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Page 1, line 7, leave out ("applies") and insert ("apply").

The noble Earl said: I have already spoken to this amendment in relation to Amendment No. 2. I beg to move.

On Question, amendment agreed to.

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The Lord Chancellor moved Amendment No. 5:


Page 1, line 8, leave out from ("if") to end of line 12 and insert ("it is granted on or after the date on which this Act comes into force otherwise than in pursuance of—
(a) an agreement entered into before that date, or
(b) an order of a court made before that date.").

The noble and learned Lord said: As well as providing which provisions of the Bill are to apply to new tenancies and which to both new and other tenancies, Clause 1 of the Bill defines a new tenancy. Amendments Nos. 5 and 7 revise and refine the definition of a new tenancy presently in the Bill and, with the Committee's leave, I believe that it would be helpful for me to speak to both amendments together since they are very closely linked.

Amendment No. 5 makes it clear that a new tenancy is one granted on or after the date on which the Act comes into force, unless it was granted in pursuance of an agreement entered into before that date or a court order made before that date. Amendment No. 7 deletes the present subsection (4) of Clause 1 and replaces it with three new subsections which put beyond doubt detailed matters relating to the concept of a new tenancy which the existing draft either does not cover or does not cover satisfactorily. I beg to move.

On Question, amendment agreed to.

The Earl of Courtown moved Amendment No. 6:


Page 1, line 12, at end insert:
("( ) Subsection (3) has effect subject to section (Overriding leases: supplementary provisions) (1) in the case of overriding leases granted under section (Right of former tenant or guarantor to overriding lease).").

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 7:


Page 1, line 13, leave out subsection (4) and insert:
("(4) Without prejudice to the generality of subsection (3), that subsection applies to the grant of a tenancy where by virtue of any variation of a tenancy there is a deemed surrender and regrant as it applies to any other grant of a tenancy.
(5) Where a tenancy granted on or after the date on which this Act comes into force is so granted in pursuance of an option granted before that date, the tenancy shall be regarded for the purposes of subsection (3) as granted in pursuance of an agreement entered into before that date (and accordingly is not a new tenancy), whether or not the option was exercised before that date.
(6) In subsection (5) "option" includes right of first refusal.").

The noble and learned Lord said: I have already spoken to this with Amendment No. 5. I beg to move.

On Question, amendment agreed to.

Clause 1, as amended, agreed to.

Clause 2 [Covenants to which the Act applies]:

The Lord Chancellor moved Amendment No. 8:


Page 2, line 2, after ("disposals);") insert:
("( ) paragraph 1 of Schedule 6A to that Act (covenants requiring redemption of landlord's share);").

The noble and learned Lord said: Amendments Nos. 8 and 9 are very closely linked and, with the Committee's leave, I feel that it would be helpful for me to speak to both amendments together. Clause 2 ensures that the Act will apply to all covenants of a tenancy, whether they are implied or express and whether they "touch and concern" the land or not. It also, as recommended by the Law Commission, excepts from the Act certain covenants entered into by tenants of local authorities who exercise

21 Jun 1995 : Column 366

their right to buy to prevent them making unjustified profits on early sale so that they will continue to be bound by those covenants notwithstanding the new regime. Amendments Nos. 8 and 9 make the necessary provision for excepting from the Act a further such covenant which was not picked up in the first draft of the Bill. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 9:


Page 2, line 4, leave out ("similar purposes") and insert ("repayment of discount on early disposals").

The noble and learned Lord said: I have already spoken to this. I beg to move.

On Question, amendment agreed to.

Clause 2, as amended, agreed to.

The Lord Chancellor moved Amendment No. 10:


After Clause 2, insert the following new clause:

("Transmission of covenants
Transmission of benefit and burden of covenants

.—(1) The benefit and burden of all landlord and tenant covenants of a tenancy—
(a) shall be annexed and incident to the whole, and to each and every part, of the premises demised by the tenancy and of the reversion in them, and
(b) shall in accordance with this section pass on an assignment of the whole or any part of those premises or of the reversion in them.
(2) Where the assignment is by the tenant under the tenancy, then as from the assignment the assignee—
(a) becomes bound by the tenant covenants of the tenancy except to the extent that—
(i) immediately before the assignment they did not bind the assignor, or
(ii) they fall to be complied with in relation to any demised premises not comprised in the assignment; and
(b) becomes entitled to the benefit of the landlord covenants of the tenancy except to the extent that they fall to be complied with in relation to any such premises.
(3) Where the assignment is by the landlord under the tenancy, then as from the assignment the assignee—
(a) becomes bound by the landlord covenants of the tenancy except to the extent that—
(i) immediately before the assignment they did not bind the assignor, or
(ii) they fall to be complied with in relation to any demised premises not comprised in the assignment; and
(b) becomes entitled to the benefit of the tenant covenants of the tenancy except to the extent that they fall to be complied with in relation to any such premises.
(4) In determining for the purposes of subsection (2) or (3) whether any covenant bound the assignor immediately before the assignment, any waiver or release of the covenant which (in whatever terms) is expressed to be personal to the assignor shall be disregarded.
(5) Any landlord or tenant covenant of a tenancy which is restrictive of the user of land shall, as well as being capable of enforcement against an assignee, be capable of being enforced against any other person who is the owner or occupier of any demised premises to which the covenant relates, even though there is no express provision in the tenancy to that effect.
(6) Nothing in this section shall operate—
(a) in the case of a covenant which (in whatever terms) is expressed to be personal to any person, to make the covenant enforceable by or (as the case may be) against any other person; or

21 Jun 1995 : Column 367


(b) to make a covenant enforceable against any person if, apart from this section, it would not be enforceable against him by reason of its not having been registered under the Land Registration Act 1925 or the Land Charges Act 1972.
(7) To the extent that there remains in force any rule of law by virtue of which the burden of a covenant whose subject matter is not in existence at the time when it is made does not run with the land affected unless the covenantor covenants on behalf of himself and his assigns, that rule of law is hereby abolished in relation to tenancies.").

The noble and learned Lord said: I have already spoken to this amendment with Amendment No. 1. I beg to move.

[Amendments Nos. 11 and 12, as amendments to Amendment No. 10, not moved.]

On Question, Amendment No. 10 agreed to.

The Lord Chancellor moved Amendment No. 13:


After Clause 2, insert the following new clause:

Transmission of rights of re-entry

(". The benefit of a landlord's right of re-entry under a tenancy—
(a) shall be annexed and incident to the whole, and to each and every part, of the reversion in the premises demised by the tenancy, and
(b) shall pass on an assignment of the whole or any part of the reversion in those premises.").

The noble and learned Lord said: I spoke to this amendment with Amendment No. 1. I beg to move.

On Question, amendment agreed to.

Clauses 3 to 5 agreed to.

Clause 6 [Procedure for seeking release from a covenant under s. 4 or 5]:

The Lord Chancellor moved Amendment No. 14:


Page 3, line 29, leave out ("before") and insert ("either before or within the period of four weeks beginning with the date of").

The noble and learned Lord said: In moving Amendment No. 14 I shall speak also to Amendments Nos. 15 to 23 and 25 to 28.

This clause makes provision for the notice procedure for the purposes of Clauses 4 and 5. At present it provides for the landlord to serve a notice on the tenant before the assignment, and for the tenant to have four weeks from the serving of the notice to object to the landlord's being released, and for the landlord to be released, as from the date of the assignment, if there is no objection within four weeks or if there is an objection but the court declares it to be reasonable for the landlord to be released.

Amendments Nos. 14 to 17 give effect to two changes which are consistent with the Law Commission's policy and are accepted by the Law Commission and which go hand-in-hand with a number of amendments to Clauses 8 and 9 which make provision for apportionment of liability under certain covenants between assignor and assignee to become binding on the other party to the lease if a similar notice procedure is gone through. These amendments are so closely interlinked with two other groups of amendments that, with the leave of the Committee, I consider that it would be appropriate if I were to speak to all of them together. Amendments Nos. 25 to 28 to Clause 9 simply carry through, mutatis mutandis, the approach of the amendments to Clause 6, and Amendments Nos. 18 to 23 to Clause 8 pave the way for the amendments to Clause 9.

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Amendment No. 14 removes the requirement that the notice be served before the assignment and allows it to be served before or up to four weeks after it. This is because there are cases where confidentiality is very important to the landlord when he assigns, so he cannot afford to make his negotiations public by serving notices before the assignment. Since the tenant has no control over the assignment and will be interested only in whether the landlord should or should not be released, it will not disadvantage the tenant if notice is not served until after the assignment. Specific provision is also made for the tenant to indicate that he has no objection, and also for him to withdraw an objection rather than have the matter go to court. Amendments Nos. 13 and 15 and Amendments Nos. 18 to 23 follow from those two changes. Clause 9 makes provision for a similar notice procedure to cover cases of assignment of part, where the assignor and assignee reach an agreement as to apportionment and wish to make the agreement binding on the other party; and Amendments Nos. 25 to 28 make the same provision for the procedure in Clause 9 as Amendments Nos. 14 to 17 make for that in Clause 6. I beg to move.

On Question, amendment agreed to.


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