Nicol, B.
Orme, L.
Parekh, L.
Patel of Blackburn, L.
Pendry, L.
Peston, L.
Phillips of Sudbury, L.
Pitkeathley, B.
Prys-Davies, L.
Puttnam, L.
Radice, L.
Ramsay of Cartvale, B.
Rea, L.
Rendell of Babergh, B.
Rennard, L.
Renwick of Clifton, L.
Rooker, L.
Roper, L.
Russell, E.
Sawyer, L.
Scotland of Asthal, B.
Shutt of Greetland, L.
Simon, V.
Skidelsky, L.
Smith of Leigh, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Temple-Morris, L.
Thomson of Monifieth, L.
Thornton, B.
Tomlinson, L.
Turner of Camden, B.
Varley, L.
Walker of Doncaster, L.
Wallace of Saltaire, L.
Warner, L.
Warwick of Undercliffe, B.
Whitaker, B.
Whitty, L.
Wilkins, B.
Williams of Crosby, B.
Williams of Elvel, L.
Williams of Mostyn, L. (Lord Privy Seal)
Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.

Lord McIntosh of Haringey: My Lords, I beg to move that consideration on Report be now adjourned. In moving the Motion I suggest that the Report stage begin again not before 8.33 p.m.

Moved accordingly, and, on Question, Motion agreed to.

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