Agricultural Credit Bill, 1977: Report Stage (Resumed).

Debate resumed on amendment No. 17:
In page 25, between lines 36 and 37, to insert the following:
(4) The Corporation shall not demand a charge prior to or in preference to an existing charge or burden on the folio where the said burden or charge creates rights relating to rights of residence, maintenance and support in favour of the father or mother of the borrower.".
—(Deputy Enright.)

When speaking to this amendment Deputy Enright referred to a very important point. He was instancing the case of a person signing over his holding to a son who was to be married shortly. The Deputy talked of a charge being put on the folio for the owner and his wife stipulating that they would be housed and maintained in the home by the son for the rest of their lives. As I understand it, Deputy Enright is proposing that in the event of a loan being applied for subsequently the ACC would give the full amount and only take a second charge on the holding, giving the father and mother the first charge. I was endeavouring to point out to the Deputy that, although I agree with him, I do not consider his proposal to be capable of implementation.

We had reached the stage of removing the house from the farm. Again, I find I am beating my head against a stone wall here. If a son to whom a place is being transferred applies to have it subdivided—taking the house separately from the farm—the farm is in his name then and is free of any other claim on the folio. However, it is usually provided in the transfer that the parents are to be supported; but if a son is reckless or for some other reason decides to sell the place, he cannot sell the house. But, having sold the farm, how is he to maintain his parents? On reaching 55 people are encouraged to transfer their holdings, but I cannot think of anyone in that age group who would be prepared to do this in the knowledge that, should the transferee sell the farm, there would be no income from which to maintain the parents.

I do not believe that the ACC are insisting on parents releasing their charge. I have never come across a case of this. Neither have I come across a case of the ACC insisting on a place being sold. I cannot envisage the corporation looking for a first charge and excluding the parents' rights to residence and support. If they should act in this way there would be no loans because the parents would not relinquish their rights.

Much as I would like to support the Deputy, the amendment is not practical. We must rely on the common sense of the ACC. So far as I know they are always reasonable to deal with and have no wish to sell out anybody.

Deputy Enright's amendment would seem to be in conflict with the argument put forward by Deputy Fitzpatrick. His argument was that there be no right to mortgage in the event of their being a charge on the folio, but Deputy Enright is suggesting that the ACC give a loan without having first charge on the folio. I am not a lawyer but I speak from practical experience; and my experience of the ACC is that if one approaches them for a loan and can produce the deeds of his holding, he will get the loan but the corporation will have first charge and that all other debts must be cleared. I have never heard of the corporation asking whether one's parents had a charge against the folio.

I would not wish to see a situation in which the ACC would refuse any loan because of there being a charge on a folio. Deputy Fitzpatrick differs with me on that. We are dealing with a very complicated matter about which lawyers could argue for a long time so we should be careful not to go into too much detail. I cannot see how an arrangement could be reached whereby a house could be separated from a holding as such and that a separate charge for the house be put on the folio. It is obvious that parents could not be supported by way of the house alone. If they had no charge on the farm their rights to maintenance would be nil. That is the reason why I think Deputy Enright should withdraw the amendment.

I should like to commend Deputy Enright's amendment to the favourable consideration of the Minister. The amendment is designed to encourage something which all sides of this House are anxious to encourage, namely, the transfer at the earliest feasible time of the effective ownership and management of a farm from a father to his son or daughter. It is well known in Ireland that the age of succession is late, too late, indeed, for the best benefit to be obtained from the land by the people of Ireland. The encouragement of such a development is obviously facilitated if there are safeguards for the parents who are transferring the land as to their ability to continue living in the family home after they have transferred the ownership in legal terms of the home and the surrounding farm to their son or daughter as the case may be.

Deputy Enright's amendment is designed to deal with the problem wherein this right of residence could be undermined by a charge being given against the entire holding, both the land and the house, by the son who subsequently succeeded, in the event of his being unable to meet his liabilities under the loan whereby the whole place would be sold, including the house, and the right of residence which the son had originally granted to his parents would be set at naught.

For this, of course, to happen requires three conditions to be fulfilled: firstly, that the land was transferred from father to son subject to right of residence; secondly, that the son takes out a loan from the ACC and the ACC get a charge against the whole holding, including the house; and thirdly, that the son fails to pay the loan for one reason or another and the whole place has to be sold. These three conditions have to be fulfilled before the problem mentioned by Deputy Enright arises. So, it will not be something that will happen every day. Deputy Callanan may not be aware of a case in his own constituency, although I acknowledge his experience in this matter is very wide indeed and I do not think his lack of formal training as a lawyer is any disability to him in helping people or contributing to debates in this House on legal matters.

Deputy Enright's amendment seeks to prevent the ACC from including the house in which there would be right of residence amongst the items which would be subject to this charge and which could be sold forcibly by the ACC, thereby, if you like, underwriting the right of residence that may be given by a son to his father, and in the case of a father transferring, subject to right of residence, to his son, even if he wanted to, he could not create a situation in which that right of residence would be undermined by its becoming subject to a prior charge in favour of the ACC. That is basically what the amendment is doing—in other words, giving parents an additional assurance that their right of residence is being copper-fastened and cannot be undermined by any subsequent agreement by the son in relation to mortgaging the place to the ACC.

Deputy Callanan made the point with some force as to how could one make this work, because to do it, he claimed, one would have to create a separate folio for the house at the time the ACC loan was originally being negotiated. This, I gather, is the case that Deputy Callanan is making. I do not believe that that would be necessary. This is something that would not necessarily happen. It would only happen if the son defaulted on the loan, and that would be very much a minority of cases. The necessity for a second folio will occur only if the place has to be sold in a forced sale. It would never be created at the time the original loan was being negotiated. I know that it is quite common for separate folios to be created relatively quickly for plots on areas of land for, for instance, a house to be built. It should not, therefore, be very difficult for a folio for an existing house to be created separate from the folio for the total farm, if the eventuality were to arise that the place had to be sold forcibly, so as to enable it to be sold separate from the house, thereby preserving the right of residence.

The Deputy raised the problem as to how the son could maintain his parents in the home if he no longer had the farm. I would respectfully submit that that is a separate problem. We are talking here, not about maintenance, but about right of residence

And maintenance as well. Both are mentioned in the amendment.

I accept the correction

Maintenance and support.

I submit that in any event they are separable and that it is possible, for instance, to have an amendment, if one believes, as Deputy Callanan submits, that without the farm the son would be unable to maintain and support his father or mother and there would be no real property with which he could do that. It should still be possible to preserve the right of residence, which in many cases is what is most important to parents more important than the right of maintenance because the right of main tenance, even if it is being enforced probably creates means which disqualifies the parents or prevents them getting full rate of old age pension. So if they lose the right of support, they possibly can gain in terms of the old age pension they will get, if it is a non-contributory pension. On the other hand, if they lose right of residence, there is no way that can be compensated for by the State. I would submit that, certainly, as far as the amendment is concerned with the right of residence, it is quite possible and desirable to separate that right and the house from the land to be charged In so doing one would encourage parents to pass on their farms to their sons at an earlier age than otherwise they would.

There may be some doubt as to how maintenance and support could be met in this case but I am sure the Minister will be in a position to deal with that. Deputy Enright will be replying when the Minister has again spoken and he probably will be able to make the case there too. I would ask the Minister to consider the amendment favourably.

There is quite a lot of confusion in the Deputies' minds when they talk about the reasons for this amendment. If they read the section and properly understood it, they would realise that what we are trying to do is to facilitate the very people talked of in Deputy Enright's amendment. Where there is a charge registered on the basis of residence or maintenance or support on the folio, we are now enabling the ACC to give a loan with only second priority charge. That still remains as a first priority. So, there is a lot of confusion in that regard.

What is being talked about by Deputy Enright and the others is a valid point in relation to the alleged practices of the ACC. I do not have any knowledge of the ACC demanding, where these priority rights exist, that they should be foregone in favour of the ACC before they grant a loan. If that has been the case, the ACC have not the authority to demand such a priority. This Bill does not give them that authority and we would not condone it. If we are made aware of situations where this practice is followed by the ACC, we will ask them to cease that practice. It would be our intention that as much land as possible is passed from the older generation to sons and daughters and that there would not be confusion as to their rights. Any involvement with the son or daughter would not in any way interfere with those rights through dealings with the ACC in regard to a loan. This section specifically states that where such rights exist the ACC can give a loan and be satisfied with second charges. The main purpose is to facilitate people such as those mentioned by Deputy Enright and other speakers.

There is no necessity for this amendment. If this practice is being carried on by the ACC, it is not our intention that it would be so; we do not condone it and we would ask them to cease. It is our wish that elderly people who own land can in all fairness pass it on without interfering with the ability of a son or daughter to obtain finance from the ACC or from the recognised banks. The amendment is not necessary and I do not accept it.

The Minister has stated that the ACC would agree basically with the sentiments expressed in my amendment. He went on to state that it is not the wish of the ACC to request borrowers to ask their parents to forego their claims. He also stated that the ACC would not condone the practice whereby borrowers would put pressure on their parents to take second charges. He concluded by saying that he is not agreeable to the amendment. Having made the first three statements, the logical follow-through would seem to have been that after consideration the ACC would agree to this amendment.

There is no necessity for it.

If the ACC wish to ensure that this practice does not continue, surely this should be incorporated in the Bill. I dealt at some length this morning with the history of the situation. I gather from the contributions of various speakers that it is believed that the ACC are not requesting people to forego their rights and are not requesting farmers to have their parents accept a second charge, thereby granting the ACC the first charge. I believe it is generally accepted throughout the country that a considerable number of applicants receive loans on these terms. This is normal practice. I am in a minority of one in the House in saying that this is standard practice at present.

I have the greatest respect for the views of Deputy Callanan and his contributions on this Bill, as on all agricultural matters, are to be listened to and studied. Much thought goes into the preparation of them and he has had years of experience. On this matter I must say that it is the practice that people have to forego their rights and take second charges. I accept the point in regard to opening a second folio, thereby separating the house from the lands. If we take the case of a 75-acre farm and dwelling-house there is no problem in separating the dwelling-house and half an acre of land from the farm itself, leaving the 74½ acres on the original land certificate and opening a second folio for the dwelling-house and the half acre. There is no problem whatsoever. The Land Commission and the Department of Agriculture have accelerated the process. It is not necessary to get the consent of the Land Commission for the sub-division of sites of less than one acre and this has simplified the procedure. All a person has to do is mark out the dwelling-house and half acre of land on an Ordnance Survey map or a Land Registry map and lodge it in the Land Registry. There would be no difficulty in regard to the rights of residents.

I had considered putting down a further amendment on these lines but I had thought that the Minister might accept a full amendment. Probably he will not accept the amendment and we are unable to push it through, so there is nothing further I can do. This matter will be coming before the Seanad and in the intervening time I would ask the Minister to consider the introduction of a formal amendment to the Bill. It is necessary and desirable. It can be done quite easily in regard to sub-division. The land certificate of the parent holding could be lodged with the ACC and the first charge could go on that.

In regard to rights of maintenance and support, those charges could be maintained and remain on the folio. Even in that instance, as Deputy Bruton pointed out, the parents will at least be safeguarded in some way in regard to rights of residence. It would not cause the same inconvenience to the parents to accept at least a right of residence—they would have a right of residence—and ask them to forego as a second charge the right of maintenance and support on the original farm folio which would be, in the example I have given, of 74.5 acres. This would not present the same problem and would not cause that great imposition and amount of arm twisting and pressurising of a parent that might otherwise ensue.

This Bill has given us an opportunity to highlight something important. We have many excellent farming correspondents, the Drover in the Irish Independent and different reporters who contribute to The Farmer's Journal——

They may be excellent reporters but what has that to do with this amendment? The Deputy must get another opportunity to praise them.

It was not altogether to praise them that I intended but I wanted to highlight this matter. Some of these matters are never mentioned by these correspondents who probably do not come across them frequently. Matters of this nature rarely come to the attention of the public and since we are discussing it on this Bill I think many people involved in agriculture should give it some thought in the years ahead. It has been there in the past and it will arise in the future.

The terms of the loan are agreed and these matters are discussed. These questions are put: "What is the position in regard to such a charge on the folio? Will you be able to get it changed?" Before letters of approval of the loan are issued verbal agreement has generally been reached. The matter has been cleared to such an extent that when letters of approval issue all these charges in favour of parents have been put in second place. I accept the good faith of the Minister on this matter and that he is stating his own opinion, but if the position is as the Minister states—at the beginning of my remarks I took three paragraphs from the Minister's statement dealing with this matter—I would ask the Agricultural Credit Corporation to issue a statement that this is not one of the conditions they seek. That simple request should clarify the position. Until I get that, I stand over my statement and defy contradiction on it. If the position is not as I state, they should state the contrary. I want them to come out in the open and put that in print. I am dealing with something that has serious implications for the farming community. Perhaps I speak only on behalf of a certain section who are obtaining credit but this situation can come to the door of any farmer. Many may say: "That will never happen to me". Many parents may say the same thing. I put it to them that it can happen to them and I want to safeguard them and ensure that the interests of those signing over their farms are protected. That is why I think it important and why I think a categorical statement should come from the ACC contradicting me if I am wrong and stating what the position is, thus giving me an opportunity to investigate it further because I believe that what I have stated is correct.

The practice has grown up of having rights in favour of people on farms and I think it is absolutely essential that we should continue this and have these rights retained on folios as charges in favour of the parents who transfer farms. We must safeguard their rights and so encourage early transfers. My amendment is reasonable and I ask the Minister to accept it. It should cause no inconvenience or difficulty. The ACC charges would be registered on the folio and they would retain possession of the land certificate and everything else.

That is what the law says at present.

They are absolutely safeguarded. If what the Minister states is the law at present, this amendment only copper-fastens the position by having this written into the legislation. As I said on Committee Stage, irrespective of what is said in the House, if the matter is contested later it is what is written into the Acts of Parliament that counts, not what is recorded in the Dáil debates. This would be a way of copper-fastening the situation if what the Minister states is correct.

Is the amendment being withdrawn?

No, I could not with-draw it because it is reasonable and fair and it is an amendment of which the House should take cognisance. There is no valid reason to oppose it.

Amendment put and declared lost.

I move amendment No. 18:

In page 35, after line 36, to insert the following:

62.—(1) An offence under this Act may be prosecuted by the Minister. The Minister may delegate responsibility for the prosecution of offences under specified sections of this Act to the Minister for Justice.

(2) A prosecution under this Act may be instituted within three years after the offence.".

This is really only a drafting amendment which should lead to no controversy. The Bill creates offences under sections 27, 29 and 35 and offences are also liable to be created for breaches of the regulations to be made by the Minister for Justice under section 26. Yet, there is no section in the Bill which fixes responsibility on any Minister for the prosecution of offences. I think it is normal in legislation such as this to have a section in the Bill which says that a particular Minister is responsible for prosecution and which sets a time limit within which prosecutions can be instituted. Otherwise, I am not sure what happens, whether it falls to the Director of Public Prosecutions to institute proceedings. I do not know whether he has either the mandate or the office staff to enable him to oversee the implementation of this highly specialist legislation.

Therefore there should be a new section inserted in the Bill to fix responsibility on the Minister for Finance, and in certain cases the Minister for Justice, for prosecuting offences under this Bill. The offences created relate to breaches of secrecy of the register of chattel mortgages, to abuse by the mortgagor of the right to sell to the obstruction of the mortgagee in inspecting the existence or non-existence of the mortgage taxes, and to the provision of false information to a creditor in respect of a chattel mortgage. It is necessary that there be somebody to prevent abuses and to oversee the legislaton in order that abuses be prevented. To make certain that there is this amendment should be accepted.

It is not considered necessary to provide for prosecution by the Minister.

Have there been any prosecutions?

No. It is a matter for the offended party to take what-ever action he feels necessary. He can do it in either of two ways. He can get in touch with the police who would ask the Director of Public Prosecutions to prosecute, or the offended party himself can prosecute and thereby become the complainant. There is no necessity for this new section or this amendment at all. It is a matter for the offended party to take whatever steps he wishes.

I accept the validity of what the Minister says in respect of sections 27, 29 and 35. Clearly there is an offended party and the Minister's statement that their right is to go through the Garda is certainly valuable clarification.

To our knowledge there have been no prosecutions.

The only thing I am worried about—and perhaps it has been dealt with—is the position under section 26. Here we are concerned with regulations which may be made by the Minister for Justice to preserve the secrecy of the register of chattel mortgages. Obviously it would be an offence if the secrecy of the register were breached. Yet there does not seem to be a provision here, certainly in the Bill as it stands, for anybody to prosecute a person who makes a breach of secrecy of the register.

If there is a breach there is an offended party.

Not necessarily, because the person who got information he should not have got might have got it against a large number of people, and the people about whom he got information might not know or have any means of knowing that he got the information about them. Obviously there is a need for somebody else to be overseeing the implementation of these regulations to ensure that in general secrecy is not breached.

The Minister's answer does not meet the case in relation to section 26 as clearly as it meets the case in relation to the other three sections I mentioned. It may be that the regulations made by the Minister for Justice can provide for offences and the prosecution of offences by means of the regulations. I doubt if one can provide for offences and the prosecution of offences within a regulation made under a section if the section itself does not create an offence or give a right to prosecute. Section 26, as I read it, does not do so. That is one of the reasons why I introduced section 62 in the form of an amendment. I am not absolutely certain that my amendment meets the case under section 26 either, because it is not specifically related to section 26. Perhaps the Minister would have a look at the matter.

We are advised that it is not so, but we will have a look at it.

Amendment, by leave, withdrawn.

There is a small verbal amendment which the Minister wishes to propose.

I move the following amendment:

On page 5, line 3, to insert "on" after "carry".

Amendment agreed to.
Bill, as amended, received for final consideration.
Agreed to take remaining stage today.