Dáil Éireann debate -
Tuesday, 25 Oct 1966

Vol. 224 No. 13

Landlord and Tenant (Ground Rents) Bill, 1965: Report and Final Stages.

Minister for Justice (Mr. B. Lenihan)

I move amendment No. 1:

In page 4, to delete lines 39 to 52 and to substitute:

"(d) in case the land is a tenement, within the meaning of the Act of 1931, a person who, or whose predecessors in title, has or have been continuously in occupation of the land as yearly tenants during the whole of the period of twenty-five years next preceding the date of the service by the person of a notice under section 4 of this Act in relation to the land at a yearly rent of an amount that, at the date of the service of the notice aforesaid, is less than the amount of the rateable valuation of the land at that date."

The object of this amendment is to meet the case made during the Committee Stage debate. It is a case which, on consideration, I regard as having some validity. It is to extend the category of yearly tenants who can benefit from the right of purchase provisions in the Bill. As the Bill stands at the moment, this right is confined to yearly tenants or their predecessors in title who have been in occupation for at least 50 years at a rent which does not exceed three-quarters of the rateable valuation. In addition, there is a prohibition against any sale taking place in that period. In the proposed amendment, we abolish the restriction in regard to a sale having taken place and furthermore we reduce the 50-year period to 25 years, and raise the valuation from threequarters to the full valuation. This widens the scope of the Bill considerably, extends it further in favour of yearly tenants. In other words, the practical effect is that any yearly tenant who is in possession, whether through predecessors in title or by virtue of a sale, if he or she is in possession for 25 years and the rent does not exceed the valuation, comes within the provisions of the Bill. I think this is a welcome extension and meets the wishes expressed by Deputies on both sides of the House.

Mr. M.J. O'Higgins

I agree that the Minister has endeavoured to meet the various points of view expressed in this regard. This does extend the scope of section 3 of the Bill. I hope he will extend it a little further on the next amendment.

Amendment agreed to.

Mr. M.J. O'Higgins

I move amendment No. 2:

In page 4, between lines 52 and 53, to insert a new paragraph as follows :—

"(e) a person who is in actual possession of land under any lease or sublease made for a term of not less than ninety-nine years at least twenty-five years of which term remains unexpired provided such lease or sublease is not now subject to a rack rent or that the rent has been redeemed whether or not such lease is a building lease or a proprietary lease."

The Minister will recall that during the Committee Stage discussion, I, and I think other Deputies, raised particular cases which are in danger of being excluded, some accidentally, from this measure. The cases I have in mind are cases where the occupier is not in a position to prove that his lease is either a building lease or a proprietary lease and consequently is not able, so far as proof is concerned, to come within the ambit of the Bill. I also mentioned during the Committee Stage discussion other cases where, for example, the rent has been redeemed or where there is no rent in fact at all attaching to premises and where there is no pecuniary interest vested in the landlords possibly for as long as 50 or 60 or 70 years to come. I suggested to the Minister that it was anomalous in such cases that the occupying tenant, who, one might say, is the owner because in some of the cases I have in mind the question of covenants does not enter into it largely at all, should be put in a less advantageous position than a building lessee or a proprietary lessee who might in addition to being subject to ground rent, be also subject to fairly severe restrictive covenants.

Probably the Minister will not mind my saying that I took the opportunity of discussing this amendment with him and I understand there might be opposition to accepting an amendment in this form which refers to rack rent. I am not in any way wedded to this particular wording of the amendment. It is probably true that the Minister, Deputy Ryan, I and other lawyers in the House know what we mean when we talk about rack rent but a person who has not some legal training may be misled by the term. What I am trying to do, if the Minister will agree, is to allow it into the provisions of the Bill where it is clear that there is not a profit rent of some marketable dimensions coming out of the property.

I suggest that where there is no rent at all, where it has been redeemed, there is a clear case for allowing the occupier to cover it. Cases of doubt may arise when people are not sure and are not in a position to prove that they hold under building or proprietary leases, but where the rent payable would leave one to suppose that a ground rent was intended, I am perfectly prepared to adopt the same line of approach as has been adopted by the Minister in the amendment he has moved—to relate the amount of the rent to the rateable valuation of the premises or even to relate it to a proportion of the rateable valuation, if that would fit into the scope of the Bill.

I strongly urge the Minister to accept the amendment either in its present form or as further amended, if that can be done. I have no doubt that the Minister has had approaches made to him regarding the type of cases I have been talking about. The framework of the Bill is to deal with lands and with the rents which are paid on the ground, and it is for that reason only that I drafted the amendment in this form. I wish to make it clear that I am thinking in terms of cases where buildings have been erected and where people who are the occupying tenants at the moment are not in a position to show that their leases are building or proprietary leases. I urge the Minister very strongly to accept this. If he does not like the expression "not now subject to a rack rent", I am prepared to amend it to state "a rent which is less than the rateable valuation of the land".

Mr. B. Lenihan

I should like again to emphasise that the whole question of leases outside those in the category of building or proprietary leases, is under examination by the Landlord and Tenant Commission. I have directed their attention precisely to the line of country covered by Deputy O'Higgins. The question of giving a right to purchase to these lesses is one I have requested the Commission to examine as a matter of urgency and I expect them to report shortly. I can see certain merits in the point of view expressed by Deputy O'Higgins, though I cannot go the whole way with him on the amendment. There is a much broader field to be covered and it is under consideration by the Commission. However, I will consider going some way to meet his point of view by moving an amendment in the Seanad covering lessees as well as yearly tenants so that lessees will have the same right as yearly tenants have under the provision I moved in the previous amendment.

Mr. M.J. O'Higgins

That would meet the case.

Mr. B. Lenihan

It would go a fair bit of the way.

Amendment, by leave, withdrawn.

Bill recommitted in respect of amendment No. 3.

Mr. B. Lenihan

I move amendment No. 3:

In page 5, line 4, to delete "twenty-one" and to substitute "twenty-six".

This is a practical amendment to extend the period of 21 years to 26 years. It has been represented to me that a number of these building and proprietary leases cover business premises, blocks of flats and that sort of development where the normal rent review is at the conclusion of the 25th year. Therefore, 26 years might be more appropriate than 21 years to meet this situation.

Amendment agreed to.

Amendment reported and agreed to.

Mr. B. Lenihan

I move amendment No. 4:

In page 5, line 16, to delete "or".

An Ceann Comhairle

Amendments Nos. 4, 5 and 6 may be taken together.

Mr. B. Lenihan

This is to give effect to representations made by Deputies Moore and Ryan on Committee Stage to ensure that leases of the Commissioners of Irish Lights are excluded from the provisions.

Mr. Ryan

I wish to express gratitude to the Minister for having accepted the request of the Commissioners of Irish Lights. Members of the House might wonder what this is all about. At the moment, the Commissioners of Irish Lights may grant leases of some land which formerly has been used for the purpose of erecting lighthouses and the provision of assistance to shipping around our shores. The Commissioners can give leases of such lands because, with modern development, there does not appear to be a need to use the land for that purpose. All of these leases contain a covenant that if the land should ever be required by the Commissioners for the protection of shipping around our shores, the land would be ceded by the leases back to the Commissioners. The effect of the amendment is to continue the right of the Commissioners of Irish Lights to benefit by this convenant for the continued protection of shipping around our shores.

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 5:

In page 5, between lines 16 and 17, to insert the following :

"( ) a lease made by the Commissioners of Irish Lights, or".

Amendment agreed to.

Amendment No. 6 not moved.

Mr. B. Lenihan

I move amendment No. 7:

In page 5, between lines 52 and 53, but in section 3, to insert the following :

"( ) Where—

(a) a building lease or a proprietary lease expired within five years before the commencement of this Act,

(b) the person who held the land to which the lease related under the lease is, at such commencement, in possession of that land under a yearly tenancy arising by implication from the acts of the parties or as a tenant at will or without obtaining a new tenancy, and (c) no person is, immediately before such commencement, entitled to be granted a reversionary lease under the Act of 1958,

the person shall, during the twelve months immediately after the commencement of this Act, have the same rights in relation to the acquisition of the fee simple in the land under this Act as he would have if he were entitled to be granted a reversionary lease of the land under the Act of 1958."

An Ceann Comhairle

Amendments Nos. 13 and 24 may be taken with amendment No. 7.

Mr. B. Lenihan

These amendments are designed to meet a point made by Deputy O'Higgins on Committee Stage. They cover the case where a building lease or a proprietary lease expires within five years before the commencement of the Act. The amendments give the lessee a right to acquire the fee simple for a period of 12 months after the commencement of the Act. That is in amendment No. 13 and meets a practical point. Amendment No. 24 cures a defect in the 1958 Act by making it necessary for the landlord to serve notice of termination not earlier than three months before the lease expires. Deputy O'Higgins brought this to my notice on Committee Stage. At the moment the landlord may serve this notice up to 15 years before the lease expires. This amendments makes it necessary for him to serve it no more than three months before the lease expires. Amendment No. 24 is consequent on amendment No. 7.

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 8:

In page 5, lines 56 and 57, to delete from "and upon" to the end of the section and to substitute ", upon every (if any) person who is, in relation to the land, his superior lessor and upon every (if any) person who is the owner of an incumbrance thereon."

This is a matter I have considered since Committee Stage. It refers to the service of notice on the person concerned. Its practical effect is to ensure that the persons on whom notice must be served under section 6 will include the owner of an incumbrance as well as the lessor so that they will all have to join in the conveyance of a clear fee simple. This was not clear as it stood in the Bill.

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 9:

In page 6, line 29, to delete "of" and to substitute "in".

This is a drafting amendment.

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 10:

In page 6, between lines 36 and 37, but in section 6, to insert the following subsection :

"( ) In subsection (1) of this section `incumbrances' does not include a mortgage or charge on the interest of the person proposing to acquire the fee simple, and, upon conveyance of the fee simple in land to a person who is acquiring the fee simple therein under this Act and whose previous interest in the land was subject to such a mortgage or charge, the mortgage or charge shall, if it has not been extinguished, be deemed to be a mortgage or charge on the fee simple in the land."

This again is a clarifying amendment to remove doubts. It makes clear that where the purchasing lessee's interest is mortgaged, there is no need for him to discharge the mortgage before he acquires the fee simple. As the section stood, there were certain doubts in this regard.

Amendment agreed to.

Amendment No. 11 not moved.

Mr. B. Lenihan

I move amendment No. 12 :

In page 10, line 5, after "rent under" to insert "or for the purposes of".

This is a drafting amendment.

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 13:

In page 10, line 7, to delete "24 to 28" and substitute "25 to 30".

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 14:

In page 10, line 21, to delete "and".

An Ceann Comhairle

Amendment No. 15 is consequential on No. 14 and the two may be taken together.

Mr. B. Lenihan

This again is a matter of clarification. It is to make sure that the county registrar will have the power to make any apportionment he may wish for the purposes of the Act. This right is given in general terms in section 17 (1) but we want to make it clear that he has this power. The need will arise in many circumstances.

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 15:

In page 10, to delete lines 22 to 24 and substitute:

"( ) determining if a person is entitled to have a rent apportioned under section 5 or 11 of this Act, and

( ) apportioning (whether under the said section 5 or 11 or otherwise for the purpose of this Act) any rent payable in respect of land part of which is land the fee simple in which is being acquired under this Act."

Amendment agreed to.

Bill recommitted in respect of amendments Nos. 16, 17 and 18.

Mr. B. Lenihan

I move amendment No. 16:

In page 10, lines 40 and 41, to delete "paragraph (b) of this subsection" and insert "paragraphs (b) and (c) of this section".

An Ceann Comhairle

Amendments 16, 18 and 20 may be taken together.

Mr. B. Lenihan

The effect of these amendments is to insert a new paragraph in section 18 of the Bill, which contains the provisions in relation to determining the purchase price of the fee simple. It covers the case where one of the superior landlords who is obliged to extinguish a rent or charge in order to give the leaseholder the full fee simple is himself required by statute to extinguish that rent or charge on particular terms. In such a case, it is reasonable that allowance be made for that fact in determining the purchase price.

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 17:

In page 11, to delete lines 25 to 31, and to substitute:

"(b) if the land—

(i) is not used for the purposes of business,

(ii) is held by the person acquiring the fee simple under a yearly tenancy or a lease which will expire twenty-five years or more after the date of the service of the notice under section 4 of this Act in relation to the land, and

(iii) does not exceed one acre in area,".

The object of this amendment is to exclude from the automatic maximum price premises used for the purpose of business. I am satisfied from fairly detailed investigation into this matter that considerations apply to business premises which are very varied. They differ in regard to location, in regard to goodwill and so on, and it would be unfair to apply to business premises the maximum criterion which will be applied to residences. In the case of business premises where there are these variable considerations it is much better to allow the arbitrator to decide having regard to the circumstances of each case as it appears to him. I was in favour of the more fixed system but on full reconsideration I think it is better to allow business premises to be considered on the merits of the case.

Mr. M.J. O'Higgins

Possibly I mentally shortcircuited what the Minister had intended. When I read this provision originally in the Bill, I took it for granted it was intended to apply only to the private residence type of case. I did not appreciate it was intended at any time, either deliberately or accidentally, to cover business premises. I think the Minister's approach to this amendment is the right one. There will be a whole lot of considerations which would be special to business premises, and I do agree that in those circumstances it is better to leave such matters open to arbitration, in default of agreement, rather than try to fit them into this section dealing with a fixed maximum. As I say, I thought that was the position.

An Ceann Comhairle

There is an amendment to amendment No. 17 in the name of Deputy Seán Dunne.

Mr. S. Dunne

I move:

In subparagraph (ii) to delete all words from and including "or a lease" down to and including "to the land".

I was not aware the Minister had put down an amendment to the section, and that is the reason why it appears as an amendment to an amendment. My purpose in putting down this amendment can best be clarified by my reference to a communication which I have had from a constituent who feels he is very much affected by this Bill and who feels he is aggrieved by its present form. In the course of a letter, he states:

...My lease has four years to run. Accordingly the protection afforded to tenants by the Bill that the purchase price to by out the ground rent cannot exceed a certain number of years purchase of the present ground rent does not apply to me—because my lease has less than 25 years to run. I will first have to negotiate a new ground rent which will be the determining factor. The landlord who will be aware that I am getting out will as I see it be out to exact the fullest pound of flesh and accordingly I see a worsening of conditions for the small group to which I belong. In other words if this Bill never came along the landlord would likely be far more lenient in four years time than now. My present ground rent is £11 15s which they would hardly have stepped up to more than £14 even though they might legally have gone as high as £30. They will, I am afraid, exact the full legal right henceforth.

By "they" I presume he means the landlord. I have put down my amendment in order to try to meet this man's position and the position of those like him, who, I am inclined to agree with him, are probably relatively few, but none the less very important. The law must be made applicable justly to all citizens, in so far as that is humanly possible, regardless of whether they are numerically in the majority or in a minority of one.

My correspondent goes on to inquire if it is possible to eliminate the distinction between the tenant whose lease has less than 25 years to run and the tenant whose lease has more years to run and he says:

In a way, the tenant who has less should be entitled to any preferential treatment that is going as the fact that he has less than 25 years to go establishes that he or those who went before him have been paying the ground rent for over 75 years. In my case the estate have been collecting for 96 years and I am to be put in a very worse position than if the estate had been collecting for 75 years or less.

The Minister may argue that the tenant is protected by the terms of section 18 as to the factors that must be borne in mind in determining the new rent but clearly the very fact that the Bill excludes the "less than 25 years to run" group from the maximum purchase price fixed for the "25 years and over" group makes clear that the Minister feels that the under 25 years man should be charged more.

He also inquires, if it is impossible to meet this small group fully and to accord them justice, could there not be some effort by the Minister on this occasion to deal with the problem with which he will be confronted.

There is a great deal of justice in what this man has to say and I should like the Minister to consider it. It may be that the form of my amendment is deemed to be too sweeping to cover such a limited section of the community. I put it down in order to get the opportunity of bringing this kind of case to the Minister's notice. I do not believe the Minister wilfully wishes to impose a hardship on this section of the people but, if we let the opportunity of this Bill go by without taking all possible steps open to us to protect the interests of leaseholders, including leaseholders such as this man who has been a long time in possession of the property and whose people before him have been paying ground rent, and if we do not take this opportunity to endeavour to deal with such cases equitably, it may be a long time before we get another opportunity of discussing them. Indeed, legislation affecting property comes under consideration in this House only at considerable intervals of time.

It may be that none of us will be taking much interest in the affairs of Dáil Éireann when the next Bill to deal with this kind of problem comes before the House. Therefore, it behoves us to take all possible precautions to make the instrument as perfect as it is possible to make it bearing in mind at all times the fact that it is not within human competence to make it completely and absolutely perfect and to ensure that it will cover every conceivable situation or problem.

I would urge this case upon the Minister. Since the number of persons affected would not be very large and as it would appear that this group of persons have a legitimate claim here, leaving aside the wording of my amendment, the Minister with his officials should seek to get legal verbiage which would cover what I am trying to provide.

Mr. B. Lenihan

I can see Deputy Dunne's point on behalf of tenants in this situation but my job in this Bill is to do justice to all sides and to seek to have enacted a measure which does justice to all sides. There is also the other side of the case. In any case where there is less than 25 years to run there is an obvious equity residing in the landlord. If this measure never came before the House, he or his successor would have a very definite right in regard to renewal of the lease in respect of which he could ask for a considerably increased rent under the various landlord and tenant provisions which are already law, a rent which would be far above the present rent. This is a right which resides with the landlord. This equity has a present value which depends on how far away the reversion is. The figure must be put somewhere. All the expert advice is that it should be put at 25 years. The Landlord and Tenant Commission recommended 25 years. Deputy Dunne would suggest some lower period. There must be a period of time within which you recognise that definite rights and a definite equity begin to accrue to the landlord, that any landlord in contemplation of property with less than 25 years to run has got a definite stake in the property. Under the law as it stands he can demand a renewal rent away and above the present rent and, having regard to this right, he has a certain claim to ask for reasonable compensation if the fee simple is bought by the tenant.

As Deputy Dunne is well aware, we are not seeking to deny the tenant this right of purchase even where there is less than 25 years to run but what we are doing is making him come within subsection (a) of section 18, so that the county registrar can arbitrate the case fully, hear what the present value of the landlord's reversionary interest in the property is, hear the tenant's side and, on balance, having heard both, decide what is the appropriate compensation. If the landlord demands unreasonable compensation, then the costs can be awarded against him under this section.

I think there is a definite distinction between the type of person mentioned by Deputy Dunne and the person who is lessee with more than 25 years to run. We have to draw the line somewhere, whether at 50, 30 or 25 years. Twenty-five years is the period recommended by the Commission. I think it is a sensible recommendation. Once having drawn the line there, we say that everybody with more than 25 years to run has an absolute right of purchase subject to the maximum price, related to the yield of certain securities, of 14.8 years purchase but, under 25 years, we say that in some cases which might arise, where there is a particular interest by the landlord, a particular expectation, a particular goodwill attaching to the premises, it might not be equitable that the 14.8 years provision should apply. On the other hand, I am certain that there are a number of cases, possibly including the case mentioned by Deputy Dunne, where the County Registrar looking at the circumstances might award 14 years purchase, or something of that kind. The County Registrar, having considered all the facts, the nature of the property, the location of the property, whether the landlord was at any great loss in taking the compensation which we have provided under (b), might award 14 to 15 years purchase. It should be left open to the County Registrar, the arbitrator decreed under the Bill.

We are giving a new right to this lessee. I think Deputy Dunne is wrong if he thinks that this Bill is prejudicing the lessee he has mentioned. He now has a right to purchase the fee simple. We are giving it to him. All we are saying is that where there is less than 25 years to run the landlord has a very definite stake in the property, an expectation in the property and, in that sort of case, by reason of the nature of the property, it might happen, if this expectation has a present value, that the landlord, in justice, would be entitled to more than 14.8 years purchase. We are saying in all these cases that the matter be left open to the arbitrator.

However, there are merits in what Deputy Dunne says. I listened closely to the letter he read to the House and I will have a closer look at it between now and the Committee Stage in the Seanad. At the moment on balance I am against the point of view put by him. However, I will have a closer look at it to see if we can find a way around it, but I cannot give an undertaking at this stage. There is "for" and "against" the point of view. I have put the "against" and he has put the "for". However, I will look at it between now and the Committee Stage in the Seanad.

Mr. S. Dunne

Thank you.

Amendment, by leave, withdrawn.

Amendment No. 17 agreed to.

Mr. B. Lenihan

I move amendment No. 18:

In page 11, line 32, before "the purchase price" to insert ", subject to paragraph (c) of this section".

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 20:

In page 11, line 44, after "land" to insert ", and

(c) where the cost of extinguishing a rent or charge out of or on land the fee simple in which is being acquired under this Act is fixed by statute, allowance shall be made for such cost in determining the purchase price of the fee simple under this section".

Amendment agreed to.

Amendments Nos. 16, 17, 18 and 20 reported and agreed to.

Amendment No. 19 not moved.

Amendment No. 21 not moved.

Mr. B. Lenihan

I move amendment No. 22:

In page 13, line 22, after "post" to insert "and, if so effected, shall be by registered post".

This is a minor amendment of subsection (1) of section 23 which proposes that notice served by post, as the section stands, should be notice by registered post.

Mr. M.J. O'Higgins

What is the particular merit of that?

Mr. B. Lenihan

Precisely because Deputy Tully wants it.

Mr. M.J. O'Higgins

You can prove acceptance of a registered letter?

Mr. B. Lenihan

Yes.

Mr. M.J. O'Higgins

Is there any merit in further expanding it and saying it should be done by prepaid registered post? That is the ordinary form in the Rules of Court, I think. I am open to correction, but I think it is normally prepaid registered post.

Mr. B. Lenihan

I will look into that. Possibly it should be. It is an interesting point.

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 23:

In page 13, between lines 25 and 26, to insert:

"(1) For the purposes of the application of section 3 or 11 of this Act or section 11 or 12 of the Act of 1958 to a person in relation to any land, the existence of a mortgage on the interest of the person in that land shall be disregarded.

(2) Where—

(a) either before or after the commencement of this Act, a lessee executes a mortgage by subdemise of the whole or part of the land comprised in his lease, retaining a nominal reversion therein, and

(b) either before or after such commencement, the land comprised in the subdemise is sold for the enforcement of the mortgage, the purchaser shall, for the purposes of this Act, be deemed to have acquired the interest of the lessee in the demised land for the entire of the unexpired term of the lease, including the period of the nominal reversion."

This is a new section after section 23. It relates to mortgages. Subsection (1) of the new section is a "removal of doubts" provision which continues the existing practice of disregarding the existence of any mortgage on the interest of a lessee when the time comes for him to apply for a reversionary lease and to extend that practice to lessees who are buying out the fee simple under this Bill.

Mr. M.J. O'Higgins

This is to meet the point I raised?

Mr. B. Lenihan

Precisely—subsection (2) is.

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 24:

In page 13, between lines 25 and 26, to insert:

"(1) Section 11 and 12 of the Act of 1958 are hereby amended by the substitution in subsection (2) of each section of `three months' for `fifteen years'.

(2) Subsection (1) of this section shall not have effect in relation to a case where a valid notice under subsection (1) of the said section 11 or the said section 12, as the case may be, was served before the commencement of this Act."

Amendment agreed to.

An Leas-Cheann Comhairle

Amendments Nos. 25 and 26 are related and may be discussed together.

Mr. B. Lenihan

I move amendment No. 25:

In page 14, line 47, after "insurer" to insert "or through a specified agent".

These amendments are mainly of a drafting character. As section 28 stands, it enables covenants in a building or proprietary lease to insure the property with a particular insurer to be varied. These amendments make it clear that the power given by the section to vary covenants to insure with a particular insurer will apply also to covenants to insure through a particular agent. It spells out that the property must be insured with an insurer who is licensed under the Insurance Act, 1936. This, again, is a clearing up amendment.

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 26:

In page 14, line 50, to delete "with any insurer" and to substitute ", either directly or through any agent, as the case may be, with any insurer who is for the time being the holder of an assurance licence granted under the Insurance Act, 1936".

Amendment agreed to.

Mr. M.J. O'Higgins

I move amendment No. 27:

In page 14, line 54, after "lease" to insert:

"or relates to land or premises occupied by others holding as lessees or tenants of the owner of the lessors interest".

This amendment is to meet a particular set of circumstances that can arise. I had an amendment down on Committee Stage but for some reason I was not able to move it, although I dealt with the remainder. Section 29 states:

Where the fee simple in land demised by a lease containing a covenant, condition or agreement which protects or enhances the amenities of any land occupied by the owner of the lessor's interest in the lease or relates to performance of a duty imposed by statute on such owner or to a right of way over the land is acquired under this Act...

The section goes on to say that these covenants will remain notwithstanding the purchase out of the fee simple by a tenant. In other words, the position is to be that, if there are covenants in the lease which enhance in some way the amenities of the land and the lessor's own property, those covenants are going to remain. I think it is quite right that they should. I am not criticising that, but what I am concerned about is the circumstance which can arise where the lessor in his lease has himself entered into a covenant with the lessee, where there may be two, three or four different lessees all with a common lessor or where you have a covenant entered into by the lessor with lessee A in order to protect the positions of lessees B, C and D or that there are covenants entered into by the lessor with lessee D which are designed to protect him vis-à-vis lessees A, B and C. I know it sounds a bit complicated but I am quite sure the Minister is able to grasp it.

What I am aiming at in this amendment is to ensure that in those circumstances, not only will the convenants which are designed or are necessary to protect the lessor's position remain, but also covenants which enhance or protect the rights of other lessees under a common lessor. I am suggesting we should insert after the word "lease" the following "or relates to land or premises occupied by others holding as lessees or tenants of the owner of the lessor's interest."

There is a simple way of explaining this. Although it is not particularly relevant to a discussion of ground rents, it illustrates the case I have in mind. The Minister will be aware that very often where new shopping centres are created in new building estates, the developer or the builder is the lessor. He allocates three or four or half a dozen shops on the estate for the purposes of different businesses. In each case he enters into a covenant with the persons concerned. For example, he enters into a covenant with the person taking the drapery shop that he will not create a lease of any other shop in which he will permit the drapery business to be carried on, and so on in the case of the butcher and the chemist. Each has the protection of a covenant with the landlord which ensures for them that theirs will be the only shop of that particular type to be carried on in the particular shopping centre.

I know that that kind of lease is not in question here but it does serve to illustrate the kind of case I have in mind, where you have a common lessor who has given leases to a number of different lessees at a ground rent and who has in those leases covenanted with each individual lessee in some way to protect that lessee or that lessee's interest. It may be against putting up buildings on adjoining land or it may be against allowing adjoining land to be used in a particular way. Whatever the covenant is, if there is a covenant of that sort given by a common lessor to two or more lessees, it is important that, in this legislation, we should protect the position of the lessee who is entitled to the benefit of that covenant. If we do not, then the neighbouring lessee who holds under a common title may be enabled to buy off fee simple and kill off whatever covenants are there.

I know that the matter is fairly complicated and possibly the Minister would like to look a little more closely at it. I feel it is something we should be on our guard against, something that needs protection by way of amendment. If the Minister feels he can agree in principle with me and would like to look at it himself and deal with it himself in the Seanad, I shall be quite happy.

Mr. B. Lenihan

It is a question of balance. One of the main attractions in the Bill is that these amenity covenants, subject to the reservations in section 29, will go. This is the whole thinking behind it. I know what the Deputy is driving at. Deputy O'Higgins mentioned a case where a man was being restricted from having a certain type of business by virtue of a lease covering a whole developed area. For instance, if he were a butcher, he was restricted under the lease from opening a licensed premises. I do not see why such a restrictive covenant should not go. I know it may affect other people in the area but business is business. This is a freeing-out so that restrictive and amenity covenants will go.

Mr. M.J. O'Higgins

I am talking about a covenant by the landlord. Suppose a landlord has undertaken the upkeep of a particular park or crescent in a residential area. That is a covenant which, as long as the lease continues—there might be several lessees—the landlord is obliged to perform. If we allow the continuance of covenants to protect amenities of the landlord, we should also ensure continuation of covenants by the landlord for the protection of amenities of the tenant.

Mr. B. Lenihan

I shall have a look at that but the thinking behind the Bill is that town planning should take care of it. As far as the tenants are concerned, covenants in relation to the keeping of a place in proper order—the very restrictive covenants that may be incorporated in a lease— should be the subject of planning legislation.

Mr. M.J. O'Higgins

Alteration of user or character of a premises but not, for example, the upkeep of a park, and so on.

Mr. B. Lenihan

I take it that the Deputy's case is that in sections 28 and 29 we are making provision for amenity for the landlord's benefit but according to the Deputy, we are not making provision for the benefit of the other tenants in the area. I shall have a look at it in the Seanad.

Amendment, by leave, withdrawn.

An Leas-Cheann Comhairle

Amendments Nos. 28, 29 and 30 are cognate and might be taken together.

Mr. B. Lenihan

I move amendment No. 28:

In page 14, line 55, after "land" to insert "demised by the lease or a right of drainage or other right necessary to secure or assist the development of land other than the land demised by the lease".

Section 29 continues in operation certain covenants affecting the fee simple acquired under this Bill, when enacted. The amendment is a desirable extension of this list of covenants. It is desirable that a right of drainage or other rights necessary to secure the development of land should survive the fee simple. Drainage, or any development of that kind, is a matter of common interest to a whole area.

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 29:

In page 15, line 4, before ", by" to insert ", right of drainage or other right aforesaid".

Amendment agreed to.

Mr. B. Lenihan

I move amendment No. 30:

In page 15, line 7, to delete "relates to a right of way" and to substitute "does so relate".

Amendment agreed to.

Bill recommitted in respect of amendment No. 31.

Mr. B. Lenihan

I move amendment No. 31:

In page 15, line 10, to delete "(unless the parties to the lease agree otherwise in writing)".

This is an amendment which has strongly been urged on me by the Incorporated Law Society. I do not think it is all that important, candidly, but this is the way they want it. I do not see any objection in principle to a clear abolition of the present practice.

Mr. M.J. O'Higgins

As the section stands at the moment, it reads:

(1) Notwithstanding any rule of law, a party to a lease shall not (unless the parties to the lease agree otherwise in writing) be under an obligation to pay the solicitor's costs of the lease of any other party to the lease.

The present position, as I understand it, is that if the agreement is silent, the lessor can then automatically claim that the cost should be paid. The Minister was going some distance to alter that. He was reversing that position unless there was an agreement in writing. I understand that the Incorporated Law Society are urging on the Minister that there should be a complete reversal of the position, without the option: in other words, that you cannot opt out of this section and that the parties cannot hereafter agree that the lessee will in a particular case be responsible for the lessor's costs. If that is their view, I disagree with it. I think the Minister's section as it stood was better.

Mr. B. Lenihan

I thought so myself.

Mr. M.J. O'Higgins

I do not think we should limit the right of people voluntarily and freely to enter into their own contracts. I can appreciate the point of view which probably motivated the Incorporated Law Society in their representations to the Minister. I can appreciate the point of view which regards the lessee as necessarily being in the weaker position, as being the supplicant who is looking for the lease and that the lessor is consequently in a position to impose his conditions. I think the Legislature would be going far enough if they stopped the present position where lessees are, so to speak, inadvertently trapped into paying the lessor's costs— it is not that they are trapped in a positive sense but if the agreement is silent on it, then that silence is taken as consent and the lessee is required to pay the lessor's costs. If that were altered as the Minister had suggested, it would be better. I say that, even though the representation has been made by the Incorporated Law Society. I do not know their reasons for making it.

Mr. Booth

In view of the fact that neither the Minister not Deputy O'Higgins seems very happy about this amendment, I find myself in some difficulty, but I think there is something in the amendment. I tend to support the Law Society's view. As Deputy O'Higgins said so very clearly, the lessee is the suppliant, the person who is in the weaker position, and the provision, as originally drafted leaves the lessor in a position in which he will be able to put pressure on the lessee to pay his costs. I should imagine, though I have no definite information on this, that the intention of the Law Society was to ensure that the costs of the lessee would be very substantially reduced. It has always seemed unjust to me that a lessee should pay the lessor's costs. Under the provision as drafted, there would definitely be a temptation to a lessor to make it a term of the original contract that, if one accepts this lease, it will be on the basis that one will pay the lessor's costs. Even if the Minister and Deputy O'Higgins do not support this amendment, I do.

Mr. M.J. O'Higgins

I will not fall out about it. I am merely giving my own point of view. Like Deputy Booth, I understand the reasons behind this and I think it is just as well the Minister should make the matter clear. This shows how the Incorporated Law Society look after the interests of the ordinary member of the public and not just their own interests.

Mr. Booth

Exactly.

Mr. M.J. O'Higgins

I think this is very desirable, but my personal view is that it is better to leave freedom for agreement and negotiation.

Mr. B. Lenihan

That is my view also. I liked the section as it stood. To me it seems to be six of one and half a dozen of the other.

Amendment agreed to.

Amendment reported and agreed to.

Bill, as amended, received for final consideration.

Question, "That the Bill do now pass" put and agreed to.