§ (1) This section applies where by virtue of a restrictive covenant the owner of any premises is restricted, either absolutely or to any extent—
- (a) in choosing electronic communications services or a supplier of such services, or
- (b) with respect to any other electronic communications matter.
§ (2) Where this section applies, the covenant, to the extent that it restricts the owner of premises as mentioned in subsection (1)—
- (a) if it requires (expressly or otherwise) the consent of any person to be obtained before anything to which the restriction relates is done, shall have effect as if it required that consent not to be unreasonably withheld; and
- (b) in any other case, shall have effect as if it required the consent of the person entitled to the benefit of the restrictive covenant to the doing of anything to which the restriction relates not be unreasonably withheld.
§ (3) Subsections (5) to (7) of section 130 shall apply in relation to a restriction falling within subsection (2) of this section as those subsections apply in relation to a prohibition or restriction falling within subsection (1) or (2) of section 130.
§ (4) Section 392 applies to the powers of OFCOM to make orders under this section.'.—[Mr. Whittingdale.]
§ Brought up, and read the First time.745 4.30 pm
§ Madam Deputy Speaker (Sylvia Heal)
With this it will be convenient to discuss the following amendments: No. 103, in page 119, line 14 [Clause 130], leave out'for a year or more'.No. 104, in page 119, line 18 [Clause 130], leave out'for a year or more'.No. 105, in page 119, line 27 [Clause 130], leave out subsection (4) and insert—'(4) A provision falling within subsection (2)(a) or (b) —
No. 106, in page 119, line 30 [Clause 130], leave out from 'with' to end of line 31 and insert 'an electronic communications matter'.
- (a) if it requires (expressly or otherwise) the consent of any person to be obtained before anything to which the provision relates is done, shall have effect as if it required that consent not to be unreasonably withheld;
- (b) in any other case, shall have the effect as if it required the consent of the lessor, licensor or other party to the agreement to the doing of anything to which the provision relates not to be unreasonably withheld.'.
No. 107, in page 119, line 38 [Clause 130], leave out paragraphs (a) and (b) and insert'with respect to any matter by virtue of which it falls within subsection (1) of (2).'.No. 108, in page 119, line 44, [Clause 130] at end insert'of his choice (so that he is not confined to selecting a person with an interest in any premises or to a person selected by such a person).(5A) The question whether consent has been unreasonably withheld in any case falling to be determined in accordance with subsection (5) shall be determined by OFCOM.(5B) Where OFCOM has made such a determination, proceedings for breach of any provision of a lease or other agreement falling within subsection (2), which consists of or includes failure to obtain consent before doing anything to which that provision relates, shall not be instituted or continued in any court.'.No. 109, in page 119, line 45, [Clause 130], leave out subsection (6).
Government amendment No. 234.
Amendment No. 110, in page 120, line 23, [Clause 130], leave out subsection (9).
Amendment No. 102, in page 347, line 15 [Clause 399], at end insert—'(13A) Before making an order under subsection (2) appointing a day for the coming into force of section [restrictive covenants affecting freehold property], the Secretary of State shall consult OFCOM and such other persons as appear to the Secretary of State to be appropriate'.
§ Mr. Whittingdale
New clause 12 and the associated amendments relate to the provisions dealing with restrictions in leases and licences. In the main, they are covered by clause 130, which we have not discussed yet because of the Government's timetable motion in Committee.
The new clause and the amendments would extend choice to people who cannot put up satellite dishes or aerials on their properties. At present, many people in leased and rented properties are prevented from 746 obtaining television and telephony services from the provider of their choice because of restrictions in their leases or tenancy agreements. Owners of freehold properties caught by restrictive covenants also suffer from the same problem.
For example, I understand that people living in Milton Keynes cannot put an aerial or satellite dish on their houses, whether they own or rent them. In essence, they are forced to get their television from ntl, the cable company. Milton Keynes residents are thereby denied a choice that they might want to make, and are dependent on one provider. As illustrated by the demise of Aberdeen Cable, when people were left without telephony, that can lead to unfortunate consequences.
Landlords, landowners and property developers sometimes impose the restrictions that I have described, for a variety of reasons. They may consider that installing a satellite dish could damage the fabric of a building, or make that building a less desirable place to live. In other cases, however, the imposition of such conditions may merely be force of habit. Restrictive covenants often find their way into standard leases and other freehold agreements and are put forward by the lessor or vendor, or his solicitors, with no real consideration as to their necessity, only the desire to retain control over the premises.
Obviously, lessees and owners can try to have such restrictions removed, but unless the landlord, or those with an interest in the covenant, willingly agree—in which case, why were the restrictions imposed in the first place?—the process of removing them can be extremely slow, expensive and cumbersome, and might even involve the Lands Tribunal and arcane bits of law.
§ Michael Fabricant
For the exclusion of doubt, will my hon. Friend confirm that the new clause does not apply to conservation areas, such as those in Lichfield and other parts of the country, where, due to the antiquity of the buildings, a satellite dish would be undesirable on the main elevation?
§ Mr. Whittingdale
If my hon. Friend will allow me, I shall deal later with circumstances in which it might be deemed reasonable to apply such restrictions. If it was reasonable, we should certainly not argue for their removal. I hope that provides my hon. Friend with some reassurance.
In general, lessees and owners will want to continue to live in their accommodation so they are not likely to want to upset their neighbours or irritate their landlord by breaching leases or covenants. Given the risks and bureaucracy involved, and the wish not to cause too much trouble, lessees and owners are often denied a choice of supplier for television or telephony due to such restrictions. Indeed, in future that might lead to a challenge under article 10 of the European convention on human rights. That has not yet happened, but it is possible to envisage circumstances in which it might.
Such restrictions could be extremely unhelpful in respect of the Government's declared objective of digital switchover—the time when it will be possible to switch off analogue television. They could also affect another Government objective, which we have just spent considerable time debating, of achieving higher levels of broadband penetration and internet access. For 747 example, if a householder was unable to receive digital terrestrial television and there was no cable in the street, he would be unable to switch over to digital television unless he was allowed to erect a satellite dish.
Although clause 130 deals with those restrictions and it certainly has good intentions, it does not go far enough to give lessees and tenants true freedom, in practice, to choose their television or telephony supplier and to make it easier for them to exercise that choice. In particular, it does not address the issue of restrictive covenants in freehold property. That is the purpose of the new clause.
I also want to speak to amendments Nos. 103 to 110, which relate to the position of lessees. Clause 130 permits lessors not to grant the occupier's request to consent regarding any relevant restriction, provided that the lessor does not act unreasonably. That point deals with the concern expressed by my hon. Friend the Member for Lichfield (Michael Fabricant). It seems an appropriate balance between the rights of lessors and lessees, but how can we determine whether the lessor is acting unreasonably? Subsection (5) addresses that question, but it does not actually specify who should make the determination. The assumption must be that the matter would be for the courts, even though the clause does not specify that. So the result may well be that it is necessary to undertake fairly protracted and perhaps expensive judicial proceedings to secure the lifting of a restriction.
Clause 130 therefore maintains a situation in which the onus is placed on the lessee or tenant to request the lessor's waiver of a restriction. However, it turns an absolute restriction into only a qualified one, the contractual effect of which is that if the lessor withholds his consent unreasonably, it puts him in breach of contract. That does not give the lessee carte blanche to proceed as though the restriction were not there. Instead, the lessee would need to take action against the lessor for breach of contract via judicial proceedings, which, as I have said, could well be protracted and costly. As a result, many lessees may decide that such action is too troublesome to pursue.
We therefore suggest that a simpler and less daunting process is needed, and amendment No. 108 would amend clause 130(5), so that the question whether or not something is unreasonable is determined by Ofcom in accordance with that subsection and, where Ofcom acts, proceedings should not need to take place in the courts. So if Ofcom decided that a lessor has unreasonably withheld his consent, the lessee may proceed as though the consent had been given and that would not put the lessee in breach of his contract with the lessor.
Amendment No. 108 would also amend clause 130(5) to introduce the element of choice of supplier in line with subsection (1). Without that amendment, the lessee could not be denied access to an electronic communications network or service, but he may have no choice at all as to his supplier.
Amendment No. 105 would simplify clause 130(4) in relation to subsection (2) and, in particular, tie subsection (4) to the concept of electronic communication matters. Amendment No. 106 is rather more limited, but it is designed for the same purpose. It would ensure that subsection (4) used the same wording as subsection (2), to which it relates. As I have said, 748 subsection (4) refers to "an electronic communications service", whereas subsection (2) refers to "an electronic communications matter".
I understand that, in subsection (2), it is envisaged that restrictions may apply to a broader range of matters than the choice of service provider, which is dealt with in subsections (1) and (3). Electronics communications matters are defined in subsection (7) and include, for example, the installation of aerials or satellite dishes and associated cabling. In some cases, that will affect parts of a property that are not occupied by a lessee—an issue that is dealt with in subsection (4). So clause 130(4)(b) has to be amended to give practical effect to subsection (2).
Amendment No. 107 would simplify subsection (5), by deleting the duplicating references to electronic communications matters and electronic communications services in paragraph (a) and (b) and tying that subsection to the relevant paragraphs in subsections (1) and (2).
Amendments Nos. 103 and 104 remove the references to "a year or more" in subsection (2). Given that subsection (1) contains no equivalent minimum requirement on the length of the lease in respect of restrictions relating to services, it is difficult to understand why such a requirement should be imposed under subsection (2), which deals with electronic communications matters. It would be helpful if the Minister could explain the rationale for that discrepancy between the two subsections.
As I said at the start, restrictive convenants are often imposed in freehold agreements, and there is no justification in our view to treat them differently from leases. That is the purpose of new clause 12, which would introduce similar arrangements to those in clause 130 to prohibit restrictions in covenants affecting freehold property.
Finally, amendment No. 102 would place on the Secretary of State a requirement to consult those people who appear to be appropriate before clause 130 comes into force. Therefore, I hope that the Government will look kindly on those suggestions.
§ Mr. Timms
First, I wish to say that Government amendment No. 234 will amend the Bill to take account of Scots law, by adding the Scots law terminology in relation to the definition of a lease contained in clause 130.
In relation to the other amendments tabled by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), I shall start by outlining briefly the purpose of the clause. Essentially, it re-enacts, with some updating and improvement, section 96 of the Telecommunications Act 1984, which was aimed at stopping landlords using restrictive terms in leases unreasonably in relation to the running of telecommunications systems or access to telecommunications services by lessees. That provision has now been extended to include restrictions that limit a lessee's choice of electronic communications service provider to their landlord or a person selected by their landlord. It is intended to follow, as far as possible, what is currently provided for under existing 749 telecommunications licences, which will, of course, cease under the new general authorisation arrangements in the Bill.
In relation to tenants' access to electronic communications services, clause 130(4)(a) and (b) deal with restrictive provisions in leases or premises arrangements, as they apply to things done inside a building, or for purposes connected with a provision to the lessee of such services. It is drawn widely to make it unlikely that any kind of electronic communications matter of any relevance to the lessee could fail to be caught by one or other of those subsections. With the amendment to the definition of electronic communications apparatus that I propose to move today, that would include restrictions relating to the installation of apparatus such as satellite dishes when such installation was connected with the provision of an electronic communications service to a lessee. I believe that the clause in its current form is sufficient to ensure that tenants' right of access to electronic communications services, and their freedom of choice in relation to their supplier, is not unreasonably curtailed by their landlord.
Let me deal in a little more detail with the amendments one by one. Amendments Nos. 103 and 104, as the hon. Gentleman explained, would apply the clause to leases or premises-related agreements running for any period of time, as opposed to only those of a year or more. The restriction of a year or more follows section 96 of the Telecommunications Act 1984, which is a reasonable threshold at which the clause should bite. It is consistent with what was on the statute book previously. Under amendment No. 108, the key principle, as the hon. Gentleman explained, would become not just freedom to secure access but freedom of choice of supplier. I am not against the substance of that broader principle, but I am not certain that a change in the principle is needed. The removal of unnecessary restrictions on a lessee's choice of supplier is already adequately addressed in the clause. If I am missing something in that regard, I would be interested to see a little more detail on the issue. The two new subsections added by the rest of the amendment would make a significant change in assigning to Ofcom a role that would otherwise fall to the courts in considering the test of reasonableness. My view is that the courts should consider the test, and that that is not an appropriate role for Ofcom.
Amendment No. 109 directly addresses the concern raised by the hon. Member for Lichfield (Michael Fabricant). It would remove the power that Ofcom has under subsection (6) to exclude any kind of restrictive provision from the scope of the clause. That would be wrong for the reason that he suggested: there could be occasions when restrictions are reasonable, such as preserving the character of a conservation area. No previous experience exists of how these provisions will work, because the provision of the Telecommunications Act on which the proposal is based was never brought into force. Perhaps it would therefore be wise to retain the current flexibility to make exemptions, for the reason that the hon. Gentleman stated, and to see how that works.
750 Amendment No. 110, by deleting subsection (9), would apply the clause automatically to any lease or agreement granted or entered into before the commencement of the section, as well as to new ones. It is an important safeguard that Ofcom has the discretion to determine whether the section should have effect in relation to any pre-existing leases. I therefore suggest that the power needs to be retained.
I can understand why the hon. Member for Maldon and East Chelmsford has proposed new clause 12. It would extend clause 130, which applies to leasehold and similar tenures, to cover any restrictive covenants affecting freehold property. There would certainly be logic in extending the arrangements in that way, but we have to be cautious. Making changes in property law is a hazardous undertaking, affecting the rights of property owners—possibly significantly. Changes made with the best of intentions may have quite unintended consequences. I can understand the argument for making changes, but I am not sure how serious and pressing the issue is in practice. However, if we were to make changes, they would need to be carefully and fully considered and consulted on. The hon. Gentleman may accept that that would take significantly longer than the time that will be available to us during the passage of this Bill.
The hon. Gentleman raises interesting points and there is potential for extension in future. The best reassurance I can give him is that we will review this issue in our review of the working of the new provisions in the Bill.
§ Mr. Whittingdale
I am grateful to the Minister for his response. Of course, I accept that tinkering with property law should be approached with some trepidation—although clause 130 does, in fact, tinker with some property law. If there are problems to do with freeholds and restricted covenants, the Minister may reconsider the issue if we are able to supply specific instances. That also applies to some of the other points in our amendments to which the Minister responded.
I am disappointed that the Minister does not want to streamline the procedure by giving the responsibility to Ofcom rather than the courts. I can understand why he prefers the courts, but there is no doubt that that will act as a disincentive in some ways. Nevertheless, the Minister's remarks have been helpful in clarifying the Government's intentions. At this stage, we will not press this new clause and the other amendments in the group. I beg to ask leave to withdraw the motion.
§ Motion and clause, by leave, withdrawn.