Landlord and Tenant (Ground Rents) Bill, 1965: Committee Stage (Resumed).
Question again proposed: "That section 8, as amended, stand part of the Bill."
On the last occasion I had made some observations on the section and the Minister was disposed to reply. I should like to hear him reply on the observations I made. If, perhaps, I may continue, what I was concerned about is that in this section we are setting up a tribunal in the form of the county registrar who is to adjudicate upon the differences between a landlord and tenant and upon differences between tenants. On the Second Stage, I referred to the fact that one of the matters with which the county registrar will be concerned is the apportionment of rents. I indicated the kind of situation in which somebody who at present it not liable to pay any rent may find himself, on apportionment, liable to rent for which he has never been previously liable, for the reason that under the existing and general law of landlord and tenant, every part of the property in a lease is liable to the entire of the rent unless, upon an apportionment, the landlord consents to the apportionment. That seemed to me to be one of the things with which the county registrars would be concerned and it seemed that it would be imposing on the tenant who, up to now, has been free of any rent, a liability to pay part of the apportioned rent.
I indicated then, and I still express the view, that this House and the Oireachtas generally are gradually eroding the rights which are guaranteed to citizens under the Constitution and the fact that this is being done by an Irish Government and an Irish Parliament is no less obnoxious than if it were done in former times by the British Government and the British Parliament. What is happening—and very few people seem to be alive to the serious implications of the direction legislation is taking in this country —is that more and more power is being vested in the civil servants, in the bureaucrats, and less and less power is being left to the courts which under the Constitution are there to protect the rights of the citizens and administer justice as between one citizen and another and as between citizens generally and the State.
I am profoundly disturbed by this trend in modern legislation and nobody seems to be sufficiently alert to what is taking place. The rights of the people are being eroded piecemeal, with very little regard, it seems to me, by the Minister for Justice in this Bill, to a case which dealt very much with this kind of inferior tribunal and which was the subject of a lengthy judgment by the Supreme Court which came on some time in 1956 and was reported in the 1960Irish Reports, the case of O'Farrell v. Gorman which dealt with the functions and jurisdiction of the Disciplinary Committee of the Incorporated Law Society. The judgment laid down quite clearly, in my view, that if you delegate to an inferior tribunal or give that tribunal the right to decide the property rights, the right of liberty or personal freedom of anybody, that is a judicial function. Not alone in this Bill are we going the distance of doing all the things which in my view and on my reading of that particular case the Supreme Court held were repugnant to the Constitution but we are going a step further in section 17 in giving to the county registrar the power of making orders in subsection (3), paragraph (d), for the examination on oath of any witness, not only before himself but before an officer of the court or any other person.
I do not know, and I shall be asking the Minister to clarify this point, who under section 8 is in the Circuit Court jurisdiction an officer of the court. The only person I know who might be called an officer of the court is the county registrar. There are various clerks of various ranks and grades in the Circuit Court. There are civil bill officers and perhaps court messengers. Are these to be persons to whom this Parliament is to give the power of examination on oath as provided in section 17 (3) (d)?
One of the indicia of the exercise of the judicial power referred to by the Supreme Court in the case of Farrell v. O'Gorman was this very power of being able to compel attendance of witnesses and examine them upon oath. Not alone are we seeking in this Bill to give to county registrars what I regard as a judicial function which, under the Constitution is to be reserved to the courts established under it, but we are providing that it shall be exercised also by unspecified officers of the court of unspecified designation or any person. It seems to me that is quite wrong and indefensible. Apart from that, as I have already indicated, it is quite wrong and indefensible to give that power to county registrars.
We must be quite clear as to what we are doing, and not alone in this Bill are we giving power to county registrars to determine rights as between landlord and tenant but it seems to me the county registrars will be burdened with the duty of interpreting the whole of this piece of legislation. I can think of nothing more partaking of judicial power than the construction of a piece of legislation of this kind. I am profoundly disturbed by the attitude of the Minister whose first function, I should think, should be, as far as he can, to defend the rights of the citizens. We find that, far from preserving the rights of the citizen under the Constitution, he is invading those rights in the manner I have suggested is taking place under section 14 and otherwise throughout the Bill.
I do not know what the Minister will have to say in reply. I have discussed this matter with people who are not at all interested in political matters, people who are interested in this Bill purely as to the manner in which it will work, and I have received more representations on this Bill as to its character and the form it is taking than, I think, on any other piece of legislation in my experience as a Member of this House. Part of these representations concerns this very thing about which I am speaking. There is astonishment and bewilderment on the part of members of the legal profession and of others that powers of this kind are being filched from the courts and vested in county registrars who, as I said earlier, with all respect to the duties which they have to perform, are not fitted by experience or by qualification for work of this kind. Not having the independence of the justices of the District Court and judges, up to the Supreme Court, they ought not to be entrusted with these powers, to determine matters as between one citizen and another.
I share some of the anxiety of Senator O'Quigley in relation to the powers of the county registrar. While I must confine my observations here to section 8, I welcome the indication by the Minister that the power to examine under oath is not being extended to officers appointed by the county registrar.
There are two matters in relation to section 8 which I wish to bring to the Minister's attention. The county registrar is being empowered in this section to appoint officers of the court to execute conveyances. In common with Senator O'Quigley, I am not aware who these officers are, but if they exist, I am not convinced that they are competent to execute conveyances. I am not aware of any such officers in any county registrar's office of which I have experience, particularly in view of the fact that these conveyances will be somewhat complicated in that many interests are being merged in transfer. There we are faced with a very real difficulty in the implementation of this Bill. I should like to have the Minister's views on that, as to whether it is possible for him to appoint competent, qualified people, lawyers, to execute these conveyances.
The other matter in relation to subsection (2) of section 8 is that in the case of infants and people of unsound mind the county registrar may carry out the procedure involved "on the application of any person concerned". I am not quite sure who that person might be. The provision says: "... appoint an officer to execute such conveyance for and in the name of the person so required". I take that to mean in the name of the infant or the person of unsound mind. Here we are dealing with a rather delicate matter. First of all, who is the "person concerned" who is going to make application and will he act on behalf of the infant or the person of unsound mind? As you are aware, the jurisdiction in regard to infants and lunatics is exercised by the registrar of wards of court in the High Court, and it is not quite clear here that jurisdiction is being retained in the best interests of infants and lunatics. I should like to hear from the Minister as to who is the "person concerned" who is to apply, and as to whether that person is applying on behalf of the infant or lunatic as the case might be.
The main issue raised by Senator O'Quigley is possibly more relevant to a later section. As regards the arbitration procedure envisaged in the Bill, I find among practical people who are concerned about having an expeditious and effective way of deciding these matters that the most welcome feature of this Bill is that we are providing a simple and effective way whereby the landlord and tenant can come together and agree on the compensation that is to be paid.
The procedure set out in a later section, section 18, envisages that in any case involving a house less than an acre in extent there will be a simple mathematical formula whereby the parties can agree without going near the county registrar at all. In relation to the maximum compensation to be paid, there would be the yield the landlord would get from the current national loan stock at current interest rates—13.2 years purchase. This is a simple mathematical formula which people can work out themselves. In my view, 95 per cent of cases will be met without going near the county registrar at all. There will be exceptional cases involving business premises, where other issues such as goodwill may be involved. There will be cases involving property of more than an acre in extent, although this would include very few residences, and cases with less than 25 years to run.
We lay down various criteria to be followed by the county registrar in coming to a decision, such as the current yields of Government stock. The hearings involved in these cases would take place in the county registrar's room. There is no elaborate paraphernalia such as is associated with an open court hearing with full legal representation. This is a provision in ease of the layman and in ease of the person for whom this Bill is intended, the tenant who wants to buy out his ground rent. He can by this means avoid the more elaborate machinery which would be necessary in certain cases.
These are matters which the county registrar is quite competent to carry out. The county registrar is a judicial officer of the court. I see no constitutional danger in appointing as an arbitrator a person who already performs many functions of a judicial or quasi-judicial nature. He performs duties in relation to estates; brings the solicitor before him in his room; decides what are the bills which are owed and to whom they are owed; and at a later stage the certificate drawn up by the county registrar is submitted to the court for approval. I have no fears at all on the constitutional issue. Article 37 envisages nothing in the Constitution which would operate to invalidate the exercise of limited functions and powers of a judicial nature by bodies other than the courts. We have an arbitration procedure under the Arbitration Acts operating in respect of compensation for road-widening or intrusion by the Board of Works or any other State body or local authority any time they intrude. In such cases there is an arbitration procedure outside the courts which has operated effectively over the years, where it is merely a matter of getting technical evidence as to valuation and nothing more.
The case mentioned by Senator O'Quigley—O'Farrell v. Gorman in the 1960 Law Reports—envisages a completely non-judicial professional body deciding to take away the livelihood of a solicitor or solicitors on the basis of submissions to it. The courts held in that case that a person's livelihood could not be taken away by a professional body and that it was too serious a matter to take away from the courts. But, over the years, under the Arbitration Acts and other Acts I could name, where it is merely a matter of assessing what is to be paid in compensation, these matters are carried on outside the courts without any elaborate paraphernalia.
Of course, this is a weakness every lawyer is prone to—that every matter needs to be thrashed out with full legal representation, the procedure of pleadings and costs, and all the rest of it. As Minister for Justice, I am concerned not only with the legal profession and the courts but with the citizens as a whole. I know that part of their protection lies in the existence of a good legal profession, but, in addition, I have a duty to see that the citizen gets expeditious and effective law. He can get it simply and effectively in a matter of this kind, particularly where there is no question of an elaborate investigation of the facts, but merely a question of a decision between valuations, by having a sensible man like a county registrar making a decision between these valuations and, after a quick hearing, coming down on one side, with a right of appeal to the courts. We have preserved that right and I think that will deal with any constitutional troubles that may be perturbing Senator O'Quigley.
The Senator has an amendment down to section 17. He mentioned that the question of having any other officer of the courts or any other person with the county registrar might lead to difficulties. I agree. I propose to accept his amendment to delete that particular part because I think it is better to tie it down positively to the county registrar and nobody else. There might be a danger if we included any other person as is suggested in section 17. To that extent I will agree with him on the matter.
Senator O'Kennedy raised a question of a person joining in execution of a conveyance in the case of an infant or a person of unsound mind. I do not see any difficulty which would prejudice the person concerned. I imagine the legal advisers of all parties would approve of the draft deed to be drawn up, the registrar would approve of it, and that is all the clerk in the office signs his name to in order to carry out the execution. Apropos of that, my experience of the Circuit Court clerks all over the country is that they know a fair share of law in these matters and indeed many of them know a lot more law in these cases than many legal practitioners.
I am fairly well acquainted with rural Ireland and I know a fair number of Circuit Court clerks. I think they are very much the key-men in the Circuit Court offices, men who really know their business about title and administration and all that line of law we are discussing at the moment. If it is merely a matter of the clerk putting his or her name to a document approved by the solicitors concerned and by the registrar, I do not see anything that will cause trouble in that respect.
Would it meet the Minister's point about cheap, expeditious justice if that decision were left to the District Justice instead of to the county registrar? The Minister says that in some cases it is merely a question of arithmetic, taking 13.2 times the amount of the rent. That is a maximum figure, not the actual figure. There is a limit on one end. The real reason you go to the registrar, the courts or whoever will be appointed by this Bill is to fix what is fair and reasonable between the parties, both parties having disagreed on what is fair and reasonable. It will meet the Minister's point if it goes to the District Justice.
I can see various objections to its going to the county registrar, objections which would not arise if it went to the District Justice. The District Justice and the Circuit Court judge are bound by oath to administer justice fairly and equitably without fear or favour to anyone. A county registrar takes no such oath. A further protection to the general public is that, if it goes to the District Justice, there is an open hearing; and the mere fact that justice is administered openly and in court means that the person administering it would be very slow to depart from fixed principles of justice.
I would ask the Minister if he would be good enough to reconsider the matter in that light. I can visualise also it would be cheaper for the parties in many instances to go to the District Justice. In many counties, as in Tipperary and Cork, the county registrar may be 50 or 60 miles away from where the parties are. That means that those parties and their solicitors must travel this long distance to have a hearing before the county registrar. So, far from expense being spared either to the landlord or to the tenant by having it before the county registrar instead of the District Justice, expense is increased.
As one who knows even less about these matters than the officials mentioned, I should like to refer to the Minister's statement that he was going to accept the amendment to section 17 dealing with the examination on oath. I notice that in subsection (3) of section 8 the county registrar may appoint such other persons as he may think fit. It struck me that there is not very much guidance to the county registrar in this phrase as to what is the type of person he should appoint. I am speaking without any real knowledge of the present practice. It is a very wide phrase. The county registrar gets no guidance as to any limitation on the type of person. I do not know whether it is a material point or not. It just struck me when the Minister said he was accepting the other amendments.
I certainly accept what the Minister says about limited powers of a judicial nature being exercised by county registrars. There is also the significant case of a plaintiff being enabled to mark judgment for a liquidated debt in the registrar's office. To that extent there might even be wider powers than are envisaged in this Bill. I am not casting any reflection on the ability of registrars' staffs, nor do I compare their legal ability with those who practise in the courts. But the Minister is probably aware that even lawyers will admit conveyancing is a very specialised branch of the law. I, for one, would not offer myself as being anything like an expert in that field. I doubt that the officers of the registrars' staff, whatever knowledge they may have in relation to general law and procedures, are competent to execute conveyances without having the advice of those who specialise in that highly-specialised sphere. That is my concern in relation to the execution of conveyances.
One of the very satisfactory features about the Minister for Justice when dealing with a Bill like this is the absolutely clear, positive manner in which he expresses himself. There never is any doubt of any kind in the Minister's mind as to what he thinks and you get it absolutely clearly, whether it is true or false. I do not say the Minister ever is a party to anything which is untrue but, whether it be true or false, you get it absolutely clearly from the Minister. Of course, he is most persuasive in the kind of things he has said here. He is on to a very good line of argument when he begins to talk about the cases which will be avoided and the money which will not be given to the lawyers if his Bill is accepted. It is a very good line for the Minister to adopt and, of course, very good political strategy. I want to analyse what the Minister has said, and I am glad to have received some support from the other side of the House on a matter which is of great significance, for this reason, gradually, if one looks at the legislation we are passing—and I refer to the dreadful provisions of the Social Welfare (Occupational Injuries) Bill——
I do not want to be taken as supporting all that Senator O'Quigley is saying.
I do not for a moment think the Senator would commit himself to that kind of blunder. With regard to that particular Bill there are people who understand what is in it and who have asked how the trade unions ever allowed that Bill to be passed because that Bill, which now vests all the rights of a workman who is injured in the faceless appeals officers of the Department of Social Welfare, sweeps away from the workmen the rights which were so well protected for them in the old Bill. That is one example of the withdrawal of powers from the court. As I have said before in relation to that Bill, workmen's compensation has now gone out of the solicitors' offices, from counsels' desks, and thanks be to God; there never was anything in it except trouble and annoyance which we all gladly undertook for our clients. There never was any money in it for anybody. As far as the remuneration or income of lawyers is concerned, the inspectors of taxes will not notice any drop in income pleaded on account of the abolition of the Workmen's Compensation Acts.
When I am speaking here, I am speaking as a legislator and not as a lawyer. I have had to complain about other Minister speaking like lawyers, in a fashion, on narrow grounds scoring debating points. What I am concerned about here is the piecemeal erosion of the judicial power from our courts. It is going on all the time and one day we shall waken up to find we have very little protection available to the courts, from the courts, and very little protection of the rights of the citizens of this country because we have allowed one piece of legislation after another, gradually and unnoticed, to take away those rights from the people. I am all for a simple and effective procedure by which to vest the fee simple of property in the occupying tenants and I have commended the Minister's approach to this Bill in relation to the compensation provisions. I entirely agree that we ought to reduce costs because if the costs are in any way too high then people will not avail themselves of this Bill. It would be a great pity if many of us who have to pay money to ground landlords, simply because we had no option when we were buying our property, could not avail ourselves of the provisions of this Bill. But it is not the majority of cases which will come before the county registrar; it will be the minority of the difficult cases. I repeat, and I do not hesitate to say of the particular public servants involved, unlike Senator O'Kennedy, that neither county registrars nor their staffs are competent or skilled to adjudicate on the matters they would be required to adjudicate upon under this Bill.
The Minister talks about simple measures of compensation to be determined by county registrars. It is much more than that; a county registrar may have to arbitrate upon whether or not a particular application comes within the terms of the Bill. Somebody may say: "I am paying a ground rent and it is a lease within the provisions of the Landlord and Tenant (Ground Rents) Bill, 1967"; and what is the county registrar to do? Under section 3 he will have to determine whether a person is holding land under a building lease; he will have to determine whether it is a proprietary lease, and I would invite any member of the House who wants to know what a building lease is like to look up the Reversionary Leases Act of 1958. Some of the most competent lawyers at this line of business could not say with certainty, because of the way in which leases are drawn up, whether particular leases are proprietary leases, building leases, partly built-on leases, or what they are. Then we have the other provisions of section 3.
It is quite absurd to say that these are simple matters and the Minister himself, on the last occasion when dealing with this Bill, referred to the very complex matter of landlord and tenant law which had to be dealt with. Of course, it is a very complex body of law and there is no use in saying county registrars, who may not have looked at a Landlord and Tenant Act for 20 or 30 years, are competent to decide these matters; that is on the question of the practical difficulties of asking county registrars to decide these things. The Minister says he wants an expeditious application; you can go to the county registrar in his room and he decides the matter. We have the Succession Act, with which the Minister is no doubt familiar. In that particular Act, the genius of the Minister and the parliamentary draftsmen was able to devise an expeditious manner of dealing with applications under that particular Act—an application in chambers to a judge, and that is what happens.
Under our income tax law at present, we have applications to a Circuit Court judge in chambers and these are applications which are quite expeditious. But the important thing—as Senator Nash has said—is that judges and District Justices are under oath to administer the law properly without fear or favour and to administer it impartially. County registrars have not got such an obligation, nor have they taken such an oath. That is one of the big distinctions between a county registrar and any officer of the court and a judicial person, apart altogether from the question of principle of withdrawing these matters from the judicial authority.
I am not concerned in any particular case as to whether or not lawyers will make money. I do not think there is any money in this particular Bill for the complex work which will have to be done in the administration of small estates where the title has never been looked after. The amount of work involved is never anything like commensurate with the fees allowed to be charged. Let us never forget, in these matters, one of the few employments or callings in this State whose remuneration is fixed by law is the legal profession. Engineers, architects, auctioneers and anybody else can charge whatever they can get but the one group of people in this country whose remuneration is fixed by law is the legal profession. Indeed, the Minister is well aware of that and knows that the fees which can be charged for this kind of performance will be extremely low.
It is incorrect for the Minister as a matter of law to say that a county registrar is a judicial officer. He is not. He is a court officer, first, last and all the time. The Minister referred to the fact that a county registrar carries out certain functions, but he is merely acting in the same capacity as an accountant in an administration suit, finding out what profits the deceased person had, and how the property devolved. He merely makes a report which does not become binding until sanctioned by a Circuit Court judge. It is quite incorrect for the Minister to equate that operation by a county registrar with a final determination about property rights which are regarded as guaranteed by the State to the citizen. There is a difference between making a determination in relation to property rights and the kind of work that is carried out by a county registrar in taking accounts and making inquiries in the course of an administration suit.
The Minister referred to Article 37 of the Constitution. If he had read the Solicitors Act case to which he referred—O'Farrell and Gorman— he would have found that it was very quickly dismissed by the Supreme Court. Equally so it has no application in regard to this Bill. I want to point out to the Minister and the House that the Solicitors' Disciplinary Committee were entitled to inquire into the conduct of the solicitor and make a report and order him to be struck off the register, with the right of an appeal to the Chief Justice. On that question the Supreme Court said that the existence of an appeal was sufficient answer to the objections made.
The Chief Justice in his judgment took the view——
—that, notwithstanding his own opinion as to the merits, he was not at liberty to act as if he were engaged on an untrammelled rehearing and he must not interfere with the decisions of the Committee unless he was clear that the decision was wrong——
——and so on. He went on:
If this view be correct the appeal is but an indifferent protection, but, even if it be not correct, the existence of an appeal to the Courts cannot restore constitutionality to a tribunal whose decisions, if unappealed, amount to an administration of justice.
If a county registrar can decide an appeal and that is final and binding it seems to me that that comes foursquare within the terms of the O'Farrell and Gorman case. The Supreme Court also said:
The questions which can arise before the Committee are as contentious, as difficult, and as important as the questions which would arise before a Court trying a common law action for negligence or fraud.
If my car is run into and someone does £10 worth of damage to it, and if the Minister sets up a tribunal which says that all claims under £10 will be heard by a county registrar the view of the Supreme Court is that that is unconstitutional.
I ask the Minister to reconsider this matter in the light of the views expressed on both sides of the House. I ask him to make this a right of appeal to District Justices in chambers. I think that would be just as cheap and inexpensive as the procedure which is being laid down in this Bill to be operated by county registrars. If that is done I will be quite happy, so long as the principle is maintained that matters of a judicial character should be determined only by judges. I do not mind whether it is in chambers or in open court so long as the determination is made by a person who has pledged his oath to uphold the law and to administer justice in accordance with the Constitution. I ask the Minister to accept this. If he does accept it I do not think he will in any way increase the cost of the operation of the Bill. It certainly would preserve the rights of which I speak.
To take up the point made by Senator Nash, it would work out in practice to be more convenient for people who might have to travel from Belmullet to Castlebar to a county registrar but who could go to a District Justice sitting down the street in Belmullet to have the matter determined. So long as it is left to a judicial person to decide these matters I would be entirely happy. I ask the Minister to revise his views in the light of the representations made and to accept an amendment on Report Stage or put down his own amendment substituting "District Justice" for "county registrar".
I should like very briefly to support the plea made from both sides of the House. I have listened to the case made by the Minister for the Bill in its present form, but it does not convince me as against the alternative suggestion of the District Justice. I do not see that there is any net advantage in the Minister's case. Perhaps he will intervene again and explain it more clearly. It may be more inconvenient for people as has been suggested by some speakers. There is the further point that there is some reason to believe that this proposal may be unconstitutional. The Minister spoke about the O'Farrell and Gorman case determining the issue of whether the disciplinary body can act in this way.
While that is the narrow issue determined, I thought it was fairly clear from the line taken in that case by the courts that the view of the Constitution was broader. I should like to say that a former member of the judiciary approached me and gave it as his firm and unequivocal opinion that this Bill is unconstitutional in this form and that it would be unfortunate if it were to go through because of the possible consequences. Because there does not seem to be any clear disadvantage in having the District Justice as against the county registrar and because the substitution would eliminate the danger of the Bill impugning the Constitution, I submit that the Minister ought to consider further the pleas made from both sides of the House and revise his position not only in respect of the subsidiary section 8 but the more fundamental section 17. I hope he will reconsider his position between now and the Report Stage in the light of the comments made from both sides of the House.
On the question of lunatics, I understand now that the matters about which I am concerned were referred to here on the last occasion and that the Minister accepted it would be undesirable to have the county registrar take any steps on behalf of any lunatic who might not have any near relatives or indeed any relatives to act as the committee of that person or even to act on behalf of a lunatic who might be living abroad. Now that I understand from the Minister that the High Court would exercise jurisdiction on behalf of lunatics, I suggest it might be desirable to make that position clearer on the face of the Bill.
I should like first of all to refer to what Senator O'Kennedy said. The matter was mentioned on the last occasion by Senator O'Quigley. I have looked into it and I agree we could clarify the section by making it clearer that jurisdiction in respect of infants and others may lie in the courts and that the county registrar will not have any right to intrude on that jurisdiction. Where a minor wants to execute a deed, the procedure could not be superseded in any way, by implication or otherwise. I will have an amendment drafted to cover this matter before the Report Stage. On the broader points raised by Senators O'Quigley and FitzGerald— the question of county registrars exercising this function—I thought I had made it plain that arbitration functions under the Arbitration Acts, which are the nearest analogy to the function to be exercised by county registrars, have been in existence for a long number of years and are precisely the kind of function envisaged by Article 37 of the Constitution:
Nothing in this Constitution shall operate to invalidate the exercise of limited functions and powers of a judicial nature, in matters other than criminal matters, by any person or body of persons duly authorised by law to exercise such functions and powers, notwithstanding that such person or such body of persons is not adjudged or a court appointed or established as such under this Constitution.
The matters to be adjudicated on by the county registrar in practice under this Bill will be largely matters of assessing compensation, the question of having two valuers in and deciding which opinion is to be accepted—the sort of function undertaken by the lay arbitrators under the Arbitration Acts in the assessment of compensation to individual citizens on the compulsory acquisition of his or her property.
The point has been made persuasively that this function, instead of residing with the county registrar, should lie with the District Justice or some judicial person. I wish to point out that the District Justice does not have an office or office machinery such as that available to the county registrar. The county registrar's office in any county town is the local registration office. In many cases it has a probate office as well. It is the place where title to property can be determined: there is a skilled staff there available for determining matters affecting property throughout the area. It is the appropriate place in which matters affecting property should be adjudicated on and decisions reached from which, if necessary, appeals can be taken to the Circuit Court judge who is the superior judicial person to the county registrar and his office.
The mechanics of having the District Justice to do it without an office or an office staff would not operate in a satisfactory way. As far as administration is concerned, the person to do it in practice is the county registrar. I am not at all afraid of the Constitution in this respect and I have looked into the implications carefully. In the case of O'Farrell and Gorman, you had a completely punitive penalty in which a person was deprived of his livelihood. This was a function approximating to a criminal function. The Court held it was not a limited function. It is the precise type of function not envisaged at all in Article 37.
This is precisely the power which will be operated by the county registrar. It is outside the criminal field. It is a matter of assessing compensation on the basis of rival valuations put before the county registrar. It is the type of limited function envisaged by that Article of the Constitution. The case of the solicitors' body was one in which a penalty of a quasi-criminal nature was proposed to be imposed on a solicitor, depriving him of his livelihood. This was a punitive function——
——and the Supreme Court held that the function exercised by this disciplinary body was unconstitutional. I have no fear whatever in that respect and I remind Senators again of the analogy under the Arbitration Acts: valuations are put forward by local authorities in respect of property proposed to be acquired by compulsory powers for, say, road widening, and an arbitrator determines the case on the valuations put forward by the property owner and by the local authority. I cannot visualise a more efficacious system than that proposed here, any more beneficial system for the persons concerned.
This Bill could become completely frustrated if we are to drive the tenant seeking to buy out his ground rent to the courts, involving the expenses of such proceedings. It would negative the Bill itself whose aim is to provide an expeditious and inexpensive way of purchasing the ground rent. In most cases tenants will settle with landlords easily because of the guidelines laid down in the Bill. However, if there is a dispute the matter can be settled efficaciously, expeditiously, with the minimum of costs, in the manner laid down in the Bill. If we were to have a provision written in involving lengthy and expensive court procedures, we would frustrate the purposes of the Bill because then tenants would not bother to buy out their ground rents.
I entreat the Minister, because I do not wish to see the Bill frustrated, to reconsider my suggestion about the District Justice. I can take practical instances from any part of the country. Take County Kerry where the county registrar's office is in Tralee. Somebody from the Dingle Peninsula or Kenmare or Valentia or somewhere else wishes to have a matter of this kind decided. The main expense will be having the respective solicitors attending wherever the hearing is to be. The county registrar will not go to sit in Valentia or in Dingle or Cahirciveen simply to hear one simple rent case because if he does, his whole office becomes completely bogged down. He loses an entire day going to the end of the Dingle Peninsula to hear one land rent case. As the Minister has said, no landlord will go before the county registrar without having valuers and his solicitor with him. If a land case is being heard in the District Court in Dingle or Cahirciveen or wherever it is, the expenses are negligible. A local auctioneer in some town has only to walk down the street and his expenses are negligible. The whole thing is heard and decided on with the minimum of expense. I should say that probably a £5 note would cover everything.
If you give jurisdiction to District Justices, irrespective of the amount of cases of this nature, you will, far from frustrating the Bill, ensure that advantage will be taken of the Bill in the maximum number of cases. As the Minister has pointed out in 80 per cent and perhaps 90 per cent of the cases the parties will agree and in the remaining ten per cent or 20 per cent the thing is dealt with cheaply and without any waste of time. The greater part of the present expenses in cases of this kind is not caused by delay in having these matters dealt with. It is caused by travelling long distances. The man who has to go from one end of a county, say from the north-west of Cork to the county registrar's office in Cork is losing time.
I do not wish to see this Bill frustrated. I should like to see it used on every possible occasion and I would therefore entreat the Minister at least to reconsider this matter. This is an excellent Bill and I sincerely ask him to look into it so that the Bill will be used on every possible occasion. I should also say that by doing so the Minister would be seeing to it that justice appears to be done in every possible case. In most cases the county registrar is a solicitor from a local county. He will see that justice is done but that will not appear to be so to ordinary people.
A District Justice is usually a stranger to the locality. In any case I have known in which the person appearing before a District Justice was a friend of his, the District Justice always got some colleague to hear it. The county registar has no power to do that. If the Minister adopts this course, not only will he be ensuring that this Bill is used on every occasion but he will also be ensuring that there is respect for the law. We see too little respect for the law. I would entreat the Minister, in the interests of democracy, in the interests of law and in the interests of the Bill itself at least to reconsider this matter.
On the last occasion, I assured Senator O'Quigley that I would reconsider a point made by Senator Nash in regard to authorising the county registrar in any case involving such matters and that this would be sent to the Circuit Court. I propose to have an amendment to cover this matter on Report Stage.
We could debate this matter for quite a long time. I would not be on my feet now except for a new misrepresentation which the Minister has made. The Minister says that all the county registrar will be concerned with is the technical question of facts as to value. That is what the Minister has said; that is not what the Bill says. The Bill sets out in section 17 the matters which will have to be determined by the county registrar. Subsection (2) of section 17 says:
Without prejudice to the generality of subsection (1) of this section, a county registrar may, in an arbitration under this Act, make an award in relation to land—
(a) determining the person (if any) entitled to acquire the fee simple therein under this Act.
If the Minister had any acquaintance with the conveyancing law, he would know that the determination of who is entitled to sell property and who is entitled to acquire fee simple is very often an extremely complex matter involving not only construction of leases but construction of trusts and a whole lot of things. That is the first thing the county registrar is asked to do. The next power he is being given in section 17 is that of
determining the purchase price to be paid in respect of the acquisition.
This is a perfectly simple matter. That can be worked out easily. There is no difficulty about that.
In practice, that will be the main job.
The next thing he is asked to do is to determine
the person or persons entitled to receive the purchase money in respect of the acquisition and the amount which each person is entitled to receive.
God knows when that particular question will be determined. In some cases this involves so many administration suits that the court is unable to bring them to a conclusion sometimes for three, five, ten or 20 years. There is a great difficulty in determining who is the person entitled and this involves a lot of delay. This is the kind of thing the county registrar will have to determine. The Minister says he is only concerned with one simple net question.
The next thing he is asked to do in section 17 is:
to determine if a person is entitled to have a rent apportioned under section 5 or 11 of this Act.
I have urged the Minister to provide some kind of guideline for the arbitrator in that regard. I think the Minister's attitude is that he is against providing him with any guideline.
The next point which the county registrar is asked to determine is:
apportioning (whether under the said section 5 or 11 or otherwise for the purposes of this Act) any rent payable in respect of lands part of which is land the fee simple in which is being acquired under this Act.
There is no use in the Minister coming in here trying to tell lay people that the county registrar is concerned with the same kind of thing as an arbitrator under the Land Act of 1919. Those are completely different functions and bear no resemblance whatsoever. The Minister would not stand ten minutes in an argument with any lawyer on that. He says that the title of property can be ascertained in the Circuit Court office. I wonder if he has ever looked into the back of the Circuit Court office. If he has, all he will have seen is a big safe in which are lodged all the land folios taken from the Registrar of Titles for all property in the county. If land maps have to be got, there is a delay of three weeks to three months in the Land Registry. At any rate, all that is to be found in the Circuit Court office and all that can be got at any time is a copy of a folio. You look for folios 1, 2, 3 and 4 and the clerk gets them out and the county registrar certifies 1, 2, 3 and 4 and that is all he or any of the officers of this court know about title to land.
It is wrong of the Minister to come in here and say that one of the advantages of county registrars dealing with this, as against District Justices, is that they know all about title to property in the county registrar's office. There is no case, none whatever, for retaining the county registrar as against the District Justice.
I want to suggest to the Minister that he has no right, legally or sufficiently constitutional, to decide as in O'Farrell v. Gorman. We know that what O'Farrell v. Gorman is concerned with is the striking of a solicitor off the register and thereby depriving him of his livelihood as a solicitor. But they decide a whole lot there—the limits to which a registrar can go in directing tribunals, in deciding judicial functions —and that is what is decided in this Bill. What the Minister is trying to do here is to give the county registrar the power to decide property rights as between one citizen and another. If that is not a judicial power, I do not know what judicial powers are. O'Farrell v. Gorman deals with all that kind of thing.
I shall not go into this but I regret that the Minister is not disposed to adopt the suggestion that has been made on all sides of the House—to substitute District Justices for county registrars, District Justices who have exactly the same amount of knowledge, in so far as it lies on paper, as county registrars have in their offices. If the Minister is not disposed towards an amendment which will substitute District Justices for county registrars, I regret to say we will have to record in a clear and defined way our opposition to this section.
For the Members of the House who are not lawyers and who might distrust lawyers, I want to give a particular indication of how we are right and the Minister is wrong. In section 8 the Minister and his advisers, who presumably have advised him on the constitutionality of this section, seek to incorporate a provision whereby a county registrar could overrule the jurisdiction and authority of the President of the High Court, in whom is vested the care of the property of persons who are wards of court, but are lunatics and infants.
Yes, amendment No. 24 was put down in my name. The Minister's advisers are not alive to the fact that in section 8 they are cutting across the jurisdiction of the High Court. The Minister cannot say that a county registrar will deal with the property of an infant or a person of unsound mind who is a ward proper under the care and jurisdiction of the High Court and is thus not cutting across the jurisdiction of the High Court. Unquestionably it is.
The Minister, equally so, is now disposed, following the unconstitutionality of section 17 (3), to exclude the words "or any other person." I rejoice in the Minister's openness of mind in that. I would hate to say anything to convince him into correcting something when he is assured otherwise in his mind. I should like to illustrate for those who are not lawyers and who may not be as familiar with those matters as some of us who have spoken on them are. Senator O'Kennedy raised the same points and one or two others. In talking about constitutionality and county registrars, perhaps the Minister would at least give an undertaking to reconsider the matter. If not, perhaps he might ask the President to refer this matter to the Council of State, or inaugurate some kind of machinery to look into the constitutionality of the Bill and have it tested.
Prima facie, it seems to me that this section is in conflict with the clear decision of the Supreme Court in O'Farrell v Gorman. I hate to mention appeals to the Minister. I do not like them, either incorporated in statutes or in speeches in this House, but I would join with Senator Nash in an appeal to the Minister to reconsider this matter. It will not in any way impede work on the Bill but will make it a much more useful measure and, at the same time, clearly establish the Minister's absolute concern in the judicial powers of the Constitution.
I should like to follow one point the last Senator has made. Is the Minister under a misapprehension in this? He has spoken of it as a matter of simple arbitration. It is clearly established in practice and, in view of what was said in O'Farrell v. Gorman, is a matter of law. Where matters concerned are merely matters of arbitration, they are not under the exercise of judicial function and can be carried out by a body under the courts. What is equally clear is what is said in the judgement in the O'Farrell v. Gorman case, that where the matter for examination goes beyond the mere calculation of an amount of money and concerns legal rights, then it becomes a matter exclusively for the courts. In putting that judgement in that case the Supreme Court quoted, with their approval, a case decided in Britain in relation to an arbitration court which decided that many if not all the functions of that arbitration court were matters appertaining to the judicial powers, and authority to deal with them could not be committed to any tribunal but a court.
The distinction made there was a distinction that powers conferred on the so-called tribunals are in the nature of calculation on the mere ascertainment of some physical fact or facts, and not the declaration of or giving effect to a controverted matter of legal rights. This was quoted in the O'Farrell v. Gorman case.
They went on to say that judicial power is concerned with the ascertainment, declaration and enforcement of rights and liabilities of the parties as they exist, or are deemed to exist the moment the proceedings are instituted, but the function of an arbitral power was to ascertain and declare what in the opinion of the arbitrator ought to be the respective rights and liabilities of the parties. The Minister is giving a power to parties outside. What are their legal rights? This goes clearly beyond the original power of arbitration and falls right into the area of this judgment, in which O'Farrell v. Gorman were viewed to exercise judicial power and were viewed to be outside the rights of any body other than the courts.
Somebody has been involved in judgment of this kind and he wrote to me and brought it to my attention. He asked me not—if I remember the words correctly—"simply to oppose the Bill but to throw it out" That was what he suggested was necessary in view of its constitutional position. I cannot see what benefit the Minister will get by digging in his heels on this issue. If the suggestion from both sides of the House were in some way to invalidate the Bill or to make it ineffective, one could see the Minister, in his anxiety to get the measure through, taking his chance on the constitutionality of it. One could almost sympathise with somebody in that position. However, the Minister has not refuted the proposal. He has not said it would be an inappropriate procedure. He has not told the House or attempted to show why it would not work but he has reiterated that he wants the section to stand without saying what is wrong with the alternative proposal. He has done this on the basis that he believes the proposal in the Bill is constitutional. He must accept that there is a doubt, whatever he has been advised.
In the past, Fianna Fáil Governments have been unfortunate in the advice they have received on constitutional issues. It has been overturned more often than it has been supported on constitutional issues in the courts. Whatever advice the Minister has been given—advice of a kind which, in the past, has got the Government into unnecessary difficulties—he ought to have regard to the other views expressed. The Minister ought to have regard to the obvious existence of prima facie doubt and to the fact that, as far as a former member of the judiciary is concerned, we have a very clear-cut view on it which might very well be shared by other members of the judiciary.
As there is nothing to be lost by the suggestion, I appeal to the Minister— rather than involve ourselves in the kind of controversy which might invalidate the Bill and mean that we should have to start the whole process all over again—to consider it between now and Report Stage.
I am not a legal luminary——
I understood the Senator was. However, speaking as a man in the street, it seems to me now, having heard those who have contributed in a very practical manner to this debate, with all the experience and knowledge they have so far as the law is concerned, that these people have pointed out to the Minister the dangers that exist with the retention of the registrar here under this section. I propose that the Minister drop the section. Even if I do not ask the Minister to accept Senator O'Quigley's and Senator Garret FitzGerald's arguments, I would ask him to consider carefully Senator O'Kennedy and Senator Nash whose contributions have been along the same line.
Senator Nash pointed out the geographical difficulties which would exist, apart from the legal dangers that are there. It is obvious that the Minister has brought in this section in the belief that it is a practical innovation which would simplify matters for the parties concerned. It seems, from this debate, that, far from making it simpler, it may create very great difficulties for the parties concerned and involve them in further litigation in the forms of appeals.
The District Court, apparently, is the convenient place for matters of this nature to be decided in the normal way. It is the most convenient for the parties concerned by reason of the number of places in each particular area where the justice is available for making these decisions. Similarly, we had the point that, if a justice feels he is in any way personally concerned by relationship with one or other of the parties, it is the normal practice for him to get some other justice to make the decision to ensure that a decision without fear or favour will be made.
For these reasons, I feel that, rather than ask the Minister to reconsider it. he should now agree to drop this proposal. I believe he did think it was a practical innovation which would bring advantages but it is obvious that, instead, it may create further difficulties.
Article 37 of the Constitution, which envisages the exercise of limited functions outside the courts, relates to powers of a judicial nature so that, in effect, these limited functions carried out by bodies other than the courts established under the Constitution are of a judicial nature. This is to meet Senator Garret FitzGerald's point in which he sought to imply that any matter that required judicial consideration would automatically have to go to the courts. The Article of the Constitution envisages functions and powers of a judicial nature for various forms of arbitration bodies and the county registrar, as proposed in the Bill. The county registrar at present is an officer of the court and at present carries out many duties of a judicial or quasi-judicial nature.
That is incorrect in law.
On a liquidated claim, he can mark judgement. He can mark judgment in any case where no defence is entered. In the case of a liquidated sum——
There is a contest —the plaintiff and the defendant—and the county registrar can mark judgment. The taking of accounts and holding inquiries is a most detailed and complex business which is carried out every day of the week by county registrars. It is to them that this arduous and complex legal work of ascertaining title arising out of very complex estates is entrusted. They have to ascertain who are entitled. It can be very difficult to work out the shares to which the next-of-kin are entitled out of the estate, the amounts to which they are entitled and the credits and debts of the estate. All of these complex matters are already carried out by county registrars. The eventual certificate is approved by the court but the county registrar carries out this work, with both solicitors in chambers, depending on their advice and submissions and on his own legal knowledge.
There is nothing of an innovation in this. Being a reasonable man, I shall certainly reconsider the matter between now and Report Stage and look carefully into it again although I have considered it very closely myself and have taken advice on it. My anxiety is to secure an expeditious way whereby the tenant, knowing his rights, and the landlord, knowing his or her rights, following the guide lines in the Bill, would have an expeditious way of resolving disputes. In probably 99 per cent of cases, in practice, with the guidelines in the Bill and compensation in regard to purchase—these guidlines and X years purchase based on national loan stock—there will be no recourse to any form of arbitration. In the remaining few cases that would go to the county registrar for investigation, in practice, in 99 per cent of these it would be arbitration between two valuation figures. Technically, Senator O'Quigley is right when he says that he has to ascertain the persons to be compensated. This is true. At present, an arbitrator must find out the person or persons to be compensated. In practice, the main function of the county registrar as envisaged in the Bill will be to decide between two valuation figures, if there is recourse to him, but it will arise in only a very small minority of cases. I shall have a look at it very closely again before Report Stage, bearing in mind what has been said by Senators.
I regard the suggestion of having recourse to the District Court as completely impracticable. It is neither a court of record nor of title. It has no office machinery at its disposal. If I were to look to the courts to carry out the arbitration envisaged under the Bill, I would go to the Circuit Court. From the point of view of practicality, the Circuit Court, being a court of record, a court of title, where the records and title of the county will be available, is the appropriate court, with the staff available and all that, to carry out the job, if I am persuaded by the Senators along the line of country they have been arguing here. I do not regard the District Court as being the appropriate court for this type of job and that is why, when trying to secure effective simplified procedure, I went to the county registrar. If I were going to be persuaded off that, I would go to the Circuit Court.
I will look at the matter very closely between now and Report Stage.
I am pleased that talk has achieved something, for once. To get the Minister reconsidering the matter is of some value and I am grateful that he has at least undertaken to reconsider it. I hope that his consideration will be helped by what has been said on all sides of the House.
I want to say something which may be of assistance to him in reconsidering the matter. I am not concerned and do not mind whether District Courts are courts of title or courts of record or not. If this Parliament wants to make these courts of record, it can do so and do so quite constitutionally. In addition, I do not think that being a court of record or not makes much difference. If necessary, we can say that a register shall be compiled by the District Court clerk. Look at all the licences under the intoxicating liquor laws kept by district court clerks, and very efficiently. They are consulted every day by conveyancers and purchasers of property, big public houses. There are these registers kept. The machinery can be provided to adapt the District Courts, if necessary.
On the other hand, there is no reason why the District Justice should not have made available to him such machinery as is at present in the Circuit Court. That can all be done by Act of Parliament.
There is just one other matter to which I should like to call the attention of the Minister in relation to the section. It may have been dealt with already. I should like to ask him why it is that in subsection (4) it is provided that the court may order that the purchase money payable to that person shall be lodged in court. In relation to the section as it stands, if the county registrar is to be the person to determine these matters, I do not see how the court comes into it.
The money is lodged in court.
But why have it that the court, not the county registrar, may order? On the Minister's terms, why would it not be the county registrar who would order that the money be lodged in court?
The money is paid into court. The county registrar is acting as a Circuit Court officer in carrying out the arbitration and the money is paid into court and must be paid out of court by order of the court.
I think this subsection betrays the fact that the court was already in it, in subsections (1) to (3).
In a later amendment I am going to delete it anyway, so far as it concerns the order for payment into court.
This may betray that and I hope that is so. It will be easier for the Minister to take a step back, which will be a step forward.
If the Minister is going to insist on his county registrar, which I hope will not arise, he should consider amending that to delete "court". We will have to leave that over to Report Stage.
I have an amendment. It is not quite that but it is on that point.
Question put and agreed to.
SECTION 9.
I move amendment No. 28:
To add to the section a new subsection as follows:—
"( ) The costs and expenses referred to in subsection (1) of this section shall be taxed by the county registrar who made or who could have made any order under section 8.
Under the existing procedure, certainly in the High Court, if you want to have costs taxed by the Taxing Master, you must have an order of the court. It seems to me that in this section there should be power in the county registrar to tax costs and expenses. It may be that section 17 provides for that but I do not think it does. It provides for the giving of security for costs. The county registrar should be in a position either to measure the costs or to tax them. It would be necessary to amend this section in accordance with my amendment.
I think section 19, subsection (1) meets the point.
I do not think that is sufficient, because what is to happen in a case where a landlord and tenant agree and do not have any arbitration before the county registrar? Is there any provision in the Bill whereby, if there is a dispute as to who is to be paid what amount of costs or expenses, this will be determined by some authority?
Section 17, subsection (1) gives the authority to go to arbitration and section 19, subsection (1) gives the authority to the county registrar conducting the arbitration to direct in what manner costs will be paid.
I would not be too happy about that because section 17, subsection (1) provides that application may be made to the county registrar in relation to all of these matters —costs, expenses, and so on. It says:
any person concerned may apply to the county registrar for the area in which the land to which the application relates is situate to have the matter determined by his arbitration...
So that costs and expenses would have to be determined by arbitration. It seems to me that that is a grossly cumbersome procedure, instead of having the bill taxed on the ordinary basis by the county registrar, by having the bill of costs submitted, as happens at the present time. It seems to me, as it stands, in the uncontested cases, except as to the amount of costs, there is no authority in the county registrar to determine these except by reference to arbitration. I think the Minister who is as anxious as all of us to cut down expenses would agree that that is unnecessarily cumbersome procedure. In addition, I think it is desirable that as between solicitor and client, if the acquiring tenant is not satisfied with the costs being charged by the solicitor, if he thinks they are too high, he should be entitled to refer these to the county registrar. It may be that he can refer them to the Taxing Master of the High Court but that is again an unnecessarily costly and cumbersome procedure.
Perhaps the Minister would look into this between now and Report Stage but it does seem to me to be necessary to have a simple provision for the taxing of costs in (a) uncontested cases and (b) contested cases, first of all, as between solicitor and client and secondly, in cases where the only issue between the acquiring tenant and the landlord is the question as to costs. The Bill as drafted does not provide for this simple expedient of reference to the county registrar to tax the costs.
An Leas-Chathaoirleach
Is the amendment withdrawn?
I want to hear what the Minister has to say on that point.
I will look at it between now and Report Stage but I think it is really a matter of terminology. If you look closely at sections 17 (1) and 19 (1), I think you will find that the matter is covered but I will look at it between now and Report Stage, certainly.
Amendment, by leave, withdrawn.
Question proposed: "That section 9 stand part of the Bill."
I should like to draw the Minister's attention to the provision under which a person who proposes to acquire the fee simple shall be liable for the payment of the reasonable costs incurred in complying with the provisions of the Act by a person upon whom a notice under section 4 has been served. I would suggest to the Minister that it can be envisaged that a person other than a person upon whom a notice has been served may have to join in the conveyance to the person acquiring the fee simple. Such a person may appear after the notices have been served in the first instance and, where such person joins in the conveyance, provision should be made for reasonable costs. I imagine that would be the intention. The position could be remedied by having a slight amendment, by the addition of "any other necessary party to the conveyance". It is possible, in the second instance, that people may have to join even though notice has not been served on them in the first instance and obviously they should be entitled to their reasonable costs.
Section 19 (1) is global and gives very wide powers in relation to the awarding of costs.
That is in relation to an arbitration.
I agree. I shall have a look at the section.
With regard to costs and expenses, costs can run to a very high figure. Expenses can be incurred in carrying out surveys. It might be necessary to have maps drawn, and so on, in order to make apportionments. Experts in this line of law have made representations to me in regard to this matter. Expenses can run to a very high figure and I am wondering whether or not the Minister has considered this aspect and whether it might be possible to limit in some way the expenses incurred by saying they shall not exceed the amount of the costs or shall not exceed ten per cent. Sometimes solicitors are inclined to be fairly lavish from the point of view of the persons they employ to inquire into matters of this kind and, if we are to avoid unnecessary expenses being incurred, we should put in some proviso in relation to expenses necessarily incurred. In that way we might tone down the level on which the solicitor acting for the tenant purchaser would pitch his requirements. Expenses in a case like this could outrun the costs and clients might find the acquisition of the fee simple not worth it after all. Have any calculations been made or are there any examples of the type of costs that will be incurred? We should restrict them in some way.
The trouble is an infinite variety of situations give rise to expenses and that makes it very difficult to fix any arbitrary figure. I shall consider both points raised.
"Necessarily" is already in the Bill.
Question put and agreed to.
SECTION 10.
Question proposed: "That section 10 stand part of the Bill".
One would not like a landlord who has no great living being unnecessarily burdened with expenses. If somebody starts acquisition proceedings and at a certain stage decides he will not go ahead, it might well be that the landlord would quite unnecessarily incur expenses which he would be unable to recoup from the tenant. I am wondering whether there is provision in the Bill entitling a landlord, where proceedings are discontinued, to recover expenses necessarily incurred by him as a result of a notice being served on him by the tenant under section 4.
Section 9 should benefit the landlord and section 10 should benefit the tenant. If the Senator reads the two sections together, he will see, I think, that what he has in mind is covered.
Question put and agreed to.
Section 11 agreed to.
SECTION 12.
Government amendment No. 29:
In line 12, to delete "the person to whom the rent is payable and upon" and substitute "each of the following persons who can be found and ascertained, that is to say, the person to whom the rent is payable and".
This amendment is consequential on amendment No. 17.
Amendment agreed to.
Question proposed: "That section 12, as amended, stand part of the Bill."
There is a reference here to the "prescribed form". I take it this is one of the matters upon which the Minister will make regulations under section 33.
Question put and agreed to.
Section 13 agreed to.
SECTION 14.
Amendments Nos. 30 to 32, inclusive, not moved.
Government amendment No. 33:
To add to the section a new subsection as follows:
"( ) Where a person upon whom a notice under section 12 of this Act in relation to rent is required to be served cannot be found or ascertained, the person shall be deemed, for the purposes of this section, to be a person who is required by this Act to join in the apportionment of the rent."
This amendment is consequential on amendment No. 17.
Amendment agreed to.
Section 14, as amended, agreed to.
Sections 15 and 16 agreed to.
SECTION 17.
Amendment No. 34 not moved.
I move amendment No. 35:
In subsection (3) (d), to delete all words from and including "before" in line 48 down to and including "person" in line 49.
The Minister has already indicated that he is accepting this amendment.
Yes: we shall the words after "witness".
I am glad the Minister has accepted this. It shows how far the Minister strayed from the straight and narrow when he included those words.
It is a demonstration of the whole purpose of a Committee Stage in parliament.
I agree, but I suggest to the Minister that he may have strayed a good deal further than he appreciates.
Credit where credit is due.
Amendment agreed to.
I move amendment No. 36:
In subsection (4), line 52, to delete "29, 35, 36,".
The Arbitration Act apparently is to apply to this particular section. Section 29 of the Arbitration Act provides for the reference and award to be at the discretion of the arbitrator or umpire. Section 35, which is being deleted, empowers the arbitrator to state a case to the High Court and section 36 empowers the court to remit matters to the arbitrator from time to time. It seems to me that having regard to the complexity of the landlord and tenant law and the complexity of this particular Bill, there may well be cases where it would be necessary for the authority determining these matters between landlord and tenant to state a case, and if at present we have provision in our legislation empowering a District Justice to state a case to the High Court, or indeed for the High Court or Circuit Court to state a case to the Supreme Court, we ought not to exclude from the provisions of this Act the power of whoever is determining matters under this Bill, more especially if it happens to be the county registrar, given under sections 35 and 36 to state a case to the High Court. The Minister should leave that power in the Bill, the more so if it is to be the county registrar. If it is the Circuit Court judge who is to determine these matters, he may have that power under the Courts of Justice Acts but it seems desirable that the power should be there if the county registrar is to be the deciding authority.
I would suggest that going on the basis of the county registrar section 22 provides adequate appeal procedure to the Circuit Court. I would be perfectly happy with section 22 as it stands. It gives the right of appeal to the court and it is the procedure set out in this Act. I can see some merit in what the Senator says but what we have in the Bill is adequate.
I do not want to argue this too strongly for fear that I might appear to be suggesting that the county registrar should be left to decide, but the Minister will agree that the Circuit Court by its constitution, because it is so far removed from authorities, law reports and that kind of thing, is not always in a position to give to matters of a complex legal character the kind of consideration the Circuit Courts would like to give. Consequently, although there is an appeal to the Circuit Court under the Bill as drafted, if complex questions of law arise, and even under the Rent Restrictions Act various complex questions have arisen for determination, and cases have been stated by the High Court to the Supreme Court, where you have that kind of situation, and where the High Court on circuit not infrequently states a case to the Supreme Court, it is perfectly obvious that there should be a right to have the matter determined finally as a matter of law by some court. I suggest that one Circuit Court judge's decision does not bind another Circuit Court judge at present and if you want to have some degree of finality, there should be a right to have a case stated.
If you are going to have the county registrar appealing to the Circuit Court, it does not follow that one judge will follow another's decision. Certainly he is not bound under the existing law. Therefore it is desirable, in order to have some kind of finality, if there has to be a case stated, that it should be determined in such a way that it will be the law applying to the whole country. Under the Transport Acts, where an arbitrator is appointed, the arbitrator has the right to go to the Supreme Court. It would be less costly and would bring some finality in any particular case stated and from a national point of view, it would be much better if we were to provide for a case stated to the High Court and that that would be final and unappealable.
It may be that that could be done even as the Bill stands under the general Courts of Justice legislation. Here you are rather on opposite sides of your argument.
That is, if we are going to retain the county registrar in the Bill.
It is quite clear that even in the undesirable event of the county registrar being retained, to allow him to make a case stated would certainly give him judicial functions which would be against the Senator's argument. It would be clearly against the general principles on which the Senator has been arguing.
I think you are at cross-purposes here.
In any case stated the person finds certain facts. Juries find facts every day and they are the arbitrators of the facts and on the basis of these facts they decide this or that. If the answer to "A" is in the negative, then does this question arise and so on. That does not derogate from the arguments I have been making earlier. I do not want to press this as it will be quite unnecessary if the Minister, as we hope he will, makes the decision in regard to the county registrar. Therefore I ask for leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Section 17, as amended, agreed to.
SECTION 18.
Government amendment No. 37:
In paragraph (a), page 11, lines 19 to 21, to delete subparagraph (iv) and substitute the following subparagraphs:
"( ) if the land used for the purposes of business or exceeds one acre in area and is not used for the purposes of business, the area and nature of the land, its location and user and the state of repair of any buildings or structures thereon,
( ) the price paid for the fee simple or any other interest in the land on a sale taking place on or after the 22nd day of May, 1964,".
The first of the paragraphs in the amendment is in substitution for subparagraph (iv) of section 18 (a). The net change involved is that the county registrar will be required to consider the nature of the lands, their location and user and the state of repair of the buildings only when the land is used for business and is over one acre in area. Residences as usually understood are excluded from this particular investigation. This amendment was recommended to me by the Association of Combined Residents Associations. They pushed it strongly and I could see merit in their case in that these sorts of stringent criteria should not apply to cases of residences.
The second of the subparagraphs is new and requests the county registrar to include, in the matters he would be considering in relation to the purchase price, the fee simple and the price already paid for it if it changed hands since 22nd May, 1964. That is the date on which the Ground Rents Commission reported.
It has been recommended to me, and I see force in the argument, that this should be taken into consideration because of the speculation which may have taken place in ground rents and price variations since the Commission reported. From then on both tenants and landlords were aware of the situation. The provision has been inserted to answer criticism that there has been speculation in ground rents. This case has been made and for that reason I think it no harm to make the county registrars consider the purchase price of any fee simple which has changed hands since the Commission reported.
Amendment agreed to.
I move amendment No. 38:
In paragraph (a), page 11, to delete subparagraph (viii).
In this section we are laying down the kind of consideration which what I shall refer to in the neutral term as the determining authority should bear in mind in arriving at the price of the fee simple. We should be quite clear. I agree with (i) to (vii) but then "such other matters as are in the opinion of the county registrar relevant to the determination of the purchase price" is the next provision. I think we should set down what are these other matters. Paragraph (viii) might include such things as the sentimental attachment somebody had to being a landlord or something of that kind. There are many things possible and I do not know what the authority might take into account. I understood the position to be that the price would be determined mainly by a reference to the current interest yields of securities of Government issues for subscription in this State and what would seem to be the value of the ground rent which they are receiving.
Having put in these other matters in paragraph (a) of this section, I think we should leave it at that and I am not inclined—certainly if the determining authority is that referred to in the Bill—to give that kind of wide power to the authority. It might be otherwise if the determining authority were different. I should like the Minister to indicate why it is necessary, having specified all these things, to leave such a wide field open to the determining authority so that it could take into consideration almost anything, it seems to me, in arriving at the price of a fee simple.
You must give credit for a certain degree of common sense to any determining authority in the exercise of discretion and I am quite certain that ludicrous or emotional factors would not be taken into consideration. It is not hard to envisage in landlord and tenant legislation that situations could arise which are not covered by the criteria set out earlier. This is an omnibus or safety valve section, to ensure that, if there is some other factor which has been missed in the various criteria set out, it can be taken into consideration by the county registrar.
For instance, in the case of any tenancy that has less than 25 years to run, you are outside the criteria of the maximum rate set out in paragraph (b) which specifically excludes property which has less than 25 years to run for the reason that the landlord has a substantial equity in the property. Therefore, we take that type of property out of the maximum purchase price of x years because there are factors which give greater equity to the landlord and it is conceivable that he would be entitled to more than the maximum. Would he apply a sliding scale according to the length of the unexpired term?
Another point is that potential redevelopment value might be regarded as a factor to be taken into account. I am only speculating in this field where there are an infinite variety of situations possible. I think it is safer to have an omnibus safety clause such as we have here which will allow the arbitrator, the county registrar, to consider any other matter that might arise in the particular circumstances of a particular case.
May I ask the Minister whether there is any implied obligation on the determining authority to say what are the considerations that he took into account? I would be inclined to agree with the proposer of this amendment that it would be dangerous to give overall powers without at least imposing on him the necessity of saying what is the further factor which he took into account.
Yes, I could consider that. That is something we might put in.
I think that would be very useful in the case of an appeal to the Circuit Court.
Amendment, by leave, withdrawn.
An Leas-Chathaoirleach
It is suggested that amendments Nos. 39 and 40 be debated together.
I move amendment No. 39:
In paragraph (b) (ii), page 11, to delete all words from and including "or" in line 44 down to and including "land" in line 47.
In these amendments we are trying to get a better deal for the tenant whose lease has less than 25 years to run, the person who together with his forebears has paid this ground rent for 96 or 98 years and is now being excluded from the more favourable conditions in the Bill. We have in mind purely residential holdings, places with no business potential. In quite a few cases, the total amount paid to landlords over the years has been very considerable and even bearing in mind the much higher ground rents of recent years, most landlords would not really suffer financially. The Minister in the Dáil on 22nd October said he would have a look at the provisions of the Bill to see if he could find a way around this before the Bill came to the Seanad. Perhaps he would let us know the result of his consideration.
Our view is that the application of the better terms to all tenants to purchase their ground rents, whether their leases have over 25 years or less to run, would not cause hardship to the persons whom the Minister described as having a very definite stake in the property. Our proposal would really mean that in the case of a £12 ground rent with 25 or more years to run, the purchase price would be about £156. Our arrangement proposes the same price for the lease with under 25 years plus 20 per cent which would amount to, say, £186. That taking account of the amount already paid to the landlord would not appear to inflict any great hardship on the property-owner.
I think it is better to leave it to the discretion of the arbitrator in this case because there are many factors involved in different cases. In some cases there would be greater hardship on the landlord than others and I would be against having a fixed percentage. In fact in the sort of case envisaged by Senator Miss Davidson the county registrar might give something in the nature of what she suggests. There are variations in equities as far as the landlord is concerned from one year up to 25 years. As the years go down there is greater equity residing in the landlord who is entitled to an increase in rent on reversion under the law at present. Coming back again to the Constitution, we must avoid any element of confiscation or what would appear to be confiscation. As I say the landlord's equity increases as the end of the lease approaches, and I am sure the county registrar or whoever determines these matters will evolve a rule of thumb method of dealing with the matter which will be reasonable. The compensation should not go too high over the maximum, the more favourable maximum as far as the tenant is concerned, in a case which has more than 25 years to run. This is a matter on which the situation can be so varied that we have to rely on the good sense of whoever is determining the purchase price rather than impose a rigid percentage.
Will the Minister be prepared to give any guideline by way of regulation?
I would prefer myself to rely on the common sense of the arbitrator. However, we shall have a look at it.
Amendment, by leave, withdrawn.
Amendment No. 40 not moved.
An Leas-Chathaoirleach
It is suggested that amendments Nos. 41 and 43 be taken together.
I had anticipated taking No. 42 first, and assumed that No. 41 would be moved when I came to No. 43. Would it be all right if I moved No. 42? Amendment No. 41 is consequential on No. 43.
An Leas-Chathaoirleach
The three of them may be taken together.
There are two different principles involved. No. 41 is merely a verbal amendment consequential upon No. 43, not upon No. 42.
An Leas-Chathaoirleach
If No. 41 is not moved, Nos. 42 and 43 may be discussed, and if No. 43 is carried, No. 41 may be brought back on Report.
Amendment No. 41 not moved.
I move amendment No. 42:
In paragraph (b) (iii), page 11, line 58, before "of" to insert "of one half".
Paragraph (b) (iii) of section 18 is rather long and I do not intend to read it entirely, but it lays it down that "the purchase price shall not exceed the amount which, if invested on the date of the award ... would produce annually in gross interest... an amount equal to the amount of the rent payable under the lease..." My amendment is simply to say that the amount should be equal to one half of the rent payable under the lease. In other words, where the Minister is suggesting that 13 or 14 years purchase would be equitable for the redemption of ground rent, I am suggesting that half this amount, that is, seven or 7½ years purchase, is sufficient. In the drafting of this Bill it seems to me that something rather odd is said earlier in paragraph (a) of this section, which provides:
the purchase price shall, subject to paragraphs (b) and (c) of this section, be the sum which, in the opinion of the county registrar conducting the arbitration a willing purchaser would give and a willing vendor would accept for the fee simple or other interest having had regard to...
The implication here is that ground rents are an ordinary commodity and that their value, as laid down in this Bill and as decided by an arbitrator, should relate simply to an open market price. What I am contending is that ground rents are very far from being an ordinary market commodity, and I am suggesting that in some cases they have no validity at all and constitute, at the very least, easy money for a speculative builder or for a landlord who has simply invented a ground rent having taken full purchase price covering site development and so on— representing easy money to be extracted from the tenant. Very often it is even worse than that. The ground rent is an extortionate and illegitimate levy upon the tenant. I should like to quote what the Minister himself said on the Second Stage at column 149, volume 62, of the Official Report of the 9th November, 1966:
The inflation in ground rent was a post-war phenomenon but certainly not in the last five years.
It is recognised by the Minister that after the war there was an inflation in ground rents. They did not deflate. They are still inflating. It is quite possible that fresh ground rents have not exaggeratedly inflated during the last five years, but he admits that they were seriously inflated in post-war years. That being so I am contending that it is not quite equitable to compensate the landlord in full for inflated ground rents, for ground rents which perhaps should never have been charged at all or the amount of which has been grossly exaggerated by him during this post-war period referred to, and admitted, by the Minister, or at some earlier or later time. Consequently when the Minister says at column 145:
On current interest yield, this would give about 14.8 years purchase and, of course, this will vary according as interest rates vary, but the formula will ensure that a landlord so compensated will not suffer any diminution of income.
When the Minister says that, I am inclined to question whether this is really, in the Minister's own words, "a fair formula". I am suggesting a great number of ground landlords do not deserve to be compensated so that they will suffer absolutely no diminution of income. I am prepared to grant that the justification for ground rents will vary very considerably and that some may be more modest than others. In suggesting that the ground landlord should get just about one half of the sum contemplated by the Minister, I feel the difference is being split, and that some sacrifice is being asked from the landlord as well as some sacrifice from the tenant who may well have been paying an inequitable ground rent for years, a ground rent which never had any justification whatever.
I refer to the very relevant speech on the Second Stage of Senator Flanagan at column 142:
I do not agree with Senator Nash that ground rents, particularly new ground rents, are based on the purchase price and development costs of sites. I have had very considerable experience of small building schemes and I have quite considerable knowledge of private building schemes carried out in recent years, within the last 20 years, when the habit of charging ground rents has become more or less universal even in country districts, and I know that in the case of building new houses or small housing schemes by speculative contractors the prices at which those houses are offered for sale include every possible item on site purchase price and development cost of sites, and the charging of a ground rent over and above that is just like "think of a number and fix that number to the particular site, and regard that as ground rent to be charged in aeternum”.
I feel that Senator Flanagan was speaking from experience and telling the truth and describing very accurately the nature of a great number of ground rents whose basis is mythical, has nothing to do with a value and for which it is in fact inequitable to give the ground landlord any compensation at all. I am not suggesting he be given no compensation. I am merely suggesting that the rate of compensation which the Minister has in mind, and which will offer no diminution at all of his ground rent income, is inequitable and I am suggesting it should be halved.
Under the Bill as at present before us, the tenant might just as well continue to pay the ground rent, because he will get nothing by putting up a capital sum which will bring in exactly the same return to the landlord as if the tenant were continuing to pay the ground rent. What is the point in that case of the tenant buying his fee simple? Senator Eoin Ryan said he would not be surprised if the number of people redeeming their ground rents under this Bill turned out to be very small. This could easily be a function of the high price they have to pay. It is for this purpose I am proposing that they pay not the capital sum which would bring in the same rate of return to the ground landlord as if he had never lost the ground rent, but just half that amount. Not only will the tenant, in my submission, be gaining nothing, but under the terms of this Bill not only is he being forced to pay the full capital sum to bring in exactly the same return to the landlord but he is also being asked to pay the full costs of the conveyance. So, he will be quite seriously out of pocket. His revenue will be diminished, although the revenue of the ground landlord is to be protected. Not only that—but as was clearly shown again by Senator Flanagan, this time at column 143— but the tenant will be subjected to the extra income-tax burden which he does not have to pay while paying ground rent.
For these reasons, therefore, it seems to me that the Bill is far too generous to the ground landlord. I feel he will be doing pretty well on average if he gets half the amount the Minister thinks is legitimate compensation. I am not suggesting that this would be far nearer to an average equitable sum than to pay him compensation which will give him the full amount of what he has been taking from the tenant, sometimes in quite an extortionate way, down the years. For that reason I am proposing, therefore, that the amount be not the full amount but half the amount that is envisaged in the Bill as it is before the House.
I support Senator Sheehy Skeffington's proposal. As I said at an earlier stage, the rents applied in recent years are definitely inequitable. The cost of purchase under this Bill, having regard to what the tenants have already paid in the years they have been in the houses, constitutes a hardship on the tenants concerned. Had I seen the possibility of inserting this amendment, I would have had it down myself.
I shall enter on Senator O'Quigley's ground and invoke the Constitution.
Good. The Minister is making more progress.
Seriously, in matters of this kind, concerned with property rights and compensation payable to people on the acquisition of property, we must be careful to hold a balance between all the parties. That is a fundamental duty of the Houses of the Oireachtas in dealing with such a matter. It is a matter to which I gave considerable thought— the question of having a rigid number of years purchase or a more flexible system such as we have here. We invented this formula, which I think is an excellent one, in which we equate the compensation to be paid to the ground rent landlord with what he or she would get from current national loan stock.
As far as income is concerned, ground rent income is the same as certain income one gets from guaranteed stock. Traditionally it has been argued that what the people in receipt of that sort of income—many of them are not wealthy people and many poor people receive ground rents—wanted was to get a certain secure income such as investors in Government stock also sought to secure. I do not think it is feasible to suggest that such a person's income should be halved automatically by a Bill of this Oireachtas. In the first place, it is simply not justice. Secondly, it would be blatantly unconstitutional. Any such person who found his property confiscated in this manner—that is what it amounts to— would question its constitutionality.
It is not relevant to go into an investigation here of the inflation or otherwise of ground rents in the past. We have to deal with the situation as it is now in 1967 and deal with the compensation we will provide for in the future in respect of people who now have incomes. Senator Sheehy Skeffington may be right in saying there was inflation in ground rents after the war. I said myself that ground rents were at a high level after the war. But in many cases people may have purchased ground rents at high prices at 20 or 25 years purchase, which was the sort of price obtaining in 1940. They will have to make do with a much lower rate than even under my provision, which sets out 13.2 years purchase related to the yield from stock. If you cut that by half again, you are into the field of confiscation.
By setting the guideline to an amount of compensation which would enable a person to reinvest in current Government stock, there is no diminution of income; but in adopting Senator Sheehy Skeffington's proposal there is blatant confiscation. If overnight you are going to cut a person's income in half by a provision passed by this Oireachtas, I do not think it would stand up for an hour in the Supreme Court. That would be blatantly unjust in a measure of this kind. Where we are giving a new right to tenants, we must also ensure that in giving that new right to them fairness and justice is done to the person against whom the right is being exercised. The minimum we can do is to provide for that person to reinvest and secure the equivalent income he or she obtained prior to the acquisition or purchase provisions in this Bill. Any other move along the path suggested by Senator Sheehy Skeffington could not stand on any reasonable criterion.
I am a bit surprised by the appeal to the Constitution because, of course, various Ministers have the power—as has the Minister for Industry and Commerce, I believe—to fix prices. There was one suggestion, for instance, that the millers have complete right to sell flour at any price they like because it is a free market and you would be interfering with their property and income if you did not allow them to sell it at any price the flour will get. Of course it may be that the Minister is right and that any tampering with prices, such as the price of flour or the price of ground rents, is unconstitutional. If that is the opinion of the Minister, then presumably he is in a minority in the Cabinet because the Cabinet decide otherwise and apparently do not fear the constitutional consequences arising out of limiting the income of the flour millers.
Until the flour millers took legal action, they did not.
The Government are perfectly right to have this power to fix prices. I do not think it is unconstitutional but I should like to see them using that power more often and using it not only in relation to the flour millers but also in relation to ground landlords. After all, one of the slogans on which many of our political Parties have grown up was "Abolish ground rents". It was not the slogan "Compensate ground landlords for fear they would lose a penny of their income". "Abolish ground rents" would seem to imply they were simply being wiped out without compensation. I am not suggesting that but I am suggesting that the compensation might be more in accordance with a common sacrifice: some income by the ground landlord or some money by the tenant who will have to pay costs and income tax as well.
The Minister says we have to deal with the situation as it is now, whether there was inflation or not. What he is really saying there is, even though some ground landlords may have quite illegitimately and unjustifiably inflated the sum they had been taking in ground rents from unfortunate tenants, since they have successfully got away with robbery for years, we are faced with a situation in which we must fully compensate them for the loss of their loot. I do not know whether, constitutionally speaking, if you find a highwayman has been getting away with holding people to ransom for years at a certain rate and you want to buy him out you have to compensate him in strict proportion to the rake-off he has been getting down through the years. A stamp forger recently was lucky enough to get that type of compensation but I wonder how many of us think that this is the legitimate way to compensate a person who may have been earning an income, either inflated or not justifiable at all.
I revert to the terms used by Senator Flanagan when he said, speaking from experience, that many times in the past 20 years a ground rent was simply slapped on to a property after every other conceivable profit had been paid. The Minister says: "Well, yes, but we are facing the present situation in which a robber landlord has been getting away with this for so long that it would be unconstitutional now to interfere with him in any way or to cause the slightest diminution of his income". But the Minister does not say it would be wrong to cause the diminution of the income of the tenant because, as has been shown, the tenant will pay up the full capital sum, which will be the equivalent of the ground rent he has been paying, plus the conveyance and other costs, plus income tax. Therefore, the tenants' income will be seriously reduced.
This, apparently, does not matter and, in the view of the Minister, no constitutional issue arises therefrom. In other words, the Minister wants the ground landlord to be compensated by giving him an income equivalent to the income he has been getting, whether or not that income was justifiable in the past. That is the principle to which I am objecting and I hope I shall get some support in the Seanad for the view that the sacrifice might be on both sides—on that of the tenant and also on that of the ground landlord.
I cannot agree with what Senator Sheehy Skeffington says. First of all, we shall deal with the question of income tax. If a tenant is paying £20 a year ground rent, before paying it, he stops £7 income tax; he pays £7 income tax to the Government which is stopped, and he pays £13 net to the head landlord. Therefore, I do not know how it enters into the picture at all, unless he means it in this way— that a tenant who is paying, say, £15 a year ground rent should get the income tax on the ground rent; he has £15 a year from £200 of a new national loan at 7½ per cent.
On that £15 from his £200 in national loan at the moment, if he is taxable, he is paying income tax. He decides to buy out his ground rent, which is £15 a year; he sells his loan holding and pays cash for the ground rent. Now he is no longer paying ground rent but he no longer has the dividends from the loan. On the one hand, he had £15 from national loan and was paying £15 ground rent. The only difference is that as the owner of his house, he is paying Schedule A tax on one and a quarter times his poor law valuation. It is not altered in the slightest by the £15 ground rent. Therefore, to say the tenant is penalised by reason of income tax is not so.
We come then to the question of what is an inflated ground rent; how is it decided, what is the criterion? Are we to say that a building site of one-eighth of an acre in a provincial town should have a ground rent of so much or that it should be so much in the city? When you apply that to the practical facts of the situation you find something completely different. A man goes to buy a house in a provincial town. A builder has built, say, 12, 15, 18 or 20 houses; he has developed a road into them; he has worked out his total costs; he goes to a man and says: "You can have your house at £3,500 or you can have it at £3,000 and pay £30 a year ground rent. In other words, I am selling this house subject to £30 a year ground rent. I know people who have not the money to pay in full for their houses. The price of the house might be about £4,000". The builder might arrange with them to pay £2,000; he would get a ground rent of £120 a year and say: "Any time you like to pay off £100, £200 or more you may but the ground rent on your house is £120 and you pay £2,000 cash".
That is a case which, on paper, might appear to be excessive but when buying a newly-built house you have got to realise that when deciding the price, you take into account the ground rent as well as the capital price. If it is too dear at that, you just do not buy it. It is not a question of being held up to ransom. There is an open market and a free market.
There is a shortage of housing which means you are held up to ransom.
There is a shortage of houses if you do not want to build, but if you are prepared to build or to buy a newly-built house, there is no shortage.
There is a shortage of money.
That is a different thing altogether. In other words, Senator Sheehy Skeffington is suggesting that because there is a shortage of money, people should sell houses at a lower price or a lower profit than they otherwise would.
Next we come to the question of compensation. The man who has originally taken over that house with that ground rent which he calls excessive, but which has been a matter of free bargaining in the first instance, has sold it to someone else. The person buying it from him has taken into account the ground rent. He decides that he will not pay as much on the open market for a house with a ground rent of £120 a year, to go back to the case I instanced a few moments ago, as he will for a house with a ground rent of £30. He therefore makes a good bargain. Is he to get further compensation for that bargain by getting a reduction in the ground rent?
Alternatively, there is the case of a builder who has built a house and sold the ground rent. In many cases the purchasers of these ground rents, if they are not insurance companies, are people living on limited incomes, widows or old people, who bought the ground rents on an 18 years purchase at a time when Exchequer Bonds were being issued at 3½ per cent and they therefore bought ground rents instead because they could get over 5 per cent on their money. Are such people to be penalised for the benefit of other people who took the ground rent into account when they bought their houses? You get tied in such a maze of facts and such a maze of different circumstances that it is absolutely impractical and totally impossible to deal with this matter. In my humble opinion, the only practical way of dealing with it is the manner in which it is being dealt with in the Bill.
I have a great deal of sympathy with what Senator Sheehy Skeffington has said. I am glad the Minister is imbued with a desire to uphold the Constitution. I want to say straight away that I have no sympathy whatever with ground landlords because, in my experience, they have exploited defenceless people, people who were about to get married and were faced with having to pay £150 or £300 for a site, and then the ground landlord charged them whatever he could get. Were it not for the building societies, Dublin County Council and Dublin Corporation, ground rents would not be even as low today as they are. Dublin Corporation said that they would not grant loans if the ground rents were higher than a certain amount in relation to certain houses. I have no time for the economics that can be gone into about prices on the open market. The plain truth is that when I was buying my house, I had no option but to pay one builder or another.
As I understand the position, after the war, in the forties and the early fifties, the cost of developing land, which the ground landlords tell us ground rent is intended to cover, was paid for in the grant, so the cost of developing the land was met by the State. In other words, the builder had no costs for the development of the land because in the small towns in many parts of rural Ireland water and sewerage passed by the roads so there was no cost of development——
Which towns had all this water and sewerage in the forties?
They were not in many villages.
Not in villages. I am surprised that this has not taken place in Donegal. At any rate, I have very little sympathy with the ground landlords. In regard to the case referred to by Senator Nash of the person paying £120 ground rent on a £2,000 house, that is not ground rent at all. That is not what we are dealing with in this Bill. That is not normal by any means. What we are talking about here is the person who is charged £15, £16 or £20 for ground rent and must pay it, because if he did not pay it to one person, he would have to pay it to someone else.
At the same time, the provisions in the Bill are not unreasonable and not unfair as between the landlord and the tenant because—and this is where I would not go the whole way with the amendment put down by Senator Sheehy Skeffington—as the law stands, the ground landlord always has the expectation and the possibility that in the event of the forfeiture of a lease through a breach of covenant or through failure to pay rent, he can acquire the entire property. He has that right at present and I cannot find anywhere in this Bill that he is getting any compensation for this contingent right to acquire property in the event of a breach of covenant.
For that reason, the landlord to that extent is not being paid for what could be a very valuable right. In addition— I speak here circumspectly because there are amendments dealing with what could hardly be described as ground rents properly so called—there is a shorter lease which is now being taken in, and where the short lease would fall in during a period of 31 to 35 years, there would accrue to the ground landlord under existing landlord and tenant law, the market rent for the property. That is now being done away with in the Bill and these people will be entitled to acquire the fee simple — another quite valuable right being taken from the landlord for which he is not to get any particular compensation to which one can specifically point in the Bill. Therefore, all in all, the landlord is not coming out of this so well but I think the tenant is coming out reasonably well.
With the question of the period of the various covenants that lie on the tenant at the present time for the cost of the acquisition of the ground rent, I imagine it is as fair a system of compensation as could be devised. I certainly have no sympathy for the people who exploit the needs of the community, and I do not mean builders particularly. The exorbitant profits made out of land development can be inferred by pointing to the building provisions of Part VII of the Finance Act of 1965 which have had devastating effects on the incomes of land developers and which in turn illustrate the large and exorbitant profits made out of the development of land.
Business suspended at 6.5 p.m. and resumed at 7.15 p.m.
I hope the Minister will not take it amiss if I support him on this matter. I should like to oppose this amendment. I consider the approach outlined by Senator Sheehy Skeffington rather misconceived and that we have got ourselves a bit tied up in knots by the exploitation of the community by developers, which is one thing and by reference back to what happened in earlier times, which is quite a different thing. It seems to me that what Senator Sheehy Skeffington is trying to do is to get at the exploiters but to me he is tackling this through the wrong channel by directing his efforts to the ground landlords who may not at all be the same people who are exploiting the shortage of land and the development of land for building purposes and making profits beyond what is economically necessary or socially desirable. I consider the Senator is aiming at the wrong target.
I was perturbed also by his reference back to the highwaymen, which seems to be irrelevant. I am aware that in saying that, I am probably in the minority and that I am proposing what is at variance not only with the views of my own Party but with those of others as well. It seems to me that the proposal here relates to land which is in short supply. Where land which can be used for building purposes is short, the suggestion that people buying up that land, speculating in it and making profits automatically make a profit at the expense of the community is something which does not happen and something in respect of which action cannot usefully be taken. We have no proposals for such action. To get it through the medium of ground rents seems all wrong.
It has been pointed out by certain Senators that if ground rents are to be bought out under this Bill from certain people, in many cases these will not be the people who initiated ground rents but people who purchased them. They are not highwaymen but people who purchased these ground rents from those who under our existing laws established these ground rents legally. It was possibly the fault of the Government, or Governments, who allowed the particular system of ground rents to continue; but, so long as the law was permitted to remain in its present form, they were entitled to do it. They are not highwaymen; they are not cute or wise boys; they acted legally and the people who purchased from them were acting in good faith and were purchasing an asset, in itself a kind of Government stock, at the time. To put them in the position that their property should be confiscated because they chose to hold one form of property as against another is quite misconceived and is not directed to what is the real problem here.
If this House decided, it could well devise some solution to the evil that exists. I would be prepared to regard the elimination of ground rents as an alleviation of an existing evil. So long as we are in a position where people can exploit an opportunity of this kind by making profits from developing it which are out of all proportion to what is necessary to provide an incentive to make profits, it is wrong. Profits are of course an incentive to economic activity. If they are achieved by exploiting a shortage of some kind, they cannot be accepted socially or morally. That, I think, is the real problem at which we should be aiming here. For that reason, I think this amendment is completely misconceived. I should be opposed to it because it introduces an element of undoubted confiscation in respect of a legitimate form of property holding and it does nothing whatever to deal with the real evil that exists.
I said that ground rents can be an alleviation of this evil for the reason that the man develops the land and then decides to cash in on his speculation. He can do so in a number of different ways. He can build houses and add the full cost of the profit he wants to make to each house and sell the houses freehold or he can choose not to do that but to sell the houses for some lower cost and put a ground rent on them. He can choose various combinations of ground rent, levels of ground rent and prices of houses. What is objectionable is that he should make a grossly exorbitant profit. Suppose he takes a profit in the form of a continuing income or raises the price of the houses and puts the money into something producing an exorbitant profit to which he is not entitled. To attack this very subtle distinction between the two particular forms of exploitation is mistaken.
Given that we allow exploitation to continue where excessive profits are made on the development of land over and above proper profits for useful economic development, it may then be that the ground rent system offers some mitigation of the effects of this on the house purchaser because it reduces the amount of money to be found by the house purchaser through loans or out of his pocket for the purchase of the house. It reduces it and enables him to get the house on a hire-purchase basis by an annual payment of portion of the total cost plus interest. It is useful inasmuch as the effects do not fall quite as harshly on the house-purchasing community. As in the first instance, we are allowing the developer of the land partially to finance house purchase through this system. To do anything that would discourage the practice of providing part of the finance for house purchase in this manner to finance part of the inflated value of the land would deprive us of a source of part of the capital for housing which we need.
I do not like the situation, particularly in Dublin, in which the development of land is such a speculative matter and profits are so large. However, to prevent the exploiter from alleviating it by putting it on the hire-purchase basis is absurd and originates because of an historical neurosis which we have about landlords, as if there were some sort of analogy between landlords in the past and in the present or that we should do something to get rid of our Cromwellian heritage. We are not attempting, therefore, to tackle a particular social evil. I should have hoped that the feelings Senator Sheehy Skeffington has on this would be devoted more constructively towards dealing with the problem of property speculation in its present form rather than with this particular not very objectionable and perhaps, in its own way, slightly beneficial alleviation of its own particular problem.
First, I should like to deal with the point made by Senator Nash on the question as to whether, in fact, a tenant under this new scheme will have additional outgoings by means of income tax. I shall just quote the point made—I think, very well—by Senator Flanagan in this connection. I quote from column 143 of volume 62, No. 2, of the Seanad Official Report:
Let us take the case of a man who is paying ground rent of £10 a year and his property is valued at £24. If he is paying £10 a year ground rent, he pays no income tax on his house. If he purchases that ground rent, as is envisaged in this Bill, even at 12½ years purchase, which is not a very high figure—I think it is a reasonable one—he pays a sum of £125, plus costs, for the purpose of becoming the fee simple owner of the property, but now something else happens.
He becomes liable to income tax on his property which is fee simple property. As I say, his house is valued at £24 which is not very high and he is liable for income tax on five fourths of his valuation. He is liable for income tax on £30. At the current rate of income tax of 7/- in the £, he becomes liable for income tax of ten guineas. Having already paid £125, plus fees, for the purchase of the ground rent, he now pays more in income tax than he originally paid in ground rent. If I am not correct I should like the Minister to comment on this, because after all the purpose of any legislation, the Minister will agree, is to confer the greatest possible benefits on those supposed to be covered by it. If I am correct, in buying out the ground rents in some cases people will run up against the cost of a 12½ years purchase of ground rents and at the same time find themselves paying more in income tax than they originally paid in ground rents.
I should not advise the Senator to act on that exposition of the law.
I am aware of the case Senator Nash is making that if a man has sufficient capital to buy out his ground landlord, his capital was bringing in some income before that. However, it seems to me that Senator Flanagan's contention in this regard is far from being without foundation. I turn now to Senator O'Quigley. I am slightly embarrassed by knowing that apparently Senator O'Quigley agrees with me but will vote against me, and that Senator Garret FitzGerald obviously disagrees with me and will also vote against me. This, I think, is disconcerting from two members of the same Front Bench.
Senator Sheehy Skeffington is a curate's egg.
I understand that Senator O'Quigley is saying that the landlord is in fact losing something, although the Minister said that, under this Bill, he would suffer no diminution of his income. Senator O'Quigley points out that he will lose the right vested in the ownership of ground rent to have the entire property, the buildings on the land, fall into his lap at the end of the term of the lease, perhaps in 900 years time.
Possibly a shorter time: perhaps 99 years, or 25 years. It is a debating point that the man or the company, it might well be a large insurance company, that is getting compensated fully for the ground rent—the tenant paying 13 or 14 years purchase—is in fact losing something.
I was a little puzzled by Senator Garret FitzGerald. While he makes the point that the ground rent idea may be economically good, he seems, in fact, to be going towards something I did suggest on Second Stage, that is that the best way to prevent speculation on the benefits accruing to land through community effort would be to municipalise or to nationalise the land. It seems to me that his speech was aiming in that direction, though he did not actually advocate it. This does seem to me to be the logical conclusion if you want to prevent profit-taking by private speculators from the unearned increment from increased land value due to community development.
Senator FitzGerald, as the House has heard, was pretty well making a case, not so tentatively either, for ground rents. May we assume, therefore, that he is opposed to this Bill, because this Bill is conceived solely for the purpose of allowing people to buy out the ground rents?
If they wish to do so. If the ground rents are economically so valuable and contribute so much to our economic wellbeing, perhaps this Bill is a mistake. Perhaps we ought not allow these ground rents to be bought back from these noble-hearted ground landlords and perhaps we should leave them alone. Perhaps we should throw out this Bill. I do not see how one can support the Bill and say that ground rents are an excellent thing. Otherwise, one has to say that ground rents are excellent provided one can abolish them at will, provided of course that you pay a large sum for the abolition.
He made the point, also, and I think this is a sound point, that if a person is going to buy a house for a few thousand pounds and is going to pay not only the cost but a certain profit to the builder, it does not really matter much whether the tenant pays this profit as being included in a total lump sum or whether it is partly in a lump sum and partly in a ground rent. I think this is quite a sound point of view but for one thing, that is, that many unfortunate tenants and buyers of houses are not sufficiently aware of what is happening. What very often happens is that they are prepared to pay a ground rent of £15, £20, or £25 having already paid the full price, which included a fat profit, because they have not fully realised—they may be stupid perhaps; but a young married couple looking for a house and desperately in need of it may not realise—that they are, in fact, paying an exorbitant profit, in fact, paying interest on a capital sum quite in excess of the value of the house they are getting.
In other words, I would attack this as being in practice a form of concealed profit. It is not a question as to whether or not you pay it in a lump sum. It does not really matter whether you pay it in a lump sum or partly in a lump sum and partly as a ground rent. I would say it represents for many an ill-informed, ignorant tenant a concealed profit the nature and extent of which is not fully realised by him and, therefore, it is in itself in many cases a bad thing.
The fact is, I would suggest, and I think many Senators will agree with me from their own experience, that very often the builder or the organiser of the selling of the land, the building of the house and the selling of the houses—the contractor—speculator— will make a large legitimate profit first, and then will add on another profit in the form of a ground rent. If the ground rent had to be shown to a well-informed tenant always to be justified, then I think Senator FitzGerald's point would be right, but I have a feeling that this is a way of slapping on an extra profit which will not look like a profit and people will say: "£15 a year is not very much" without realising that they are adding quite considerably to what is already a big profit.
Senator FitzGerald also suggests that people who attack ground landlords are perhaps suffering from some kind of historical neurosis. In the past we hated landlords, and I feel that the basis of his plea is that as long as exploitation is done by 51 per cent nationals, it is all right. I cannot feel that. I feel the same if it is exploitation in the past or exploitation in the present, even if in the past it was done by English landlords and in the present by Irish landlords. I attack, not the ground landlord as a landlord, but the ground landlord as an exploiter. If it can be shown that there is no exploitation today, and no unjustified ground rents, all right, but the mere fact that the exploiter or the present ground landlord is Irish or 51 per cent Irish or 99 per cent Irish seems to me to be irrelevant. It is not, in other words, the landlord that I in any sense hate or detest, but a system which allows exploitation of people due to the fact that there is a housing shortage.
Finally, I feel that in this House there are many Senators who sympathise with my view that 13 or 14 years purchase is too much, particularly when the costs are to be borne entirely by the tenant. I feel that many on the Government side of the Seanad would agree with me on this point, although they may not carry their agreement to the point of actually voting for my amendment. I feel that many of the ground landlords have done extremely well for long years and my amendment would mean that they would in this process lose a little bit of the fat they have accumulated down the years, and, therefore, I would like to press my amendment which amounts to saying that instead of getting 13 or 14 years purchase, they would get seven or 7½ years purchase, which seems to me to be a reasonable compromise.
I must reply to a couple of these points. First of all, I deny any inconsistency in supporting the Bill and rejecting the proposal or in anything I said in this respect. The Bill is desirable for the very reason I mentioned: because it is useful that ground rents can be created so that houses can be sold at a lower capital cost and are more accessible to people who have not got the money. That is precisely my point, that they should be able to get the money to pay the bit extra for the house. The two go together. The justification for the creation of ground rents, as distinct from their continuance, is in the fact that it does reduce the capital cost of the house and makes houses more accessible. But, when the man has accumulated more money and would like to have full rights to his house, he ought to have full rights to do so. That is why I support the Bill, which completes the system and makes it a workable and useful system and something which is a useful alleviation of the present system of exploitation, as long as we permit it to continue.
There is great special pleading in all this talk about the ground rent being added on and representing an exorbitant profit added on and the ground rent being hidden. Senator Sheehy Skeffington is turning the thing on its head. When a house is sold, part of the cost of development is hidden in the price of the house and owing to the fact that we have no system of showing how that arises to the person buying the house, that is hidden. What is not hidden is the ground rent. The person buying the house does not know the cost of building; he does not know what profit he is giving to the builder for the development of the land as distinct from the house. He only knows the ground rent. What is added on is not, in fact, the ground rent. The ground rent is the open thing, which is known. What is added on is an unknown, unspecified hidden sum to the price of the house as an additional exorbitant price over and above the price paid for the cost of building the house, a reasonable profit and the ground rent. Senator Sheehy Skeffington is getting the entire thing on its head and talks about ground rent being hidden when it is open, and the cost of the house being public, when it is hidden. The element of speculative profit on the land is hidden. This is nonsense. If words mean anything, it is quite obvious which is hidden and which, in fact, is disclosed.
His argument that I am in favour of ground rents held by 51 per cent nationals is nonsense. It does not matter who owns the ground rent. I cannot see that it is of particular importance in this area any more than in any other kind of property. It is, of course, desirable that the bulk of the land, houses, and factories should be owned by our own people. This is true in this area as in any other but I cannot see that it matters more in this area than in others, and perhaps it matters less in this area than some. That is not the point I was making in regard to it.
There are two separate things here. One is the case where a ground rent is held by someone who has inherited it over the years or has bought it, has acquired it by one or other of the legal systems as part of property, no different from any other property. That kind of person has as much right to that property as if he sold the ground rent years ago and bought Government bonds instead and there is no more reason for confiscating half the ground rent than there would be for confiscating half the Government bonds. If one does that, one immediately puts a premium on one particular form of property as against another. The man who has the wit to sell his ground rents and buy Government bonds escapes scot free. That kind of distinction is absurd.
The real problem is quite different. It is not that there are certain kinds of property which are objectionable and should, therefore, be penalised in some way but rather that the creation of ground rents can be part of a system of exploitation. That is the issue: that is what should be tackled. You tackle it ineffectively by trying to confiscate existing ground rents, most of which are innocent of the exploitation that has taken place in recent years because of shortage of land. Existing ground rents go back much further and there is no more reason for confiscating them than there is for confiscating any others. Private enterprise is doing a more useful job than others are doing and if the idea is to get at excess profits as a result of an artificial shortage of land, particularly where the land costs element in the house is not disclosed, then that should be tackled directly and not indirectly. It is a completely different problem and I think there is some misconception about it.
I did not hear the whole of what Senator Sheehy Skeffington said but his feelings seem to me a little oversensitive. Since I came into the House, he used the words "I feel" about nine times. I feel this, that, and the other. He did not give us one concrete example to substantiate his argument. I wonder is Senator Sheehy Skeffington upset by reading to many letters in the evening papers. I feel that is his trouble.
And by writing to the Irish Times.
I did not like to say that. He did not give us one concrete example. He feels this is happening and that is happening. This is 1967 and there are not now so many gullible people prepared to give exorbitant ground rents. I agree with what Senator Garret FitzGerald has said. A great many of these rents are held as trustee investments. Quite often a married man buys ground rents as a trustee investment for his wife. These are the people then whose incomes Senator Sheehy Skeffington would cut. He does not appreciate the position. He cannot be fully conversant with ground rents as an investment.
It is a little unfair of Senator Cole to say he only heard the end portion of what I said and then allege I did not cite a single example. I certainly did cite examples in the portion the Senator did not hear. If I may say so, I "feel" that the Senator did not hear the beginning of my speech and he should, therefore, be a little more careful in alleging that not a single example was cited. I want now to crave the indulgence of the House and mention again two examples I did cite.
It is disorderly to repeat.
One was a quotation from the Minister, who said that after the war——
That is not an example at all.
Again, I "feel" that Senator Cole is jumping a little too rapidly in saying it is not an example before he has heard what it is.
An Leas-Chathaoirleach
If Senator Sheehy Skeffington would quote, and Senator Cole would allow him to do so, the Chair might be able to determine whether it is in order.
It is column 149 of the much-quoted Second Stage debate in which the Minister said the "inflation in ground rents was a postwar phenomenon". That is one point. I think it is true. It is believed by the Minister. Otherwise, he would not have said it. It is believed by me. I believe this opinion of the Minister is soundly based, and based furthermore in my opinion, upon the kind of example that was given at some length by Senator Flanagan. I do not propose to quote it again but I refer Senator Cole to it; it is column 144. Senator Flanagan refers to his 20 years' experience of building societies and so on, and the way in which ground rents are in practice brought into being. The Senator is a man of considerable experience. He is a Member of this House. He talked most cogently on this subject and to quote the Senator is to quote examples, no matter what Senator Cole may feel about it. I quoted earlier from column 142. I do not want to delay the House by quoting again.
We have not got a concrete example yet.
A Leas-Chathaoirleach, I am sure you and the House will agree that for me to quote again the excellent speech made by Senator Flanagan would hardly be in order simply because Senator Cole was not here this afternoon.
What the soldier said is not evidence.
The soldier in this case is an old campaigner.
I always look forward to Senator Sheehy Skeffington quoting Senator Flanagan and the Minister.
Senator Sheldon is asking me to go further and agree all the time with everything said by anyone I quote. The fact is I agree with his particular point. I can agree with Senator Sheldon on a number of points without regarding him as being infallible on every other point.
It would be a personality change if the Senator agreed all the time.
Senator Flanagan spoke in terms which seemed very sound. When Senator Flanagan, or any other Senator for that matter, speaks in terms which seem to be very sound, then to agree is a duty and a pleasure, and to quote the examples he gives is very relevant, particularly if he happens to be on the Government side of the House. I am not sure on which side Senator Sheldon is on this matter.
I am just as independent as the Senator who is speaking.
Geographically, the Senator is on the Government side of the House.
An Leas-Chathaoirleach
The Chair would like to hear Senator Sheehy Skeffington on the amendment.
I should like to press this amendment because I should like to see how many Senators there are who think that ground landlords ought to suffer absolutely no diminution of their income. If they really believe that, they will vote against my amendment. If they do not believe that, they will vote for my amendment and we shall then see how many Senators believe that justice demands that ground landlords should get as much as 14.8 years purchase——
It is 13.2 now. It was 14.8 on the Second Stage.
I wonder if we might inquire whether the Senator is more concerned to see ground landlords suffer rather than see the tenants benefit. The impression he gives is that ground landlords should be penalised a little. He has not made the same case in relation to the tenants.
If I might answer that: I am not suggesting that these be confiscated. I am suggesting that the number of years purchase should be cut in two. The entire costs are to be paid by the tenants, and I am suggesting that 7½ years purchase should be enough. This will benefit the tenant. I feel the ground landlord is more likely to be able to live on his fat than the tenant would be.
Senator Sheehy Skeffington's argument smacks of corporal punishment for ground landlords.
Amendment put.
The Seanad divided: Tá, 6; Níl, 32.
Tá
- Crowley, Patrick.
- Davidson, Mary F.
- McAuliffe, Timothy.
- Murphy, Dominick F.
- Prendergast, Micheál A.
- Sheehy Skeffington, Owen L.
Níl
- Alton, Bryan G.
- Boland, Gerald.
- Brennan, John J.
- Browne, Seán.
- Carton, Victor.
- Cole, John C.
- Conlan, John F.
- Connolly O'Brien, Nora.
- Dolan, Séamus.
- Eachthéirn, Cáit Uí.
- Egan, Kieran P.
- Farrell, Joseph.
- FitzGerald, Garret M.D.
- Flanagan, Thomas P.
- Honan, Dermot P.
- Killilea, Mark.
- McDonald, Charles.
- McGlinchey, Bernard.
- Malone, Patrick.
- Nash, John Joseph.
- Ó Donnabháin, Seán.
- O'Kennedy, Michael.
- O'Quigley, John B.
- O'Reilly, Patrick (Longford).
- Ormonde, John.
- Ryan, James.
- Ryan, Patrick W.
- Ryan, William.
- Sheldon, William A.W.
- Stanford, William B.
- Teehan, Patrick J.
- Yeats, Michael.
Tellers: Tá, Senators Miss Davidson and Dr. Sheehy Skeffington; Níl, Senators Browne and Farrell.
Amendment declared lost.
I move amendment No. 43:
In page 12 to add a new paragraph as follows:
"( ) where the rent or charge out of or on land, the fee simple in which is being acquired under this Act, originated after the date of the coming into force of this Act, the purchase price shall not exceed one penny."
I am sorry to appear to monopolise the time of the House but I imagine I shall have more or less unanimous support for this amendment and that the conservative unity in contributions and reactions in support of the property-owners demonstrated in respect of the previous amendment will operate in reverse in this one. I feel I am on very strong ground here because what I am suggesting is that a new paragraph should be added to the paragraphs which laid down that the purchase price for ground rents shall not exceed a certain amount, and the purport of my amendment is—I shall read the paragraph just to put it on record:
"( ) where the rent or charge out of or on land, the fee simple in which is being acquired under this Act, originated after the date of the coming into force of this Act, the purchase price shall not exceed one penny."
Practically all of us, if not all of us, approve very strongly, at least in principle, of the stopping of the future creation of ground rents, and the purpose of my amendment is not to prohibit or stop altogether or ban the creation of future ground rents but strongly to discourage them. Where earlier in the Bill the same phrase is used about the regulation of the rent or charge out of the land and so on, what my paragraph refers to is to new ground rents, future ground rents.
Senator O'Quigley on the Second Stage at column 120 of the Official Report said:
Surprisingly enough the Commission on Ground Rents considered this matter. They agreed that ground rents should not be permitted to be created in future but they could not devise machinery....
I quote the relevant paragraph of the recommendations of the Ground Rents Commission which is on page 47 of their recommendations, paragraph 8, which reads as follows:
The creation of further ground rents in the case of residences and combined residences and business is undesirable....
I note here they disagree with the view put forward by Senator Garret FitzGerald just now in regard to the creation of further ground rents. They then add—this is what Senator O'Quigley was referring to:
It was not found possible, however, to recommend machinery by which these might be prohibited....
I am not suggesting machinery whereby they could be prohibited: I am suggesting a simple device for discouraging them by saying they shall not be worth more than the sum of one penny.
Senator O'Quigley, also on the Second Stage, at column 121 of the Official Report said:
This is where I think this Bill is defective. This Bill should at once prevent the creation of ground rents in the future.
I hope I shall have full support from Senator O'Quigley for my suggested device for doing precisely that in this Bill. "It is illogical," he said at column 122, "to say it is highly desirable to enable people to acquire the fee simple in their property and at the same time let this other thing go on." He refers again to the possibility of preventing the creation of ground rents in the future, adding, in the same column: "It seems right and proper that we should discourage and, in fact, prohibit the creation of ground rents". I myself on the Second Stage supported this view and at column 127 made the point that the Bill should face the fact that not merely are we in favour of allowing ground rents that exist to be abolished but also of preventing new ones being created. I have already quoted Senator Flanagan at column 142 in which he puts a similar point of view about the creation and the essence of ground rents. The Minister himself at column 148 said:
Another point made in the course of the debate.... is the prohibiting of the creation of ground rents in future. I was personally attracted towards prohibiting future ground rents until I examined the matter in greater detail.
He then made the case that if, in fact, you prohibit the creation of ground rents this will mean, in effect, that you are adding £200 or £300 to the initial price of the house. That is on the basis, on the mistaken belief in my opinion, that ground rents represented legitimate profit, whereas I fear they very frequently represent a racketeering exploitation.
In the same column also he says that it could be unconstitutional to prohibit the creation of ground rents "because you are here prohibiting somebody from dealing with his property in the way he wishes." Whatever about the Minister's first argument, I feel that here he is not on safe ground because, after all, in allowing a tenant to force a ground landlord to sell a ground rent we are in fact preventing somebody from dealing with his property in the way he wishes: we are insisting that he sell. It seems to me that this is part and parcel of the Bill itself. It prohibits somebody from dealing absolutely as he wants to with his property.
My suggestion is a simple one. It can easily be incorporated in this Bill. This Bill allows people to buy existing ground rents at what I feel is an exorbitant price; at the same time it would be possible to discourage the creation of future ground rents by saying that any ground rent which comes into being after the passing of this Act shall not exceed one penny. This is clearly a strongly discouraging provision. It cannot be argued that this will in some way be robbing the ground landlord of something that belongs to him, because we are talking not about existing ground rents but about ground rents that have not yet come into existence. By accepting such an amendment as this we would be carrying out the spirit of the recommendation of the Ground Rents Commission who say the creation of further ground rents in the case of residences and combined residences and businesses is undesirable. By accepting this amendment we would show that we think it is undesirable and that it should be strongly discouraged. Since I have had so much support on the Second Stage for the general principle of not allowing the creation of future ground rents, I would expect this to be passed virtually unanimously.
I am afraid Senator Sheehy Skeffington is doomed to another disappointment. Here in this amendment he proposes to pay landlords, for new ground rents that will be created after this Bill has become law, a sum not exceeding one penny. In my amendment, I propose to pay them not one penny. I am extremely surprised at Senator Sheehy Skeffington going that distance, and I hope he will accept my amendment rather than his, which I think out-Sheehy Skeffingtons Sheehy Skeffington.
That is a harsh thing to say about any amendment !
I do not understand why Senator Sheehy Skeffington, having declaimed against the creation of ground rents and declaimed against the inequities and iniquities perpetrated by ground landlords and ground rents, should lend himself in this amendment to the continued creation of ground rents.
We ought to face squarely this Bill and the evil we want to eradicate from our society and prohibit, as is suggested in my amendment, the creation of any ground rent after the passing of this Act. I must confess to be somewhat surprised at the generosity with which Senator Sheehy Skeffington proposes to treat ground landlords in the future.
The Ground Rents Commission in their report make certain observations on the difficulties of dealing with the problem of ground rents in the future. To my mind, there is a problem, and it is one, like a whole lot of other problems, which it is the duty of the Government to tackle and resolve. I am not convinced at all that the ground rent which is paid by purchasers of houses has any relationship whatever to the economics of house building.
Neither has the price of the house.
What happens is this: a developer, an exploiter, an entrepreneur—call him whatever you like—buys five or ten acres of land outside the city of Dublin. He develops it and then makes a proposition to a builder. It is not the builders who are the niggers in the woodpile in this matter, so much as the developers of land. The man or the company that has acquired the land and has developed it by putting in roads and getting planning permission and so on says to the builder: “I will grant leases to people whom you nominate at ground rents of £15 or £16 and subject to the payment of a fine of £150, £185, £300”—think of a number. The plain truth of the matter is that the developers of land were making such exorbitant profits, to the certain knowledge of the Government, that Part VII of the Finance Act of 1965 was introduced to skim off the huge profits these people were making. The reason they were making these huge profits is that they were exploiting the need of people for houses.
There is no such thing, in my view, and according to the terminology I use, as the market price for ground rent of a plot of land. You enter into a contract with the builder to build a house for £2,500, £3,000, or whatever the amount is. You are faced with one price and if you do not accept that, you go to another builder. There is constant exploitation which has no relationship to the economics of house building. That is going to continue and it is proposed in this Bill to allow that system to continue. To my mind, that is, to use an Anglo-Saxon word, daft.
It is Anglo-Saxon, and I agree with the Minister it is not original. The Commission's report says that one of the reasons for not recommending the abolition of ground rents in future was that unless and until the purchasing power of the £ became stabilished it would not be just to lay down any upper limit beyond which a ground rent should not rise. That is a remarkably inane statement for a commission to publish. Does everybody not know that the value of the £ is never going to stabilise? It has not done so for the past 30 years. Therefore writing that into a commission's report is a waste of time. However, there are ways and means at the disposal of the Government for providing land for the building of houses at cost prices to the house purchaser. That can be done under the Housing Acts where local authorities have powers of compulsory acquisition. If it is necessary in the interests of the community that these powers should be extended so as compulsorily to acquire land and then to take the market value of that land in accordance with the provisions of the Land Acquisition (Assessment of Compensation) Act of 1919, that can be done. You can make available lots of land through the machinery of the Housing Acts, fix the price and make the land available for the building of houses. That can be done and as soon as that happens the price of land from the exploiter will very readily drop. That is one way of doing it. There are other ways of doing it, by relationship to the rateable valuation of the land.
We find the Land Commission tribunal has developed over a period of time a relationship between the rateable valuation of land and the price of agricultural land. The multiplier varies over a period of five or ten years. That can be worked out and the price of land fixed if it is acquired either by the Land Commission or by the local authorities for sale afterwards to builders and to house purchasers.
I do not agree with the spirit, although I accept the principle, of Senator Sheehy Skeffington's amendment, for the simple reason that it implies the continuance of the system of ground rents and says that afterwards you purchase them out at a price not exceeding a penny. That imposes, even in the purchasing out of them, all the rigmarole of investigation of title, serving notices under the Bill and maybe going to arbitration to determine who are the various interests and then the dividing up the penny among a variety of landlords. I do not think we ought to ask the Legislature to stultify itself in this way.
In practice, no future ground rents will be created, if this is accepted.
I always thought the Senator had the gift of clarity. If that is what he wants, that is what he should say. In my amendment No. 46, I suggest the insertion of the following new section:
"After the passing of this Act it shall not be lawful in any lease of land for the purpose of building thereon to reserve a rent or other periodic payment and a lease reserving a rent or periodic payment shall be invalid to the extent to which it reserves such rent or periodic payment."
That, to my mind, gives the person entitled the fee simple of the property. That is the line of approach we should adopt. I do not think Senator Sheehy Skeffington's amendment — laudable though it is, in the same way as my own is—meets the situation. Perhaps he might withdraw it for Report Stage? I do not think it prevents the creation of ground rents. I am quite sure the Minister will say that, if we do this, it will increase the price of houses. That may be so, but the Minister can very quickly go to his colleague in the Department of Local Government. If there is not sufficient power in the Housing Acts to enable local authorities to acquire and put on sale land for building houses, then that legislation can be amended. I believe the way of making land available at a reasonable price is to invoke the powers local authorities have at present compulsorily to acquire property at a reasonable price and then, having put that on the market, if sufficient of that is done very quickly, one will find that the entrepreneurs, the speculators and exploiters—however you wish to label them—will quickly drop their prices and ground rents and the cost of houses will not rise.
I am sorry to have to embarrass the Minister again by putatively agreeing with what he is going to say. I find myself—I explained my position on the earlier amendment —in the difficulty that it seems to me that, not alone is the wrong problem being tackled, but it is being tackled in a way that will aggravate the problem. The difficulty here arises from the fact that there is no control of any kind over the amount of money people make out of developing land. As land is short, the profits being made are disproportionate—they possibly might be regarded as unreasonable—to the effort involved and to the acquiring of the incentive needed to get people to develop land. That is the problem we need to tackle. If we tackle it by the abolition of ground rents, the affect is that the people at present making good money by the dual method of charging an unknown fine, which is not disclosed and is hidden, and the ground rent will up the unknown fine by an unknown amount and get their money that way. This merely increases the immediate cost of houses, makes it more difficult to buy houses and aggravates the problem.
It will also have the bad effect of reducing the pressure for reform. As things are at present, there is this misconcieved idea that the problem as regards land development and housing is a problem of ground rents. If this is passed, there will be a great tendency to breathe a sigh of relief and say: "We have reformed the system of ground rents", and then forget about it. What is required is some quite different frontal attack on the whole problem of developing land. By passing this amendment you will have no effect on the exploitation of people. But the whole of it will be hidden; nothing will come above the surface. It will be there as a constant if irrational irritant of the people, encouraging nothing to be done about reform, as well as increasing the cost of houses. It will take away the present position whereby people contribute something to the capital cost of a house, thereby reducing the pressure for reform. It does not seem to me that the amendment is a good one.
Senator O'Quigley has said that, if this pushed up housing costs, the Government could do something about providing more land for development. I do not follow Senator O'Quigley on this. If that is required now, with the present system of ground rents and fines, it should be done now. If that can be done and if that is the solution— I am not convinced it is an adequate solution—I do not see why we should abolish ground rents, wait for the fines to go up, and then act. If it is the solution of the dual problem of exploitation, then it should be adopted. I may have misunderstod the Senator. The amendment does not tackle the problem frontally; it removes pressures for reform; it does not act effectively vis-à-vis a serious problem; and eliminates the slight alleviation of the present system of exploitation.
Further to what Senator Garret FitzGerald has said, surely there must be some reasonable landlords? A person might come to them and say: "I have the price of a house. I have calculated this, and if you would allow me to pay the cost of the site over a number of years, it would help me in the provision of a house." Surely that would be a rent that would come under the amendment proposed by Senator Sheehy Skeffington or even that by Senator O'Quigley?
Will Senator Cole quote some concrete examples of good landlords?
Some day Senator Sheehy Skeffington might find himself in another house and the house he is living in at present demolished. There would then be a little bit of land owned by Senator Sheehy Skeffington. I would come to him and ask him to let me build a house on this site. I would say to him: "I do not want to pay for it now. I would like to postpone the payment." What would he do? He would probably give it to me for nothing.
Look for a better-off client.
I said here on the Second Stage that when I got down to tackling this matter, my first reaction to the Commission's report was that they were a bit timid in regard to this matter of abolishing future ground rents. My feelings were: "Surely there must be a way?" I approached it from that angle. I was predisposed towards abolishing future ground rents. I went into it in some depth and what I discovered more or less coincides with what Senator FitzGerald has just outlined. The real problem here is not the problem of ground rents; it is the scarcity of building land adjacent to all the urban centres, the inflation in the value of such land and, thereby, the speculation which is dealt with in regard to dealings in this type of land. It cannot by any means be argued that the profit margin in that sort of dealing, which is in excess of reasonable incentives, should operate in regard to any profit margin. This is a separate problem. This is a question of the control of such land, of planning, of organising the land resources available for building purposes so as to ensure that there is an equation between the need and the supply.
The nationalisation of building land. Would the Minister accept——
There is an answer to that, too. Some degree of speculation in this particular business is necessary in order to provide an incentive to get building going. Unless you go the whole hog and nationalise all forms of building, how can you get private builders to go into building and speculate in order to provide houses? That is the other side of the argument.
This is not a problem strictly relevant to the debate. It is one on which we could have an interesting discussion all night. It is one on which I have had discussions with the Minister for Local Government and it is certainly a matter which is engaging his attention. It is outside the scope of this Bill. Much of the criticism in relation to ground rents is more relevant to a discussion on this basic problem than to a discussion in regard to ground rents. I am in favour of giving tenants this right in this Bill— giving them the right to buy out their fee simple interest and become owners of property. I am in favour of this in regard to business tenants as well as residential tenants. The fact that we have included both business and residential tenants will help in urban renewal and redevelopment, where it is necessary and can be done, because there is no distinction between the particular properties. Having said that, I think on the whole question of ground rents people can get rather hysterical. It is a wrong form of tenant holding; it is proper that we should give this right, which is incorporated in this Bill, but I do not think this is as unmitigated an evil as people think.
A far more real problem is that of scarcity of building land. Further, as far as the future is concerned, giving the tenant the right to buy out his interest will mean the gradual elimination of ground rents as we know them today as a form of tenancy. They will become completely unattractive as far as any investor is concerned. Obviously for anybody who wished to invest or deal in ground rents the attraction heretofore has been their certainty or stability, the fact that they were a secure form of investment. That will disappear once this Bill becomes law.
There is no certainty attaching to a form of tenancy where, if one invests in a ground rent, one may find oneself bought out at any given time in respect of the ground rent one has created. That very fact will make for the gradual elimination of ground rents in the course of time. In ten years time we should see them practically gone as a form of tenant holding.
Viewed in the context of our present problem in regard to land for building purposes and our present housing needs, there is no doubt—and this is a further fact I ascertained on looking at this matter in depth—that the immediate effect of prohibiting the creation of future ground rents will be to put up the cost of housing. I have discussed this with people who should know, with various experts on housing and there was complete unanimity that the immediate effect of doing this now in the context of our scarcity of land for building purposes, the immediate effect of putting into this Bill anything in the nature of what Senator O'Quigley or Senator Sheehy Skeffington propose would be to put up the price of houses by £200 or £300. Is this what we want in our present situation? Anybody who was in my chair would have to say "No". Where the effect would be to put up substantially the cost of housing, then one would have to say "No".
The important thing as far as the newly-weds are concerned is the price of the house which will be reflected in the mortgage payments those people will have to make. This, I feel, is a far more important thing as far as the young house purchaser is concerned than the burden of the ground rent and the sort of people who will buy out the ground rent, whether of business or residential property, will be people who have been living there for some time and who find themselves in a financial position to buy out the ground rent and become absolute owners. As far as the newly-weds are concerned the important thing is the mortgage repayment and how low it is. If the price is a couple of hundred pounds up, that means they will be paying a couple of hundred pounds more to the insurance company or whatever building society has financed them. In fact, the ground rent is in the nature of a hire purchase arrangements as far as such a person is concerned in that he gets a loan, as it were, in mitigation of the cost of the house and the ground rent repayment goes to reduce the mortgage repayment considerably.
On balance and having regard to our situation at present, the practical argument is overwhelmingly not to prohibit the creation of future ground rents but to bring in this mandatory right to purchase which in the course of time will gradually erode the whole position of ground rent as a form of investment.
I think it is very revealing that the Minister has said and, I am afraid, quite correctly that we have so little control over building land and over private speculation, so little control, I think that the profit derived from building land which has gone up in value due to community effort goes into private hands and that consequently if ground rents were to be abolished the price of housing would simply go up. This is a confession of failure from those who govern us. I am thinking not only of the present Government but Governments down the years if the situation today is that we have so little control over land that has become valuable solely by reason of the fact that the community has spread out and developed. When the profit for this increased and enhanced value goes into private pockets, then I feel that none of our Governments have been moving fast enough, and in the correct direction to work for the public benefit. I agree with Senator O'Quigley that it is worthwhile abolishing future ground rents. It is true that his later amendment would have the same effect but I felt that within the framework of this Bill it was possible to insert this additional paragraph, which would make it obviously absurd for anybody to create a future ground rent because he would get nothing in excess of one penny for it. It would reduce the creation of new ground rents to an absurdity, and do so within the framework of the present wording of the Bill. It would offer, in other words, a piece of machinery such as was deemed to be desirable by the Commission on Ground Rents, though they did not find it possible to suggest one. I therefore press for acceptance of the amendment, and in all seriousness, I would hope that I would receive support from all those who do believe that we should not merely allow present tenants to buy out existing ground rents but should in effect abolish the whole concept of the future creation of ground rents. That is the burden of my amendment, and I should like to see it put.
Amendment put.
The Seanad divided: Tá, 7; Níl, 27.
Tá
- Crowley, Patrick.
- Davidson, Mary F.
- McAuliffe, Timothy.
- McDonald, Charles.
- Murphy, Dominick F.
- O'Quigley, John B.
- Sheehy Skeffington, Owen L.
Níl
- Boland, Gerald.
- Brennan, John J.
- Browne, Seán.
- Cole, John C.
- Conlan, John F.
- Dolan, Séamus.
- Eachthéirn, Cáit Uí.
- Egan, Kieran P.
- Farrell, Joseph.
- FitzGerald, Garret M.D.
- Flanagan, Thomas P.
- Honan, Dermot P.
- McGlinchey, Bernard.
- Malone, Patrick.
- Nash, John Joseph.
- Ó Conalláin, Dónall.
- Ó Donnabháin, Seán.
- O'Kennedy, Michael.
- O'Reilly, Patrick (Longford).
- Ormonde, John.
- Ryan, James.
- Ryan, Patrick W.
- Ryan, William.
- Sheldon, William A.W.
- Stanford, William B.
- Teehan, Patrick J.
- Yeats, Michael.
Tellers: Tá, Senators Murphy and Sh eehy Skeffington; Níl, Senators Browne and Farrell.
Amendment declared lost.
Section 18, as amended, agreed to.
SECTION 19.
I move amendment No. 44:
In subsection (1) to add at the end:
"and the person acquiring the fee simple or other person to whom costs are awarded shall have a lien on the purchase price which shall be lodged in court pending the ascertainment of such costs."
My purpose is merely to provide that where a landlord unreasonably objects to the acquisition of the fee simple by the tenant and the tenant is required to go to a determining authority and the determining authority awards him costs, he should not be obliged to pay over the compensation to the landlord but should have a lien on the purchase price for the costs awarded to him by the arbitrator. That is a safeguard the tenant is entitled to and I, therefore, do not think any difficulty should arise about accepting the amendment.
The contrary position does not have to arise because the tenant will have acquired the fee simple of the property and the landlord, if he is awarded costs, will have a right to register a judgment mortgage against the tenant's enlarged interest in the property. Therefore, it is not necessary to provide the safeguard that there should be a fund available out of which to pay the costs. That would apply only to the landlord who will get the money and who may be a foreign corporation or a person who would dissipate the funds before the tenant's costs were satisfied.
I know what is in the Senator's mind but I do not think the amendment is necessary. The tenant will be able to look after himself. He will have his legal advisers, but even if he has not, he can deal with the situation quite easily. He has to pay over the purchase money and he can always deduct the costs before he passes it over. The costs will have been ascertained: the determining authority will assess the costs and the purchase price and a sensible tenant or lessee will hand over the purchase price less the costs. Having regard to the reality of the situation that may arise, I do not see any real need to write in such a provision.
The Minister is imbued with the idea that everybody is reasonable. In the ordinary course of events, this will not arise but it can arise in a considerable number of cases, particularly if there has been a fight and the matter has to be determined by another authority. I do not think it is correct to say that, the purchase price being £300, if the tenant does not pay over that £300 there will not be an impasse. I am suggesting there should be a lien on the money until the tenant's costs are satisfied.
It is far more effective than a lien to keep your money in your pocket.
That might be so but if you do, you will not get the conveyance of the fee simple. The amendment would benefit the tenant purchaser and it would meet the case of the unreasonable landlord who does not want any deduction from the amount he was awarded. In most cases landlords will consider the awards made as too small and it is with recalcitrant landlords that I wish to deal.
You could clutter up the Act. I do not like putting into a Bill things that are not necessary. The situation is fairly well covered as it is. The landlord will give a conveyance, the tenant will give the landlord the money and the county registrar will have assessed the costs. The tenant can hand over the money for the conveyance, less the costs. Is that not how it will work out?
That is how one hopes it will work out.
Amendment, by leave, withdrawn.
Question proposed: "That section 19 stand part of the Bill".
I should like to draw the attention of the House to subsection (3) which states:
A county registrar——
Let us leave it in inverted commas for the moment——
—shall not direct fees of counsel retained on behalf of a party to an arbitration under this Act to be paid by another party to the arbitration unless a question of law was involved in the arbitration of such kind as, in the opinion of the country registrar, rendered it necessary to retain counsel.
I should like the House to bear that fact in mind in order to allay any fears or misgivings they may have had because of things which are being said in the House by people to the effect that the way of life of those of us employed as counsel will improve through the fat fees we will get——
We never would think that!
I welcome the provision of this section and I might add that I rather think counsel and solicitors will benefit very little in terms of pounds, shillings and pence from the work that will fall to be done under this Bill.
On the same subsection, though from a different point of view, the Minister indicated that he will reconsider the function of the county registrar. I should like to point out to him that apparently it is accepted that as the Bill stands the county registrar will be adjudicating in matters of law. This might be a cogent consideration for the Minister in determining whether this Bill will be regarded as unconstitutional. I am not concerned with the question of counsel being retained. The only justification for it would be when a question of law was being adjudicated on by the county registrar. There is a wider point because the section enables the county registrar to penalise in costs a person who has acted unreasonably or who has not co-operated in allowing a tenant to have a fee simple conveyed to him.
This power to penalise in costs is a judicial function. Whether it is limited, I am rather doubtful but I am not aware of a similar body, arbitration or otherwise, which has similar power. Before coming to his decision as to whether the person had acted unreasonably, the county registrar would have to review the whole basis of the Act, the whole nature of the legislation, in order to come to his decision. Again, he would be treading on very delicate ground. I hope it will not be necessary to have those points considered in view of what the Minister has said, that he will give this suggestion full consideration. I would suggest that those points are cogent factors in this matter.
Is it contemplated that there will be a scale of costs or fees, or is it intended that the ordinary scale of fees in relation to conveyancing matters will apply? I am sorry Senator Nash is not here because I do not know as much about those matters as he does, but it seems to me that a scale of fees which will be involved in investigating title and matters of this kind would be quite inadequate for the amount of work involved. The costs in such matters, say, in a case of ground rent of £20 might be £320. It seems to me that the cost for the solicitor in such a case would be quite small and it would be totally inadequate for the amount of work which he would be required to do.
As regards fees for counsel, I do not think they are of any consequence to anybody. With regard to the cost of arbitration, the county registrar, who would be doing the work, would receive costs on the equity scale. The Circuit Court has a particular scale to go on, which is fixed by Rules of Court. I cannot recollect that there is any provision in this Bill that Rules of Court will be made or that anybody will have power to make Rules in regard to what should be provided for the peculiar type of costs that will be involved in either arbitration cases or in regard to title cases. This is a matter which may not have occurred to the Minister. If it has occurred to him, I should like to know what the position is.
There is no provision here. Solicitors will be paid on the ordinary costs involved in conveyancing procedure. They may make their case before the statutory committee that is there to make recommendations in regard to scale costs. If they feel those costs are inadequate for the amount of work involved here, it is a matter for them to make their case to the Incorporated Law Society.
That point will be all right so far as the conveyancing costs are concerned. When it comes to the cost of arbitration, I do not think there is any scale for this matter. There is not any equity scale in the Circuit Court by which the determining authority will be able to determine what the costs are. Perhaps the Minister would have a look at this matter.
Question put and agreed to.
Sections 20 and 21 agreed to.
SECTION 22.
Question proposed: "That section 22 stand part of the Bill."
There does not appear to be outlined very precisely in the Bill the type of matter which might be remitted to the county registrar for consideration. When the court is dealing with those matters on appeal, it is possible there may be matters on which the courts might need to have clarification by the county registrar. We can see it would be quite enough for them to send those matters to the county registrar for further clarification. As subsection (2) stands, it is possible that the courts might interpret this matter to mean that they remit the whole matter to the county registrar for reconsideration.
I suggest to the Minister that this obviously is not the intention of the Bill and that it would be better to insert some amendment that the court, before coming to its decision, may from time to time, remit any subject for such appeal. This would thereby make it clear that decision on such matter must rest with the circuit court and that the court may not throw it back to the county registrar and say: "You deal with this; I do not want to do so."
It seems that further down in the same section of the Bill it can be remitted to another county registrar. Again, I am not too happy as to the position here. Is it possible under this section to remit the whole matter to another county registrar or is it intended to remit some matter to him before the court comes to a decision?
There is another matter which might perhaps be dealt with together with the matter Senator O'Kennedy has raised. When it comes to appealing to the Circuit Court, there is no provision in the Bill providing that Rules of Court may be made for reconsidering any of those matters. This is a problem which will face practitioners if they want to remit an award to the circuit court.
I hope it will not be necessary to deal with this section on Report Stage. If it is, I would ask the Minister to consider inserting somewhere in the Bill a provision that Rules of Court regulating those and other matters, in which one may be involved, will be made so as to bring some clarity and definition into the matter. I do not believe that the Circuit Court Rules Committee would be entitled, as it stands, to make any such rules. You find that in most legislation such as the Rent Restrictions Acts and other such statutes, where Rules of Court are in fact made, there is a provision that Rules of Court shall be made to deal with various matters which will arise under the particular statute. We hope it will not be necessary to deal with this section on Report Stage.
I think Senator O'Quigley is mistaken on this. The Circuit Court Rules Committee can deal with this. They have general powers to make Rules on matters which may arise from time to time. With regard to the point made by Senator O'Kennedy regarding this question of the county registrar where a court may from time to time remit any matter to him, that is a global discretion given to the court to remit matters, on which they want clarification, to the county registrar. That is reasonable enough. The Senator also inquired about courts remitting matters to another county registrar. This is put in to meet a case made by Senator O'Quigley on another occasion when he spoke about a county registrar who might personally be involved in a particular matter. This point was made to deal with the county registrar who might personally be involved in a matter in a way which might prejudice his decision. In that case the court could remit the matter for hearing to another county registrar.
I do not want to press this matter but would the Minister not agree that it might be better, even as it stands, to clarify the fact that it is an appeal which will leave the decision of the matter to the court? It might be better in those circumstances to put in some provision that the court may, before coming to a decision, remit any matter, thereby making it clear that it is the court who makes the decision. As it stands it could possibly be interpreted to mean that it is the county registrar who can make the decision on an appeal from himself.
I shall look into it with a view to clarifying the draft so as to emphasise what I said.
Question put and agreed to.
Section 23 agreed to.
SECTION 24.
Amendment No. 45 not moved
Section 24 agreed to.
NEW SECTIONS.
Amendment No. 46 not moved.
I move amendment No. 47a:
Before section 25, to insert the following new section:
"Sections 10 and 18 of the Landlord and Tenant Act (Ireland), 1860 (23 and 24 Vict. cap. 154) and the following words in section 14, subsection (6), paragraph (i) of the Conveyancing Act, 1881 (44 and 45 Vict. cap. 41) namely `To a covenant or condition against the assigning, underletting, parting with the possession, or disposing of the land leased; or' are hereby repealed with effect from the date of the passing of this Act."
The Minister for Justice established a Commission in January, 1966 to inquire into the working of the law relating to the landlord and tenant. It is only right and proper that the Minister should have done that. What I am concerned with in this particular amendment is to amend two sections of the Landlord and Tenant Act (Ireland) 1860, commonly referred to by lawyers and judges as Deasy's Act. I hope the amendment of Deasy's Act will commend itself to people on the other side of the House. I want to delete sections 10 and 18. I want to put on the record, if I may, section 10 of this Act with its medieval provisions. It provides:
Where any Lease has been or shall be made containing an Agreement restraining or prohibiting Assignment, the Benefit of which has not been waived before the First Day of June One thousand eight hundred and twenty-six, it shall not be lawful to assign the Lands or any Part thereof contrary to such Agreement without the Consent in Writing of the Landlord or his Agent thereto lawfully authorized in Writing, testified by his being an executing Party to the Instrument of Assignment, or by an Indorsement on or Subscription of such Instrument.
Section 18 provides:
When any Lease has been or shall be made containing an Agreement against sub-letting or against letting in Conacre, the Benefit of which has not been waived before the First Day of June One thousand eight hundred and twenty-six, it shall not be lawful for the Tenant to sub-let the said Lands or any Part thereof, or, in case of an Agreement against letting in Conacre, to let the same in Conacre, without the express Consent in Writing of the Landlord or of his Agent thereto lawfully authorized, testified by his being a Party to the Instrument of Sub-lease, or by an Indorsement on or Subscription of such Instrument, "or by a Note in Writing signed by such Landlord or his Agent," and no Receipt of Rent by any Landlord or his Agent shall be deemed to be a Waiver of any such Agreement against sub-letting.
The effect of these two sections of the 1860 Act is that in many letting agreements and leases there were this prohibition and a covenant by the tenant that he shall not assign, sub-let or part with possession of the premises hereby demised. It has happened in numerous cases and is happening today. There are cases under consideration by solicitors and by counsel, and sometimes there are cases going into court where a tenant perhaps 40 or 30 years ago has assigned property or sub-let it and did not get the consent in writing of the landlord. The net position is that if I buy a property that was sub-let or assigned without the written consent of the landlord and if I were to pay £3,000, the landlord if sufficiently unscrupulous—and there are such landlords who do this at present and are seeking to do it—can come into court and say: "I want to eject this man". The tenant says: "I hold under this agreement: I bought the land for £3,000." If he did not get the consent of the landlord in writing he is out lock, stock and barrel and his £3,000 is gone. There is no relief the court can give him. Subsection (6) of section 14 of the Conveyancing and Law of Property Act, 1881, provides relief against the forfeiture of a lease. In other words, it prevents the tenant being thrown out where he pays the rent. There is a covenant whereby if he is not paying rent he can be thrown out but he can draw attention to the Act of 1881. That cannot be invoked in the case of an assignment or a sub-letting which has taken place 20, 30 or 40 years ago without the consent of the landlord. Subsection (6) provides:
This section does not extend—
(i) to a covenant or condition against the assigning, underletting, parting with the possession, or disposing of the land leased;
I have quoted sections 10 and 18 which I want to repeal in this section. The enormity of these monstrous provisions in this law of landlord and tenant is such that the landlord may year in year out have known, and his predecessors in title, that this assignment was sub-letting without consent. He may have said "that is all right". He may have consented to it but if not in writing the provisions of sections 10 and 18 of the Landlord and Tenant Act 1860 are absolute and out the tenant goes, even if the landlord may have consented to it orally 20, 30 or 40 years ago.
I have read out, in order to anticipate the Minister for Justice, the terms of reference of the Commission which he established to look into landlord and tenant law. People have been asking me at what stage the Bill is, and whether there is anything that can be done to deal with this monstrous position. If I am the owner of a small factory and I convert myself into a company and the company then takes over and runs the factory, in law there has been an assignment of the property from me to the company and that assignment is a sub-letting without consent in writing of the landlord and the company, that is, I in another guise, can be ejected.
In any event, I have effected the lease without consent in writing. This is a monstrous provision to have on the Statute Book. It is grossly unfair. It is exploitation of human error which is often made not by the tenant in question or the lessee but through a slip on the part of the solicitor who may be young or inexperienced but the tenant pays a fearful price. I do not think we ought to wait one day longer than is necessary to remove this particular section from the Statute Book. The Minister may say "I am not entirely happy about the full implications of this." What I am concerned about is serious wrong is being done to tenants of property who may have paid substantial sums for it. We ought not to wait one day longer than is necessary to remove that law from the Statute Book.
If the Commission on Landlord and Tenant Law which the Minister has established and which I understand may report at an early date make recommendations then by all means repeal this particular section and put in something better. I have little doubt that every person in this House and every person who devotes a moment's attention to it will agree that no amendment of the existing law along the lines I have set out in this amendment can work as much injustice or be as wrong as to leave on the Statute Book sections 10 and 18 of Deasy's Act.
I am proposing that these amendments will have effect from the date of the passing of the Act. What I intend is a matter for the Minister's advisers in regard to draftsmanship. I want to ensure that the day this Act becomes law, whether other parts of it become law or not, this amendment affecting sections 10 and 18 of the Landlord and Tenant Act, 1860, should take effect immediately so that if there was an assignment in 1930 which comes to light only on 7th April, 1967, then, if this Act is law on 30th March, 1967, no matter when the breach of covenant occurred the relief which this section is intended to provide will operate.
The Minister has already said on the Second Stage that he has set up this Commission. I do not think we ought to allow for one minute longer than we can this monstrous provision. I have received quite an extraordinary number of representations, quite unusual, in the matter. I suppose that up to now, people felt that nothing could be done but, because this Bill is going through, people have come to me and said: "Put down something about it". I had put down an earlier amendment and, having the advice of some of the conveyancing counsel, my colleagues in the Law Library, we decided that the present amendment is better than the original amendment which was drafted without counsel's advice and, so, amendment 48 (a) is a better one than the original one that was there. I would certainly, on this occasion, again make a very strong appeal to the Minister to undo what was regarded by all and sundry as an enormous injustice and to prevent— through human frality, error and lack of skill—tenants who are in the hands of their legal advisers from being as grossly exploited as they can be under these two sections of the 1860 Act.
I shall cut this short by saying that I will go a long way in agreeing with the sentiments expressed by Senator O'Quigley in regard to the forfeiture provisions in the Deasy's Act. I am rather unhappy with the whole Act.
This is why I submitted not alone the Deasy's Act but every subsequent Landlord and Tenant Act to a Commission which is well established now and at work under the chairmanship of Judge Conroy. I should not like to rush in here and to deal in a piecemeal way with two sections of an Act which I should imagine the Commission will propose to me should be repealed in its entirety. There are a number of other anomalous features in various Landlord and Tenant legislation from 1931 to 1958 and up to now. I should like to see the whole of Landlord and Tenant law codified into one statute. I propose doing that when the Commission's report comes to hand. They have been asked to deal urgently with business tenancies and the renewal of these tenancies. There have been some complaints about the inadequacy of renewal provisions under the 1931 Act for the tenants concerned.
There is the larger question of codifying the whole law. I think it would be better to keep this particular measure to what we originally set out to do in it, namely, to provide for the purchase of ground rents and any matters ancillary to that. I think it would be bad practice to take out two sections, though they may be obnoxious enough, and to deal with them in this particular Bill when we have these plans in train already for a fully comprehensive review for all Landlord and Tenant legislation, with particular reference to the Deasy's Act.
While I agree largely with what Senator O'Quigley has said, I do not think it as urgent as all that. Practitioners have lived with the Deasy's Act since 1860 and are familiar with it. I do not think a few months longer will worry many people. In the Landlord and Tenant legislation, we shall be able to embody the sentiments expressed in Senator O'Quigley's amendment—rather than have them in here, unrelated to this Bill—in another Bill which will be before the Oireachtas inside 12 months.
I must say I am somewhat disappointed but not without hope that the Minister may change his mind on this. The Minister has the great virtue of flexibility of mind and is always open to argument. He has informed the House that the Commission which is at present sitting is dealing as a matter of urgency with business tenancies. They are entitled, under the terms of reference, to furnish an interim report. If they furnish an interim report on that, they will then have to search into the Landlord and Tenant Act, 1860, I suppose the whole of the law relating to notice to quit, ejectments, part of the Land Act law, and it will be years before the Commission report, notwithstanding the great industry of their Chairman and the other members. It will be several years under active consideration by the Department of Justice and it will be a long time after that before it reaches the form of Heads of Bill, is circulated to the Government and is then put into draft form.
I think that the Minister for Justice and the House should face up to what is contained in this amendment. There is no doubt whatever about it that there is not to be found in the whole of our Landlord and Tenant law any provisions that are more obnoxious or that compare in hardship with the two sections I have mentioned. Anybody who reads them or who comes into contact with them must admit that. I am not one of the more experienced conveyancers in the legal profession. Even in my limited experience, I have come across this kind of thing where a lease has been forfeited because of failure to obtain written consent. The inequity of these particular sections lies in the fact that a landlord or his agent may have only consented to the assignment or the sub-letting of a particular property. But, even though they have, and have misled the tenant, they can still afterwards come in, and it has been done, and eject the tenant because the lease has been forfeited.
This is not a kind of case where there are any considerations such as the Minister was urging in relation to the prevention of the creation of ground rents in future. This here is what is regarded by all persons who have come in contact with it as a monstrous inequity. There are no two ways about it. It is a gross injustice that a landlord can say to his tenant: "You can let the property to so-and-so. He is a fine respectable man" and, if he sells the property to somebody else, the new landlord can say: "Did you ever get the consent of the landlord?" and he can then eject him and become possessor of the property, which may be worth £3,000, £5,000 or £10,000. That is what we are going to allow to be left on the Statute Book.
I am not saying that this commission after it has considered this matter may not come up with some better amendment but I do say that once the attention of the Legislature has been drawn to these monstrous provisions, and they have been so described by judges who have had to administer this law, and the opportunity is provided for amending the law, we should seize it with both hands and enact an amendment as quickly as we can.
The Minister says not to do this piecemeal. I would appeal to the Minister that where we are faced with an undoubted inequity that is being perpetrated by unscrupulous landlords upon tenants we ought to deal with that straight away and we can do that by repealing sections 10 and 18 and the corresponding provisions in the Conveyancing Act and get rid of that. I have no objection whatever and I encourage the Minister and the commission into putting in a new provision that may be more appropriate than the amendment here. We ought to do that.
I would direct the Minister's attention to the fact that this Bill came originally into the House as the Landlord and Tenant Bill and then it changed its name to the Landlord and Tenant (Ground Rents) Bill and we have, apart altogether from ground rents, from section 25 on, amendments to the Reversionary Leases Act of 1958 and, in section 27, an amendment to section 57 of the Act of 1931. I quite agree that the Landlord and Tenant Act of 1860 is not an entirely satisfactory piece of law but I do not see that we ought to allow these unjust sections to remain on the Statute Book when we have the power to amend them.
I may say this to the Minister and to the House, that it was my intention because of the representations I received before this Ground Rents Bill ever came to this House to introduce a simple amending Bill to the Act of 1860 to delete these sections and subsection (6) of the appropriate section of the Conveyancing Act, for the simple reason that opinion among lawyers who come up against this kind of problem was so vehement and indignant against these sections that I felt it was desirable that I should introduce a special Bill to get rid of them.
The situation when I put down this and other amendments was that I was afraid they might have been ruled out of order by the Cathaoirleach as not coming within the ambit of the Bill. That was my only doubt about putting them down. Once they have been allowed in by the Cathaoirleach as being within the ambit of the Bill, I would press the Minister very strongly. If he consults with the Incorporated Law Society or the Bar Council or any other body interested in landlord and tenant law he will find that there are decent landlords even who do not believe that these provisions should be allowed on the Statute Book because they are so monstrously inequitable.
I am in a magnanimous mood. We will look at it between now and Report Stage.
We will look at the amendments to see if they are suitable to effect the purpose the Senator wants and we will come up with something on these lines.
Amendment, by leave, withdrawn.
Section 25 agreed to.
SECTION 26.
Question proposed: "That section 26 stand part of the Bill."
I am wondering why the Minister is taking what is regarded by some people as the extraordinary power of amending by order section 18 of the Act of 1958. Why is it necessary?
Just to be practical about it. Instead of having legislation for the purpose, it is more practical to do this that way.
I see. It gives each House of the Oireachtas an opportunity of dealing with it.
We do not have a Landlord and Tenant Bill every year.
Question put and agreed to.
Sections 27 and 28 agreed to.
SECTION 29.
Amendment No. 48 not moved.
Question proposed: "That section 29 stand part of the Bill".
If I am right, this is the section that provides that the covenants in a lease which applied and could be enforced by other tenants who took under the same lease will apply in future only to the lessor if he happens to be in occupation of particular premises adjacent to the person who is buying out the ground rent. While I like to see the property being vested in the tenant with as few restrictions as possible, there may certainly be occasions where there are amenities which the adjoining owner of property has enjoyed for years and which may be liable to be damaged simply because the tenant has acquired the fee simple and the covenants no longer apply. I know the Minister's answer to that is that the town planning people will have to give permission for any further development but the kind of thing town planning authorities are permitting are not such as to encourage me to think that they will have any regard at all for privacy or to the aesthetic values which people oftentimes pay a high price for. I have seen some extraordinary things which the Dublin Corporation Town Planning authority has permitted. I am not too happy, to say the least of it, that the benefit of covenants which all property in a particular lease has enjoyed over a period of years should, because one tenant buys out the fee simple, be destroyed for all the other tenants. I am wondering whether the Minister has been able to meet that difficulty. That is a difficulty which exists under the Bill as drafted.
It may well be, a Chathaoirleach, that the arguments which I am making do not relate to this section but relate to another section.
I was going to suggest that. It is more relevant to section 31.
Question put and agreed to.
Section 30 agreed to.
SECTION 31.
I move amendment No. 49:
In lines 27 and 28 to delete "occupied by the owner of the lessor's interest".
I have already said what I want to say on this.
The basic principle we discussed on the Second Stage arises here. One cannot have one's cake and eat it. Senator O'Quigley, the Dáil generally and the public want this idea of mandatory purchase of the fee simple by the tenant. If that is to be the position one must give the tenant the full freehold and freehold means freedom from covenant. That freedom we are giving with some exceptions. This will, in fact, be the most attractive feature. A tenant who heretofore had restrictive covenants imposed upon him will be able to release himself from these covenants by purchasing the fee simple. That is the most attractive aspect of the Bill from the point of view of the tenant.
Even though I share some of the fears expressed by Senator O'Quigley with regard to amenities possibly being damaged by an irresponsible tenant purchaser, town planning is now so advanced that it will cover that kind of situation pretty thoroughly. If we are going to make the break now and give the tenant his full rights then we must go the whole way and release him at the same time from restrictive covenants. I say that recognising the risk involved and the burden that will be placed on the town planning administration. We could hardly tell a tenant he may buy the fee simple without allowing him at the same time to rid himself of restrictive covenants. One just cannot have it both ways. Any other approach would frustrate the legislation and few tenants would be interested in buying out the fee simple while still carrying the burden of restrictive covenants. That would negative the legislation.
I quite appreciate that one cannot have one's cake and eat it, but there are certain kinds of cakes that I should like to have though I might not want to eat them. I would not, for instance, touch the kind of cake covered with icing. But that would not necessarily mean that I could not have that cake. I would not be too concerned about the rights of adjoining owners if I had much faith in our town planners. Because of what I have seen to date, I have no faith in them. They are one of the worst offenders in the creation of appalling nuisances around the country. The Minister will recollect the dump outside Longford town. It is maintained by the town planning authority. There is another dump outside Ballina, also maintained by the town planning authority. These are the kind of eyesores our town planners create for the disedification of the public.
Again, the circumstances in which they permit certain planning gives me no confidence whatever in their capacity to do the right thing as between conflicting interests. I am all for as few restrictions as possible on owners of property but I am wondering whether the Minister might not, as a halfway measure to meet the difficulties, take the matter up with the Minister for Local Government, on the line that, in considering permission for development by any particular person, the town planning authority would take into consideration the kind of covenants that existed and the amenities generally. They should be taken into consideration in determining the outcome of an application for planning permission. If people have paid for amenities over a period of years, it is only right and proper that the planning authority should have regard to them. I shall say no more than that.
The town planning authority might not be so quick to grant permission in a particular case if they had before them the question of amenities. The town planning authorities are the custodians of our amenities but, in my experience, they cannot always be trusted to preserve those amenities. That is my fear here. I have seen too many things permitted. The Minister is right in saying one cannot have one's cake and eat it; all I ask him to do now is to draw the attention of the Minister for Local Government to this.
I shall do that. I have a great deal of sympathy with what the Senator has just said.
Amendment, by leave, withdrawn.
Section 31 agreed to.
SECTION 32.
Government amendment No. 50:
In subsection (1), line 43, after "lease" to insert "and so much of any contract made after the commencement of this Act as provides for the payment of all or any of the solicitor's costs of the lease of any party to the lease by any other party thereto shall be void".
This has been amended several times and I hope we have now got down to a final draft. Section 32 at present provides that, notwithstanding any rule of the law, a party to a lease shall not be under any obligation to pay the solicitor's costs of the lease of any other party to the lease. The Incorporated Law Society were not satisfied that the section as drafted could adequately prevent persons from contracting out. The amendment provides that any contract made after the commencement of the Act which provides for the payment of any party's costs by the other party shall be void.
Amendment agreed to.
Section 32, as amended, agreed to.
NEW SECTION.
Government amendment No. 51:
Before section 33 to insert the following new section:
(1) Subject to subsection (2) of this section, so much of any contract made after the commencement of this Act as provides that any provision of this Act shall not apply in relation to a person or that the application of any such provision shall be varied, modified or restricted in any way in relation to a person shall be void.
(2) Nothing in this Act shall prevent a person from giving or accepting, for the purpose of the acquisition of the fee simple or other interest in land under this Act, or the apportionment of a rent under this Act, a shorter title to a fee simple or any other interest in land than the title which a purchaser is, in the absence of special contract, entitled to require.
The purpose of subsection (1) is to prevent contracting out of the benefits derived under the Act generally. There is a prohibition on contracting out under section 42 of the Landlord and Tenant Act, 1931, which is to be read as one with this Bill, but a doubt has arisen as to whether it is adequate to prevent contracting out of the benefits to be derived under this Bill. This is because section 42 of the 1931 Act relates specifically to "relief under this Act" which is defined in section 2 of that Act as being "compensation for improvements or a new tenancy under Part III of this Act".
The amendment of subsection (2) of this section will enable the parties to the purchase of the fee simple to agree on a shorter title than that which would be required on an "open contract", namely, 40 years clear title including a good root of title. It is common practice nowadays for purchasers to accept a shorter title than "open contract". The provision is necessary because a doubt has arisen that, because of the wording of section 6 of the Bill, which requires the persons concerned "to effect a conveyance free from incumbrances of the fee simple", the conveyance would be subject to the full requirements as regards title laid down in the Vendor and Purchaser Act, 1874. This is not intended and, where good title can be conveyed on a shorter basis, this will mean a saving in costs.
Amendment agreed to.
Sections 33 and 34 agreed to.
Title agreed to.
Bill reported with amendments.
Report Stage ordered for Wednesday, 1st February, 1967.
