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Lord Goodhart: Before the noble Lord, Lord Kingsland, replies, I have not researched this but I am not quite as sure as the Minister that the contracts necessarily would be frustrated. The issue about transferability of contracts is a complicated one. The basic rule is that the benefit of a contract can be transferred but the burden of a contract cannot. However, if the gardening contractor who is providing the services is willing to continue to provide those services to the RTM company, I am not entirely certain that the court would not be prepared to draw an implication that the contract was not, in those circumstances, frustrated, and that the gardening contractor was entitled to continue to provide those services and to receive payment for them from the RTM company rather than from the landlord. That may or not be the case--I am not saying that it is--but I believe that this issue will need to be looked at with some care in the interval between now and Report stage. I shall try to do so myself and perhaps the Government will also consider doing so.

The Earl of Caithness: The Minister said that he had received careful advice. Having listened to what he has had to say and being interested to hear how the noble Lord, Lord Goodhart, took a different view from me on reading the Bill, I wonder whether the Minister would seek more careful advice on this clause. I am more muddled than I was before I heard what has been said. I shall have to read it in Hansard because the acoustics in this room are not great at the best of times. This area needs clarification. Perhaps we can look at it between now and the Report stage.

Lord Kingsland: I do not rise to withdraw an amendment because I do not have an amendment down. I simply speak to the Question that Clause 88 and 89 shall stand part of the Bill. My noble friend Lord Caithness and the noble Lord, Lord Goodhart, gave the Committee very good advice. We can all go away and read what we each said, form our own views and come back at Report stage to hear whether or not the Minister will reaffirm what he has already said, or whether he has reconsidered his position and returns with a modified view.

Clause 88 agreed to.

Clause 89 agreed to.

[Amendments Nos. 151 and 152 not moved.]

7.15 p.m.

Lord Kingsland moved Amendment No. 152A:

(" .--(1) Where a liability exists as a result of an event prior to the acquisition date, the responsibility for that liability rests with whoever was the manager party at the time of the event.
(2) If a liability such as described in subsection (1) exists, the RTM company shall permit the former manager party and any person authorised to act on his behalf reasonable access to any relevant documentation (or, if the information is recorded in the

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document in a form in which it is not readily intelligible, to give any such person access to it in a readily intelligible form) which is in its control.").

The noble Lord said: I rise to speak to Amendment No. 152A. The amendment ensures that if a liability exists, it remains the responsibility of whoever was responsible for the management at the time it arose, and gives the former manager a right of access to any relevant files in such circumstances until the issue is resolved.

Where there are continuing liabilities arising from an event prior to the date of the hand-over of responsibility, it should be made clear that the liability remains with whoever was responsible at that time, and does not transfer to the new management regime. It is logical, in these circumstances, that the landlord should have the right of access to the relevant files until the matter is concluded, even where the RTM company would have a subsequent interest once the case is settled. I beg to move.

Lord Whitty: I am grateful to the noble Lord, Lord Kingsland, for explaining that. At first sight, we do not agree that this provision is necessary. There is nothing the Bill itself will do to transfer any liability which was incurred before the acquisition of a right to manage. This is partly bound up with our previous discussion on what will happen to existing contracts. It may be that we can reach greater clarification on that at a later stage in the Bill.

The amendment also proposes granting powers to the landlord to access documents held by the RMT company. That does not seem necessary. Clause 90 requires the previous manager to hand over only information which is required in connection with a company's management of the building. As liability does not pass across, it should not be the case that any documentation relating to that liability would have passed across. Therefore, I do not see the need for that part of the amendment either.

Lord Kingsland: Perhaps on reflection, it would have been better to have dealt with this amendment in the course of the discussion on the previous grouping. We shall wait to hear what the Minister has to say on Report on the general issue of contractual liability, and in the light of that, reconsider whether or not I should press this amendment. In the meantime, I beg leave to withdraw.

Amendment, by leave, withdrawn.

[Amendment No. 153 not moved.]

Clause 90 [Duty to provide information]:

The Earl of Caithness moved Amendment No. 154:

    Page 42, line 47, leave out ("four") and insert ("three").

The noble Earl said: In moving Amendment No. 154, I wish to speak also to Amendments Nos. 158, 162, 163 and 164. As I read the Bill, information on a hand-over could be as long as two months after the right-to-manage company has acquired the right to manage. In other words, there is an RTM company that we want to see succeed, we want to see take over

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the block, but it is not getting all the information that it needs, and some it will not get until two months after it has taken over the management of that block.

That is wrong. As soon as the claim notice has been put forward, there ought to be an overlap period. There should be a regular flow of information for at least two months between the landlord and the right-to-manage company before the right-to-manage company takes over. There is also a provision that where information is not provided, that matter could be referred to the LVT. I beg to move.

Lord Williams of Elvel: I should like to support the amendment of the noble Earl, Lord Caithness, and I have put my name to the other amendments in the group. I am particularly concerned that an RTM company could start business without any funds. That seems to be something that the Government do not intend and which this amendment would correct.

As I read the Bill at present, there is no obligation for the landlord to hand over uncommitted service charges at the acquisition date; it may wait until the appropriate moment. This seems to put the RTM company in a very difficult position. We are trying to achieve a smooth handover from a landlord to an RTM company. I believe that these amendments, taken in the round, would ensure that the handover is as smooth as it can possibly be. There will undoubtedly be difficulties, but we want to make it as smooth as possible.

Lord Whitty: I appreciate that we are all seeking to ensure a smooth transition of management. Quite frankly, with this Bill it has been quite difficult to know what to do for the best and there are conflicting suggestions. We appreciate that in many cases it would indeed be helpful if the transfer of functions and the handing over of monies were to take place at the same time. However, we also recognise that some leaseholders will wish to take over the management at the earliest possible date because they are concerned that the existing landlord may well exploit any delay.

We fear that this amendment would leave leaseholders vulnerable to such a position and also reduce the time available for landlords to produce the records. The arrangements for handover in the Bill were drawn up after extensive consultations and represent a compromise between the various conflicting concerns. We would be reluctant to move away from those arrangements. There will be many situations where an element of co-operation will enable the parties to agree sensible arrangements for the transfer of responsibility and to agree sensible timetables--the provisions in the Bill allow plenty of scope for that--but where there is an element of antagonism or mistrust, leaseholders would almost certainly wish to gain control as rapidly as possible. In such cases, they would need to accept a temporary period of inconvenience and may need to finance expenditure arising. Nevertheless, the issue as to who was controlling the building would be resolved.

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Nothing is completely satisfactory in this area. We believe that our provisions are better than those contained in the amendment.

The Earl of Caithness: A compromise is a compromise is a compromise and can even be re-compromised. I hope that, on reflection, the Minister will think carefully about these amendments because they are specifically designed to ease the transition period and to ensure a smooth handover.

The Minister said that in a bad situation the right-to-manage company will be eager to take over as soon as possible. I can understand that. However, I would have serious concerns for that RTM company if it does not have all the information. The landlord must be required to provide information for the right-to-manage company by a certain time, otherwise that company would be opening itself up to potential liabilities in order to enter into a contract in good faith. The RTM company wants to see its block properly managed and believes that it can manage it better than the landlord, but, unless it has all the information required, how can it possibly be in a position to make a sensible judgment?

This is a very serious area that we have still to resolve. I do not like the situation in which relevant information could be handed over as much as two months after the new management company has taken over. That is surely not right. I hope that the noble Lord will reflect on that further between now and another stage.

I am grateful for the support of the noble Lord, Lord Williams of Elvel, on these amendments. He raised a very important point about finance for an RTM company that has adequate funds. Can the Minister give me an assurance that he will have a serious look at this issue again--without commitment--in order that this problem may be properly addressed?

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