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LORDS AMENDMENT

29Clause 42, page 27, line 38, at end insert--
("( ) No transfer scheme shall be made under subsection (2) before the first Session of the next Parliament after that in which this Act is passed.")
The Commons disagreed with the Lords in their amendment but proposed the following amendment in lieu thereof--
29CPage 27, line 38, at end insert-
("( ) No scheme may be made under this section before the end of the period of three months starting with the day on which this Act is passed.")

Lord Macdonald of Tradeston: My Lords, I beg to move that the House do not insist on their Amendment No. 29 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 29C in lieu thereof.

Moved, That the House do not insist on their Amendment No. 29 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 29C in lieu thereof.--(Lord Macdonald of Tradeston.)

[Amendment No. 29D not moved.]

On Question, Motion agreed to.

29 Nov 2000 : Column 1343

Insolvency Bill [H.L.]

4.18 p.m.

Lord McIntosh of Haringey: My Lords, I beg to move that the Commons amendments be now considered.

Moved, That the Commons amendments be now considered.--(Lord McIntosh of Haringey.)

On Question, Motion agreed to.

COMMONS AMENDMENTS
[The page and line refer to Bill 173 as first printed for the Commons.]
COMMONS AMENDMENT

1Before Clause 9, insert the following new clause--
ADMINISTRATION ORDERS

(" .--(1) Part II of the Insolvency Act 1986 (administration orders) is amended as follows.
(2) In section 10 (effect of application), after paragraph (a) of subsection (1) there is inserted--
"(aa) no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the leave of the court and subject to such terms as the court may impose".
(3) In section 11 (effect of order), after paragraph (b) of subsection (3) there is inserted--
"(ba) no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose."").

Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1. In speaking to this amendment I shall speak also to Amendments Nos. 13, 22, 23 and 24.

These amendments deal mainly with a landlord's ability to forfeit a lease by way of peaceable re-entry, a matter which was raised by the noble Baroness, Lady Buscombe, and the noble Lord, Lord Razzall, in Committee. At that time I was able to inform them only that we were in the process of consulting on the matter.

The purpose of these amendments is to provide that a landlord's right to effect peaceable re-entry and so terminate the tenancy in respect of premises rented by an insolvent is generally stayed while a company or an individual is the subject of a moratorium in the company and individual voluntary arrangement and administration procedures. Our recent consultation, started while the Bill was passing through this House, showed that there was a general agreement that that right should not be available to a landlord during statutory moratoria. Additionally, Amendments Nos. 23 and 24 make the individual voluntary arrangement moratorium effective against all forms of

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distress and provide that the court may stay the levying of distress while an application for a moratorium in that procedure is pending.

Moved, That the House do agree with the Commons in their Amendment No. 1.--(Lord McIntosh of Haringey.)

Baroness Buscombe: My Lords, I should like to speak to Amendment No. 1 which, with Amendments Nos. 13, 22 and 23, have become part of the Bill as a result of what I said at Second Reading. I said then that consideration had to be given to whether it was appropriate that a landlord should be able to forfeit a lease under which the company was a tenant during a moratorium. I pointed out that we could see no policy reason why a landlord should be in the privileged position of being able to re-enter premises let to a tenant during a moratorium, but all other creditors were restricted from exercising their rights. Even a landlord would be restricted from taking proceedings for possession but, curiously, would not be prevented from peaceably re-entering the premises. I also pointed out that if landlords were not restricted from exercising their right to re-enter premises the whole point of the moratorium and a proposal for a voluntary arrangement would be defeated.

At Second Reading the Minister said that it was too complex a point for the Government to deal with in the context of the Bill. In Grand Committee the noble Lord changed his mind and said that it was an important matter. The Minister informed your Lordships' House that the Government had put in hand a consultation process, and we expected government amendments to be tabled in due course. We on this side of the House waited with bated breath for the amendments so that we could consider them properly and consult those whom the amendments would affect most. We waited and waited. I passed a couple of happy afternoons with the Minister in this Chamber on Report and at Third Reading. The surroundings were pleasant, as was the company of the Minister and others, but there was no sign of the amendments. The Bill went to another place. Towards the end of October the amendments finally appeared. In essence, it took six months for the Government to produce relatively straightforward amendments, and it is they who complain about delays in this House.

The lateness of the amendments means that we cannot give them the consideration that they obviously merit. The amendments could be improved in one particular respect because, as presently drafted, they would prevent a landlord from peaceably re-entering the premises even if they were unoccupied. We believe that that is an unreasonable restriction. However, we on this side of the House are anxious that the Bill should be enacted as soon as possible, and in a spirit of compromise we have not tabled any amendments to these particular Commons amendments.

Lord McIntosh of Haringey: My Lords, I do not begrudge the noble Baroness her gloat. I said in introducing the amendments that they had been tabled because the noble Baroness and the noble Lord,

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Lord Razzall, had raised the issue in the first place. I said, wrongly, that the matter had first been raised in Committee. The noble Baroness is quite right to remind noble Lords that she raised the matter at Second Reading. The noble Baroness is also right to say that the consultation took a certain amount of time. However, the amendments have been considered both in Committee and at Report stage in another place and have received parliamentary scrutiny.

I am glad that the noble Baroness has only one remaining concern about the amendments. That concern is related to the case where a property which is leased is no longer needed for a rescue. If it is not needed for a rescue or occupied--they are related cases--surely it is in the interests of the tenant to see that the lease is surrendered because that will improve his financial position. Therefore, the boot is somewhat on the other foot. He may seek to surrender the lease to the landlord, but if he does not he is unlikely to defend any application by a landlord to forfeit the lease of premises that he no longer requires. In any case, peaceable entry is not a right that is used very often and applies almost exclusively to business premises. Without going back over all the arguments, the period of a moratorium is only short. In any case, there is the fallback that an application can be made to the court for leave to re-enter any premises whether or not they are necessary for the rescue; for example, if rent is unpaid.

I accept the thrust of what the noble Baroness says about the way in which the issue has been dealt with, but we have come out right in the end.

On Question, Motion agreed to.

COMMONS AMENDMENT

2Clause 11, page 7, line 12, at beginning insert ("After")

Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 2. In moving this amendment I should like to speak also to Amendment No. 3. These amendments effectively introduce a completely new Clause 11. This arises because, if the clause had remained unamended, what would have been new subsection (5) of Section 421 of the Insolvency Act 1986 could have had an unfortunate and unintended effect. There was a risk that it could have prejudiced the marketability of property where on, and as a result of, his death the deceased person's interest in jointly-owned property had passed to the survivor, irrespective of whether he was solvent or insolvent. It was that particular point which was raised by noble Lords opposite, notably by the noble Lords, Lord Sharman and Lord Razzall. I note, however, that the noble Baroness, Lady Buscombe, was also concerned about this matter.

In Grand Committee the noble Lord, Lord Sharman, said:


    "It is necessary that there should be no retrospective effect on any third party who might have acquired property in good faith".--[Official Report, 15/6/00, col. CWH 56.]

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I responded at col. CWH 57:


    "We understand the concern of the noble Lord, Lord Sharman, which he also raised at Second Reading. We agree that, left as it is, this clause could prejudice the marketability of property where the deceased's interest in jointly-owned property has passed to the survivor on death, irrespective of whether the deceased is solvent or not. We would not wish an arm's length disposal of a property by a surviving partner to be made unnecessarily difficult because prospective purchasers were concerned that they might find they did not have good title if the deceased's estate became insolvent".

These two amendments address just that point. In doing so, they will also ensure that the value of any interest in jointly-owned property, lost by the operation of the survivorship rules, is recoverable for the benefit of the insolvent estate and, therefore, for the creditors of the deceased insolvent.

Clause 11, as amended by Amendment No. 3, which is the substantive amendment in this group, will enable the trustee of the insolvent estate to make application to the court for a monetary order against the survivor in such cases. The order would be for a sum to cover the debts and other liabilities of the deceased insolvent's estate. This sum could be smaller than the value of the former joint interest, but could not be greater. That approach would avoid the difficulties of the original clause which would have had the effect of treating the deceased insolvent as if he had been adjudged bankrupt on the day before he died and, by that route, making his interest in jointly-owned property part of his estate. Not only would that have overridden survivorship rules, but it would have taken effect without regard to the position of other joint-owners or any subsequent purchasers.

Clause 11, as amended, will address the consequences of the decision of the Court of Appeal in Re Palmer (deceased) in a balanced and measured way which will allow the courts to have regard to all the competing interests in such cases. Although we have adopted a different way to achieve that aim, it will mean, so far as is reasonably possible, that the creditors of an insolvent will not be in a significantly worse position in a case where he has died than if he were living. I urge noble Lords to accept the amendments. I shall say something about Amendment No. 3A when it has been moved.

Moved, That the House do agree with the Commons in their Amendment No. 2.--(Lord McIntosh of Haringey.)


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