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The Lord Chancellor moved Amendments Nos. 15 to 17:


Page 3, line 31, after ("assignment") insert ("or (as the case may be) the fact that the assignment has taken place").
Page 3, line 35, leave out ("either").
Page 3, line 42, at end insert (", or
(c) the tenant serves on the landlord or former landlord a notice in writing consenting to the release and, if he has previously served a notice objecting to it, stating that that notice is withdrawn.").

The noble and learned Lord said: I spoke to these amendments with Amendment No. 14. I beg to move.

On Question, amendments agreed to.

Clause 6, as amended, agreed to.

Clause 7 [Covenants binding assignee of tenancy or reversion]:

On Question, Whether Clause 7 shall stand part of the Bill?

The Lord Chancellor: As I explained in relation to Amendment No. 1, the provisions of Clause 7 are reproduced in the new clause after Clause 2 which was introduced by Amendment No. 10. Accordingly, Clause 7 no longer has a part to play and should not stand part of the Bill. I beg to move that Clause 7 do not stand part of the Bill.

Clause 7 negatived.

Clause 8 [Apportionment of liability under covenants binding both assignor and assignee of tenancy or reversion]:

The Lord Chancellor moved Amendments Nos. 18 to 23:


Page 4, line 34, leave out ("proposes to assign") and insert ("assigns").
Page 4, line 36, leave out ("proposed assignee would") and insert ("assignee are to").
Page 4, line 39, leave out ("proposed assignee agree that on") and insert ("assignee agree that as from").

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Page 4, line 43, leave out ("proposes to assign") and insert ("assigns").
Page 4, line 45, leave out ("proposed assignee would") and insert ("assignee are to").
Page 5, line 1, leave out ("proposed assignee agree that on") and insert ("assignee agree that as from").

The noble and learned Lord said: I spoke to Amendments Nos. 18 to 23 with Amendment No. 14. I beg to move the amendments en bloc.

On Question, amendments agreed to.

The Lord Chancellor moved Amendment No. 24:


Page 5, line 9, at end insert:
("( ) In any such case the parties to the agreement may also apply for the apportionment to become binding on any person (other than the appropriate person) who is for the time being entitled to enforce the covenant in question; and section 9 shall apply in relation to such an application as it applies in relation to an application made with respect to the appropriate person.").

The noble and learned Lord said: In moving Amendment No. 24, I speak also to Amendment No. 30.

Amendment No. 24 inserts an extra subsection into Clause 8, which provides for an assignee and assignor in the case of an assignment of part to seek to make an apportionment agreed between them binding on the other party to the tenancy. The new subsection makes provision to cover the possibility that there may be another party to the tenancy, other than the landlord and tenant, who is entitled to enforce the covenant in question; generally speaking, a management company. Management companies may be parties to leases in leasehold developments such as business parks, or office developments. The management company covenants with the tenants to perform various functions usually falling to the landlord, such as cleaning, maintenance, and so on. The Bill does not presently make any provision for management companies, but it is necessary to cover them since the use of management companies to undertake functions normally falling to the landlord is not uncommon. Fuller provision for the way in which management companies are to fit into the scheme is made by Amendment No. 30, and with the Committee's leave I shall speak to Amendments Nos. 24 and 30 together.

Amendment No. 24 simply ensures that the apportionment provisions will apply in such circumstances so as to enable the agreement to become binding against the management company.

It is necessary to ensure that the burden and benefit of a covenant with a management company will pass to an assignee tenant or landlord and that the assignor tenant or landlord will not retain the benefit of it so as to be able to sue the management company. It is also necessary to ensure that the assignor will be released from the burden of the covenant. The new clause introduced by Amendment No. 30 achieves this by defining a third party in terms which encompass management companies but exclude surety covenants, and by providing for covenants given by or to such a third party to be treated as landlord covenants or tenant covenants as appropriate for the purposes of transmission and release and apportionment. I beg to move Amendment No. 24.

On Question, amendment agreed to.

Clause 8, as amended, agreed to.

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Clause 9 [Procedure for making apportionment bind other party to lease]:

The Lord Chancellor moved Amendments Nos. 25 to 28:


Page 5, line 24, leave out ("before") and insert ("either before or within the period of four weeks beginning with the date of").
Page 5, line 26, after ("assignment") insert ("or (as the case may be) the fact that the assignment has taken place").
Page 5, line 32, leave out ("either").
Page 5, line 39, at end insert (", or
(c) he serves on the parties to the agreement a notice in writing consenting to the apportionment becoming binding on him and, if he has previously served a notice objecting thereto, stating that that notice is withdrawn.").

The noble and learned Lord said: I have spoken to Amendment Nos. 25 to 28 inclusive with Amendment No. 14. With the leave of the Committee, I beg to move the amendments en bloc.

On Question, amendments agreed to.

Clause 9, as amended, agreed to.

The Lord Chancellor moved Amendment No. 29:


After Clause 9, insert the following new clause:

("Excluded assignments
Assignments in breach of covenant or by operation of law

.—(1) This section provides for the operation of sections 3 to 6 and 8 and 9 in relation to assignments in breach of a covenant of a tenancy or assignments by operation of law ("excluded assignments").
(2) In the case of an excluded assignment subsection (2) or (3) of section 3—
(a) shall not have the effect mentioned in that subsection in relation to the tenant as from that assignment, but
(b) shall have that effect as from the next assignment (if any) of the premises assigned by him which is not an excluded assignment.
(3) In the case of an excluded assignment subsection (2) or (3) of section 4 or 5—
(a) shall not enable the landlord or former landlord to apply for such a release as is mentioned in that subsection as from that assignment, but
(b) shall apply on the next assignment (if any) of the reversion assigned by the landlord which is not an excluded assignment so as to enable the landlord or former landlord to apply for any such release as from that subsequent assignment.
(4) Where subsection (2) or (3) of section 4 or 5 does so apply—
(a) any reference in that section to the assignment (except where it relates to the time as from which the release takes effect) is a reference to the excluded assignment; but
(b) in that excepted case and in section 6 as it applies in relation to any application under that section made by virtue of subsection (3) above, any reference to the assignment or proposed assignment is a reference to any such subsequent assignment as is mentioned in that subsection.
(5) In the case of an excluded assignment section 8—
(a) shall not enable the tenant or landlord and his assignee to apply for an agreed apportionment to become binding in accordance with section 9 as from that assignment, but
(b) shall apply on the next assignment (if any) of the premises or reversion assigned by the tenant or landlord so as to enable him and his assignee to apply for such an apportionment to become binding in accordance with section 9 as from that subsequent assignment.
(6) Where section 8 does so apply—
(a) any reference in that section to the assignment or the assignee under it is a reference to the excluded assignment and the assignee under that assignment; but

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(b) in section 9 as it applies in relation to any application under section 8 made by virtue of subsection (5) above, any reference to the assignment or proposed assignment is a reference to any such subsequent assignment as is mentioned in that subsection.
(7) If any such subsequent assignment as is mentioned in subsection (2), (3) or (5) above comprises only part of the premises assigned by tenant or (as the case may be) only part of the premises the reversion in which was assigned by the landlord on the excluded assignment—
(a) the relevant provision or provisions of section 3, 4, 5 or 8 shall only have the effect mentioned in that subsection to the extent that the covenants or covenant in question fall or falls to be complied with in relation to that part of those premises; and
(b) that subsection may accordingly apply on different occasions in relation to different parts of those premises.").

The noble and learned Lord said: In moving Amendment No. 29, I speak also to Amendments Nos. 40, 63 and 75.

Amendment No. 29 introduces a new clause to make effective provision for cases where an assignment is not lawful or voluntary, but takes place in breach of a covenant against assignment or by operation of law (such as passing to personal representatives on death of the landlord or tenant). Consequential on the new clause, Amendment No. 40 rectifies wording in Clause 13, Amendment No. 63 ensures the completeness of Clause 15, and Amendment No. 75 to Clause 19 is to make necessary changes to the definitions in that clause. Once again, with the Committee's leave, I feel that it would be helpful to speak to this group of amendments together.

In accordance with the Law Commission's recommendations, assignments of the type I have just mentioned are not to have effect to release the person parting with the interest from his rights and obligations under the lease, although they will, as is the case at present, be fully effective to pass the estate and accordingly to bind the assignee. This will be achieved by the new clause introduced by Amendment No. 29 and, as I have said, Amendment No. 75 to Clause 19 is to carry through its effect into the list of definitions in that clause.

Amendment No. 40 changes the wording of Clause 13(1) to reflect the fact that it is possible for a former tenant under a new lease as well as under an existing one to remain liable other than under an authorised guarantee agreement, because there has been an excluded assignment, and the existing draft of the Bill missed this point. The new subsection to Clause 15, introduced by Amendment No. 63, makes it clear that, consistent with the approach of Clause 15, any such assignment will not affect any liability of the assignor for breach occurring before the assignment, or any accrued rights of the assignor relating to a breach of the other party occurring before assignment. I beg to move Amendment No. 29.

On Question, amendment agreed to.


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