Seanad Éireann debate -
Wednesday, 31 Mar 1943

Vol. 27 No. 19

Landlord and Tenant (Amendment) Bill, 1942—Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister for Justice (Mr. Boland)

This is a Bill to amend Section 46 of the Landlord and Tenant Act, 1931. The necessity for this Bill arises owing to a court decision on a point which was not covered in the Act. It was a case where a lease was signed subsequently to a house having been erected on a building site. The house was built in expectation of the lease being given but, owing to the fact that the lease was only signed after the house was erected, the court held that the point was not covered and consequently it was necessary to bring in this Bill. There is another case where a local authority in County Cork, a board of guardians, took a plot of land outside an urban area. It was a pure building lease and the house was erected on the site.

An urban area is described as anything down to a village for the purposes of the 1931 Act. This place was actually outside the village of Carrigtwohill and because of that was not covered by the Act. That position is being provided for under this Bill. Where the lease is for a period of not less than 20 years, the benefit of the Act of 1931 is extended to non-urban areas. Another point is being covered. It has happened that a person who got a building lease partly developed a plot of ground and for one reason or another was unable to continue the work. A man may have built six houses where he was to build 12. He developed half the site for the six houses. The undeveloped portion of the plot would not be ancillary to any house on it, and as the Act stands at present, by reason of the fact that all the plot was not ancillary to the buildings on it, it is very doubtful if the lessee in such a case would have the benefit of the 1931 Act.

There was one particular case brought to my notice, where a man got such a plot of land and had expended on it something up to £12,000 in building houses. The whole site was not developed and he was going to lose the full benefits of the reversionary lease, as it is called, because he had not developed the whole site. That is being provided for. We are coining a new expression in this Bill to deal with cases of that kind. We are dividing such a lease as that into two parts, calling the part that has been developed the "built-on" lease and the other portion the "vacant" lease. What would happen when the lease would expire would be that the lessee would be entitled to a reversionary lease in respect of the built-on portion; but the unbuilt-on portion—the "vacant" portion—even if there were a house on it, which may have been built before the lease was given, would be a matter for arrangement. Take a case such as the case I am speaking of, where there may have been a very large plot of ground and a mansion built on it and that part of the plot was built on by the lessee and that the house may be on an undeveloped portion of the plot. In this Bill now the lease for that portion is called the "vacant" lease. As far as that part is concerned, it is a matter for arrangement between the landlord and the lessee when the lease expires, and they can make a new lease on terms mutually agreeable to them. As far as the "built-on" portion is concerned, we are protecting the person who had the lease and who built the houses.

There is another section to which I wish to draw attention. When the Bill was going through the Dáil, it was pointed out that there were people who might be affected in another way. In view of the court decision that the lessee had no rights in the case of a house built before the lease was granted, some people, believing that they had no further rights whatever, made other arrangements with the landlord, which were to their disadvantage. We are providing that, if the lease had fallen in since the 1931 Act was passed, and if no third party had acquired any rights in the meantime— that is, if the arrangement still was one between the landlord who granted the lease and the lessee—we would void any agreement that might have been made and give the lessee the benefit of the 1931 Act.

Everyone will see that the sections are very cumbersome. They are set out in detail and it is believed that the points I have raised are covered. I do not think that I need deal with these points more fully at the moment.

Mr. Fitzgerald

To begin with, I would assume that there was land which was to be built on by a contractor who, instead of owning the land freehold, merely leased it from the freeholder. In doing that, he contracted to cover it with houses and to pay a certain annual rent. I understand the proposal here is that the lease will be divided into two parts. In regard to the area that is covered and on which he has built, say, six houses, his rights and responsibility to pay ground rent would remain. With regard to the other half, what is the position? Does he retain that, paying the rent that he originally agreed to pay, or is that cancelled and does the land go back to its original owner?

Mr. Boland

When the lease falls in, he has no claim and it is a question of a new arrangement. He is entitled to a new lease of the built-on portion but, as far as the other portion is concerned, it is a matter for arrangement. He cannot claim for the part that he had not developed and he has no rights there, but in respect of the other part he gets the full benefits of the 1931 Act, that is, the right to a reversionary lease.

Mr. Fitzgerald

In the case of a man who takes a rood of ground and builds a house on it, strictly speaking, the house belongs to the lessee. There used to be cases where the landlord, who had already got an exorbitant rent for the land, claimed the house as well, and that seems to be inequitable. The risk behind this is that, if you have 100 acres and houses are going to be built on that land, those houses provide great security, because they are more valuable than the land and, therefore, the rent will be paid. In the case of someone taking ground for 12 houses and contracting to pay rent, the owner has the guarantee of the houses as security for the payment. Suppose someone takes 100 acres and builds two houses. There the value of the land is much greater than the value of the property built on it. What is the arrangement going to be there, if the lessee, who has built the houses during the period of that lease, fails to pay rent on the whole 100 acres? Normally, the owner of the land has the security of the built-on part. I judge from what the Minister said that the lease of the whole 100 acres remains— during the 99 years, or whatever it may be—but in that case the landlord has not the same asset available to him to guarantee the payment of the rent. I give the case of 100 acres and two artisans' dwellings built on it. What is the position if the man fails to pay?

Mr. Boland

If he breaks his contract or covenant, he could be ejected.

Mr. Fitzgerald

That is to say, he would be at the loss of the two houses built on the 100 acres?

Mr. Douglas

Oh, no.

Mr. Boland

If he has built those two houses and has sublet on proprietary leases to someone else, the sublessee has his rights as against the ground landlord and the lessee would lose his interest.

Mr. Fitzgerald

Let us say that the lessee has spent £3,000 on building the houses. He has no money at all. He has to pay rent on some hundreds of acres and is unable to do it. These two houses are certain assets of his,. as far as a man on a weekly or yearly tenancy is concerned. I want to see how the law will work there.

Mr. Boland

In such a case, if he does not keep his contract the landlord could bring him to court and he could be ejected. I do not know about the houses: I think he would lose his houses altogether.

Mr. Fitzgerald

I think we ought to know.

Mr. Boland

If the lessee actually owned the houses himself, he would lose them; but if he had sublet to someone else, the person to whom he had sublet, if prepared to carry out the terms of his sublease, would be able to deal directly with the head landlord.

Mr. Fitzgerald

That does not seem to be quite satisfactory. I gave the case of 100 acres and two houses. Now, the proportion may go much nearer than that. There could be a position in which the yearly or weekly tenants may come out of the deal quite well, but the man who spent a substantial amount of money on building the houses may not come out well, and he may be in the position that he cannot even get the rent from his tenants.

Mr. Douglas

It seems to me that this Bill is genuine. As far as I can see—and it is difficult to see far in a complicated measure of this kind—it is a satisfactory method of dealing with the difficulty. I am not clear as to what the Minister calls the second amendment to the original Act, as I have not the details. As far as I am concerned, I am in complete sympathy with the objects of the Bill. In a complicated measure of this kind, particularly one that is full of legal phraseology, we are to a large extent dependent on the Minister and his advisers. There are few, if any, lawyers in the House and I do not think there is an actual practising barrister. No one, except he is really in practice and knows what recent decisions have been, is really able to give what I might call a fully competent opinion as to how this will work. But, even if we had two or three such barristers and the best Minister in the world—I am not running down this one, of whom I have a high opinion— I still recognise that in a measure of this kind we never know what we do pass until cases come before the courts. That is peculiarly the case with regard to the landlord and tenant position more than anything else. At the same time, I have done as much as any layman could do to understand what is intended in this Bill and I am in favour of it.

It may be that I misunderstood the Bill, but I am not at all clear that the point raised by Senator Fitzgerald has anything to do with this Bill at all. It seems to me that it is a criticism of the 1931 Act, if it be a criticism at all. At the same time, as he mentioned it, I should like to point out that, in practice, the theoretic cases which he raised rarely if ever arise. If a man has, we will say, 100 acres, and has built two houses and pays an annual rental, which usually in a lease of that kind is relatively small, very much less than the actual value of the two houses, he will borrow on the value of the houses which he has before he will allow his rights to disappear. I think if it got to the stage that the rights of his tenants were likely to be affected, the property would be sold up and somebody else would become the owner. In fact, you do not ever get a case where a man, for the sake of £10, £20 or £30 ground rent, actually is able to seize houses. But what you might get prior to the 1931 Act was a case where the lease had run out, and where, because of the value of the asset, you had a much larger and possibly unfair lease demanded. That, I think, was the principal object of the 1931 Act, and it is to make that more watertight and more satisfactory that this Bill is introduced.

Mr. Goulding

It is difficult for a layman to follow the complications of these Acts, but one point has occurred to me. Take the case mentioned by the Minister, where a man builds only half the number of houses he intends to build on a plot of land. He has obtained a building lease, and he has failed to carry out his building programme—half the land is left unbuilt upon. Is the lessor entitled to take possession of that land when the lessee fails to carry out the building programme? As a result of the war situation, many builders have failed to finish their programmes and have left land unbuilt upon. Will the owner in these cases be entitled to take possession of the land?

Mr. Fitzgerald

The Minister said yes.

Mr. Boland

I should like to make it clear that in connection with a building lease a person does not necessarily contract or covenant to build a certain number of houses. If a person gets a plot of land he can build on it unless there is a covenant that he must not build. If he does undertake to build a certain number of houses and does not build them, then he has broken his covenant and he can be proceeded against and ejected. The only people who are protected then are those to whom he may have given a sublease, not weekly or monthly tenants, but people who have given a valuable consideration. They are protected, but they will have to deal with the head landlord; that is where a covenant has been entered into. I understand that in a lot of these building leases there is nothing laid down as to the number of houses to be built.

Mr. Fitzgerald

In a lot there is. Take the Pembroke estate.

Mr. Boland

In these cases they are entitled to recover and eject the person, but the sublessee is protected. That is the position. As to the point that Senator Goulding raised, where a man had contracted to build a certain number of houses and was not able to do it, he can be held to his contract. We are not dealing with that at all. We are providing for the case where a person has partly developed the site in respect of which he had obtained a lease in which there was no prohibition against building. A single house may be standing on one acre and, quite clearly, the whole acre may be ancillary to the house. Whereas, if he made a road through the acre and parcelled it into three parts on one side of the road, building a house on each part, one-third would be ancillary to each house and the other half on the other side of the road might be a market garden, which would not be regarded as ancillary. If one house had been built and the land had been laid out as a sort of pleasure ground, the whole acre would be ancillary. If there is a covenant to build, that is enforceable as against the lessee. The sublessee, who has paid money to the lessee, has his rights guaranteed by the 1931 Act. He must, however, deal with the man who has got possession as a result of the breach of covenant by the first lessee.

Mr. Goulding

If a lessee continues to pay rent for a whole plot, but is unable to complete the building contract as a result of the war situation, surely he should be safeguarded, if it is impossible to carry out the full terms of the lease.

Mr. M. Hayes

I think he is, if it is impossible.

Mr. Boland

It is outside the scope of this Bill. I am only dealing with Section 46.

Mr. Healy

As to the point raised by Senator Goulding, if the Minister could provide for that in this Bill he would be doing justice to a certain section of the community. For instance, a builder in the city may purchase an acre of ground from some person and may intend to build ten or 12 houses on that land. Owing to the emergency he may only build seven or eight houses. He may not be able to get the material and therefore may not be able to finish the proposed building scheme. In my opinion, it would be only common justice that that man should get time until the emergency is over to conclude his programme.

Mr. Boland

I think that would be covered in the lease.

Mr. M. Hayes

Yes, it would be covered.

Mr. Boland

I am dealing with actual cases which have caused great hardship. There may be other cases which I have not dealt with—I do not know.

Mr. Baxter

They have not come to your notice.

Mr. Boland

I do not know that I have anything more to say. It is certainly a complicated matter, but I tried to make it as clear as I could. We are dealing with cases which have arisen. What Senator Hayes has said is probably the fact, that if a person makes a contract of that kind he will surely provide for such contingencies or else it will be a queer sort of agreement. I have not heard of any such case where the land was taken over by the landlord.

Mr. Hayes

The courts would recognise the emergency.

Mr. Boland

I am sure they would. This Bill was very simple originally. There was only one single sheet dealing with two cases, one of which was decided in the courts and the other one which a local authority had asked us to deal with. They had actually taken a plot of land for the specific purpose of building a dispensary and then they found that, because it was outside an urban area, they could not get what they were looking for. Then other cases came up which I considered were worthy of consideration. There was the one I spoke about where the land was partly built upon. A man bought this plot somewhere outside Carlow. There was a mansion on it. I do not know how many acres, but there was rather a considerable amount of land involved. There was no covenant against building. He decided to develop, and had gone a certain distance when he died. I understand he had spent something like £12,000 in building. It was quite clear that, although the land may have been held to be ancillary to the one large house, it could not be considered as being ancillary to the number of houses that had been built, but each plot attached to a house was ancillary to it. Consequently we have arranged that that particular part would get the benefit of the 1931 Act, and in regard to the other part it would be open to whatever arrangement might be made between landlord and lessee when the lease expired. Other cases may arise from time to time, and they will have to be dealt with.

Question put and agreed to.

Committee Stage ordered for Wednesday, 14th April.