Seanad Éireann debate -
Wednesday, 27 Jun 1973

Vol. 75 No. 4

Auctioneers and House Agents Bill, 1973: Second Stage.

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

Minister for Justice (Mr. Cooney)

May I say, first of all, that I wish to apologise to the House that copies of my speech will not be available for about another five minutes. There was an unexpected demand on time this morning which upset the schedule to a small degree.

Before describing what is in this Bill, I should like to indicate the present position regarding the employment of and remuneration of auctioneers and house agents.

Normally, if one has need of the services of a person having a special skill or offering a special service, the cost of this person is borne by the person employing him.

This is not the case where the person concerned is an auctioneer offering certain special skills in the disposal of land. When I use the word "land" I also include in this term buildings of all kinds.

It has become a standard practice to charge the fees of the auctioneer to the person acquiring the land in question. In other words, the person who employed the auctioneer does not pay him, though as his employer he is legally liable to do so, but instead he passes over this liability to the purchaser. This is standard practice with one exception which I shall mention in a moment.

This practice means that the price of the land in question is increased by the amount of those fees. Of course, it is also increased by the stamp duty, if any, payable and by the legal costs.

There is one exception to this practice and that is that in cases of sales in Dublin by private treaty the fee is borne by the person employing the auctioneer, the vendor.

The fee which auctioneers customarily charge is 5 per cent of the purchase price with one exception, this again in the case of sales by private treaty in Dublin where the fee charged is 2½ per cent of the purchase price. In all sales therefore outside Dublin, that is sales by public auction or private treaty, the fee is 5 per cent and in Dublin, sales by public auction are also charged at 5 per cent. As I have already said, these fees, with the one exception mentioned are passed over to the purchaser. In addition to his fees, the auctioneer usually has a claim for out of pocket expenses incurred, those usually being the cost of advertising the land in sale. The practice is that these are recovered from the vendor that is from the person on whose behalf they have been incurred, the person employing the auctioneer.

You will have noted that the fee charged is a flat percentage and the next point to be noted is that it is charged at the rates mentioned irrespective of the size of the purchase price or the complexity or difficulty of the particular transaction.

The extent of the service given by auctioneers and house agents varies according to the circumstances of particular transactions and remuneration is not related to the work actually done in individual cases. The fees can be, in cases, totally out of proportion to the work done. The system whereby a flat percentage rate is charged irrespective of the value of the property is in any case open to serious criticism, particularly in the case of land and houses, which have appreciated so enormously in value in recent years.

Senators are aware of the Government's concern about inflation and this concern is being translated into remedial action, as witness the announcement yesterday of my colleague the Minister for Industry and Commerce.

Auctioneers fees charged as a percentage on the purchase price have an inflationary effect. To put it simply, present practice means that the price of a house is inflated by 5 per cent in most cases and this pressure falling as it does on a very vulnerable section of the community—the wage-earner setting up his house—is a significant factor in the entire inflationary spiral.

Furthermore the custom of charging the fee to the purchaser coerces him in practice into accepting liability for it or run the risk of losing his purchase if he bargains over the fee.

This whole area of house purchase is a very sensitive area in the context of inflation and because it is so, the Government in their budget considerably reduced and in some cases totally abolished stamp duty so as to further ease the lot of the person purchasing his own house.

Let us take the case of a £7,000 house as an example and look at what a purchaser would have had to pay prior to the budget for stamp duty and auction fees. The pre-budget stamp duty was £210 and auction fees, assuming the transaction outside Dublin, £350, a total of £560 which the purchaser had to find in addition to his purchase price and the legal fees. You will agree that this was a substantial sum for a newly wed to find setting up his own house or for a family man moving from a rented apartment into his own house.

The budget reduced the stamp duty in this instance to £100 and when the Bill becomes law the purchaser will be relieved of auction fees of £350, giving a total relief of £460. The legal fees incidentally, assuming a title in the Land Registry free from equities and most houses in this price range would be so registered, amount to £80.

Let me emphasise, however, that when I say the purchaser will be relieved of auction fees I do not mean that these fees are being abolished. The liability for them will be transferred from the purchaser to the vendor. I now turn to the Bill itself.

The Bill has two basic provisions. The first proposes that, save in certain specified cases, contracts whereby a purchaser, lessee or tenant is made liable to pay the fees and expenses of an auctioneer or house agent shall be void. The second provision proposes to increase from £5,000 to £7,500 the fidelity guarantee bond or deposit which must be maintained in the High Court by auctioneers and house agents. I will now go on to deal with these provisions in turn.

The Bill proposes that, with one exception, any provision in any agreement or contract relating to the sale, lease or letting of property, other than personal chattels, whereby the purchaser, lessee or tenant is required to pay the auctioneer's or house agent's fees or expenses shall be void. The exception is the case where the auctioneer or house agent has been retained by the purchaser, lessee or tenant to act for him and has not been so retained by the vendor, lessor or landlord. I feel that in such cases it would be unfair to an auctioneer or house agent unless such arrangements are excluded specifically from the provisions of the Bill.

Many people consider that the fees charged by auctioneers and house agents to purchasers are too high and, that the system of charging is wrong. Two possible changes suggest themselves, namely, that a sliding scale of charges be substituted for the fixed percentage charge now operating and that the vendor should pay the fees.

It is proposed, in due course, under the powers in the Prices Acts to have a detailed examination carried out of the fees charged by auctioneers and house agents but this will take some time and will involve consultation with the profession. The powers exercisable under the Prices Acts do not, in any event, extend to directing that the vendor, rather than the purchaser, should be responsible for the payment of auctioneers' or housing agents' fees and that is why this measure is being introduced in advance of such examination. The proposal in the Bill would not make it unlawful, in the sense of making it an offence, for an auctioneer or house agent to contract with a purchaser for the payment of his fees; it would simply make any such contract void and hence unenforceable. The main area of concern relates to the sale of property, that is houses and land, and accordingly the provisions of the Bill are, in effect, confined to transactions in real estate.

I recognise that if the vendor has to pay the fees the net cost of the property to the purchaser might increase but, on the other hand, the vendor who employs the auctioneer or house agent is in a stronger position to bargain for a lesser fee, and I am hopeful that the overall cost to the purchaser will be less.

I will now pass to the second object of the Bill.

Auctioneers and house agents are required by law—the Auctioneers and House Agents Acts, 1947 and 1967— to maintain in the High Court a fidelity guarantee bond for £5,000 or to lodge this sum with the High Court. In practice, almost all auctioneers and house agents are covered by bonds, collectively or individually. The figure of £5,000 was fixed in 1967; the figure fixed in 1947 was £2,000. The bond or deposit is required to provide some form of insurance for the public in view of the fact that large sums of money are regularly held by auctioneers and house agents on behalf of clients.

Having regard to appreciation in the value of property in recent years, the figure of £5,000 now appears to be too low. I understand that the current premiums on bonds for £5,000 are not unreasonable and that a collective bond at a very reasonable figure is maintained for members of the Irish Auctioneers and Valuers Institute. I should add that no claims have been made against these bonds in the past five years, which is in itself a clear indication of the integrity of the profession.

The Auctioneers and House Agents Act, 1967, includes a provision requiring auctioneers and house agents to keep separate clients' accounts and stipulates the manner in which these accounts must be kept. Despite these safeguards it was thought desirable at the time that Act was introduced to increase the amount of the guarantee bond or deposit from £2,000 to £5,000. In the context of the amending legislation which is now being introduced I consider that the amount of the bond or deposit should be increased to £7,500 to keep pace with the times.

I have now covered the two objects of the Bill in some detail and I accordingly recommend the Bill to the House.

Mr. Lenihan

I will refer to the second object of the Bill first, the one that I imagine will give rise to very little debate—the proper increase in the amount of the fidelity guarantee bond which was fixed in the Act of 1967 which I had the privilege to introduce here. It is now being raised from £5,000 to £7,500. I am glad to note that no claims have been made against these bonds in the past five years and that the requirements to keep separate client accounts is also working well.

There is no question that the auctioneering profession have made a very positive effort in recent years to put their house in order. The legislation enabled them to do this. They have also proceeded with educational courses designed to bring up the qualifications and the knowledge of auctioneers, who are making a real contribution to the life of the community by providing a necessary service. The one element in question, until recent years, that gave rise to public criticism was the fact that standards and educational qualifications were not as high as they should have been and that guarantees against the misuse of public moneys were not sufficiently written into the statute. This has now changed, and changed for the better, in recent years.

The main object of the Bill, which is the one that will cause some debate in this House and in the other House, is the question of removing the liability for fees in regard to real estate dealings from the purchaser to the vendor. I might say that I, as a member of the Government that made the decision to bring this in as a matter of principle, fully agree with the Minister for Justice in bringing forward this measure. It is a very desirable social development and, while agreeing totally with the principle of this, the first object, and with the principle behind the second object, there are a number of Senators, and I understand a number of Deputies in the other House, who have views in regard to matters of detail in connection with the Bill. While our group will not be opposing the Bill on Second Reading we would like time to enable Senators to put down Committee Stage amendments. We will require at least a fortnight to enable us to consider the matter with a view to putting down Committee Stage amendments but we do not oppose the Second Reading of the Bill.

I regard the Bill as a very desirable social development in the sense that— the Minister has set it out in his opening remarks—the vendor is the person who is in a much better position to bear this liability. The purchaser is in the position where he or she has very little choice in the matter. In many cases the purchasers may be young people who wish to buy a house so as to set out in married life. They are the weaker party in the situation. From the social point of view it is highly desirable that we should change to the way of operating such sales which exists in Britain and in Europe and, indeed, operates to some extent in Dublin already in the case of private treaty sales. It is logical that we should be on all fours with the practice that exists in Britain and throughout Europe in this respect.

It is anomalous that the situation should be as it is here. I am aware, of course, that the 5 per cent provision which is now in many cases a burden on the purchaser has no legal sanction. In many cases an arrangement is reached between the purchaser and the auctioneer for a much reduced rate. This whole area of charges is one which, I think, is more appropriate to the Prices Commission. It would be very difficult to write a scale of charges into the statute. Ideally, it would be the right way; but I do not think it would work out in practice because of variations in the type of property, variations in the type of service and so on. Any such fixation of charges is more appropriate to the National Prices Commission. I take it from the Minister's remarks that it is proposed that the job of investigating the whole system of the scale and rates of charges in this field be given to the Prices Commission. We made a decision, as a Government, that this should operate generally in regard to professions as a whole. There is no reason why any professions should be excluded, in any way, from the ambit of the Prices Commission investigations. If there are to be such investigations they should apply equally to lawyers, doctors, engineers, architects and all professional groups as well as auctioneers.

That is a separate area from the area involved here in the Bill. What is involved in the Bill is just the enunciation of two principles, the first of which is completely non-contentious— the raising of the limit of the fidelity bond—and the more important social one, which poses the question: "Which of the two parties to the contract is in a better position to bear whatever auctioneers' charges that arise". If one looks at it from the social and personal point of view the vendor is the person who is better equipped to bear whatever charges arise out of any such transactions Already the vendor bears the out-of-pocket expenses of the auctioneer. The vendor is the person who is seeking to sell the property and the vendor is the person who should then hire whatever expertise he may require in the sale of his property and the person whom he hires in that situation is an auctioneer who has the expertise in regard to the value of property and in regard to its disposal.

I am talking strictly in terms of social principle here and the personal choice involved in this particular situation because in many cases it is not going to make as much difference as people might think. Obviously, in many cases what will happen is that whatever percentage is agreed upon as the auctioneer's fee will be put on to the value of the property so that the purchaser will pay the auctioneer's fee under the guise of an increase in the property. This will happen as a matter of practice in many cases, but I believe there is a very important point of principle involved as to who better can bear this extra burden. The purchaser has very little choice in the matter. He or she is the person who must buy. The vendor is the person who is in the advantageous position in the transaction. He or she is selling, he or she has hired the expertise to conduct the sale and I think it proper that the vendor should discharge the liability and pay the fee.

There is nothing in the Bill which, in any way, changes the fee. The fee is not a statutory fee, it never was a statutory fee, and is purely a matter of custom. Again, the vendor is in the position to make the best practical deal in regard to the rate of charges. The vendor will be in a stronger position to deal with the person whom he or she is hiring so as to negotiate a fee that may be appropriate in the circumstances. The market is the best agency for deal-with this situation and the vendor and the auctioneer are better matched in the market than the auctioneer and the purchaser. The give and take of the market will ensure that a negotiating fee can be made at best and with the least possible danger of injury to the persons involved by having it negotiated between vendor and auctioneer. To that extent I welcome the main principle enshrined in the first objective of the Bill. Other Senators, in my group and other groups, may have other views on the Bill which, I believe, can be best expressed in amendment form between now and Committee Stage; but, so far as Second Stage is concerned, we do not propose to oppose it.

Mr. M.J. O'Higgins

I agree largely with the views expressed by Senator Lenihan with regard to this Bill. We are dealing here with a question of principle the pattern of which, in relation to professional fees, was established to some extent as far back as 1967, that is, that the person who orders the service should pay for it. Senator Lenihan, as a lawyer, will probably remember that the position in regard to legal fees in relation to leases, up to 1967, was that if the contract was silent, or unless a contrary arrangement was made, the lessee was responsible for the lessor's costs. I think it was Senator Lenihan who was Minister for Justice at the time the Reversionary Leases (Ground Rents) Bill, 1967, was introduced. The opportunity was taken on that occasion to bring in, in relation to legal costs of leases, a provision very similar to the provision which is enshrined in this Bill. It provided that in future any contract—I have forgotten the precise wording—which requires one party to a lease to pay the cost of another party to the lease would be void. The principle there appears to be precisely the same principle as is enshrined in this Bill: the principle that the person retaining services or ordering the work is the person who should have to pay for it.

I can appreciate that there may be different points of view in relation to this, particularly within the auctioneer's profession. This Bill is altering a practice that has been a long-settled one. Generally speaking, people do not like to be unsettled. They do not like to see a settled practice being changed. I, therefore, anticipate that there might be objections from at least some people in the auctioneers' profession.

It is important to emphasise the point made by Senator Lenihan, which is an absolutely valid point in relation to this Bill. It is that the auctioneer is not being deprived of anything. This Bill regulates the relations between vendor and purchaser in so far as the incidence of auctioneers' fees or commission is concerned. It is not saying that the auctioneer will not be entitled to his commission. It merely indicates in particular circumstances who is to pay that commission.

Senator Lenihan also made another valid point in regard to something which may lessen the effect of the Bill. In practice what will happen in many cases is that there will not be any great difference in the ultimate price to be paid by the purchaser. I anticipate that, as a result of this, the vendors, recognising that the liability for the auctioneers' commission is clearly going to be theirs in the future, will give their "riding" instructions to the auctioneers, which may be as follows: "The price you are to get is to be a price which will be sufficient to cover, in addition to the purchase price, your commission."

To some extent, the Minister has given the answer to that in his opening statement. He pointed out that the vendor will be in a better position than the purchaser to strike a bargain with regard to fees. So long as the system was such that the purchaser had to pay the fees, then the purchaser found himself in the position where, when he made a bid for property, he knew that his bid was going to be whatever his figure was plus the auctioneer's commission. The auctioneer's commission, while not fixed by statute, was a known ascertained factor in any buying or selling of property. Therefore, the price to the purchaser—and the purchaser knew it —was going to be whatever price he bid, plus the auctioneer's commission. That will be altered. The vendor is in a different position in that he can strike a bargain with the auctioneer as to the commission which he is prepared to pay for the auctioneer's services. I am not prepared to say if this is a good or a bad thing. There are two sides to it. If the Bill has that effect, then it may result in a reduction in price for purchasers. However, from the point of view of the auctioneer, I am not sure if the position would be quite so happy.

I know I will not be allowed by the Chair to extend the debate in any way. Nevertheless, I should like to point out that, in a profession such as an auctioneer's where there is a minimal requirement for a certificate of qualification before the courts, obviously there is a very wide range when you take the field as a whole. There may be the highly-qualified, experienced auctioneer. Then, there may be the person who obtains an auctioneer's licence for a specific purpose, and not with the intention of engaging generally in the business of auctioneering. That is not unknown.

In his reply, the Minister might let us know if it is intended in the future to have a more comprehensive measure dealing with the auctioneer's profession. There would be a strong view that what I regard as the minimal requirements for a certificate of qualification should be examined from the point of view of requiring something in the nature of a solid apprenticeship and experience in the profession, in addition merely to fitness and character. However, I do not want to go into that question, which is obviously a very much larger one than is contemplated in this measure.

An Cathaoirleach

I am glad the Senator appreciates that point.

Mr. M.J. O'Higgins

The Senator appreciated it all the time. He was wondering how far he would get.

I should like to refer to one point, which is probably a Committee point, relating to section 2. The Bill refers to:

... any provision (whether express or implied in an agreement entered into after the commencement of this Act ...

The Minister has already pointed out that the Bill is not imposing penalties. What it is doing is making void any such agreement entered into after the passing of the Act whereby the purchaser would have to pay fees, thereby making it unenforceable. I wonder should this be examined a little more closely? If a purchaser, possibly in ignorance of this statutory provision when it comes into force, agrees to pay auctioneer's fees and, in fact, pays them, there is nothing he can do about it. The fact that the contract was void and unenforceable—I may be wrong—will not entitle him to get his fees back if he has already paid them. It would, obviously, be a perfectly good defence if the auctioneer were to sue him on foot of the agreement for the fees which he had agreed to pay. But if he enters into an agreement and pays the fees, it does not seem to me that he can get them back.

Mr. Lenihan

I think that is what subsection (2) of section 2 is about.

Mr. M.J. O'Higgins

I do not think so. Subsection (2) deals with a different question. This is where an auctioneer is retained by a purchaser and vendor. I agree with subsection (2) of section 2. The Minister is quite right to retain the principle there, that is that the person who engages the services pays for them. However, I am talking about the case where a purchaser does not retain the services of an auctioneer but where the vendor obtains the services of the auctioneer and sells them to a purchaser. The purchaser, either in ignorance of the law or because he is particularly keen to get the house says to the auctioneer —possibly because he feels it is necesary to do so—"I will pay the fees". If he agrees to pay the fees and does so, nothing can be done about it. But if he agrees to pay the fees and does not do so, then the auctioneer cannot recover it because it is unenforceable. I am talking about the case where, through ignorance, he pays the fees and am asking whether or not it should be tightened up to allow the purchaser to recover fees paid on foot of any such contract, if he does pay them.

There is a second point relating to this. I am sure the Minister has been well advised on this point and there is possibly no force in it. I would prefer to see the wording of this section referring, not merely to any contract entered into, but to any arrangement or contract entered into. Like a number of other Members of this House I am a lawyer, and it is our job, when this type of legislation comes into existence to look at it closely and see other ways around it if we are asked to do that. It seems to me that there is possibly a way around this, but I may be mistaken.

Mr. McGlinchey

There are many auctioneers in the House, too.

Mr. M.J. O'Higgins

No doubt we will hear from them. The only other point I want to mention is in relation to the amount of the deposit or fidelity guarantee. Heretofore, since 1967, the figure has been £5,000. It is a great tribute to the auctioneers' profession that no claims have been made on foot of these bonds in the past five years. That would probably dispose most people to feel that it is not necessary to increase the amount of the bond. If we approach it from the point of view of either the change in money values or the enhanced value of land and house property, I would be rather inclined to the view that a change from £5,000 to £7,500 possibly is not enough, relating it merely to changes in money values and property values. If that view had strong support in the House or from the auctioneers' profession, the Minister should have an open mind with regard to the amount of the bond.

Any person in my position—the same is true for Senator Alexis FitzGerald and others—has a great deal to do with the auctioneers' profession. It does not surprise me—I say this quite sincerely—to discover that the position is as the Minister has stated and that no claims have been made in the past five years. I think I can say with complete confidence that members of the auctioneering profession with whom I do business in Dublin are of an extremely high character and calibre. It is due to their profession to say that. Auctioneers regard themselves as being in a profession and being duty bound both to their own profession and to the clients for whom they deal, to give a service of very high professional standard. In any measures dealing with the auctioneering profession the Minister and the Government will —I know the Government are and have expressed themselves to be keen on doing this, not only with regard to auctioneers but to others—try to work in the closest co-operation and after close consultation with the auctioneers' profession.

Mrs. Robinson

Like the other Senators who have spoken, I welcome this Bill because it removes the anomaly that the burden is on the purchaser of a house to pay the fees of the auctioneer who was the vendor's agent. I accept the Minister's point of view that the purchaser is the weaker party and is in no position to bargain. In the case of a public auction the fee was 5 per cent, which in many sales of houses or land could come to a considerable amount.

This brings us into line with legislation in other countries. The legislation in Northern Ireland was changed quite a short time ago in this respect. I welcome the change.

I also welcome the fact that this Bill has been introduced in the Seanad. This is a practice which was evident under the previous administration, a practice I would like to see continuing, particularly with regard to non-contentious Bills of this sort, where there is more time in the Seanad to debate them.

I am not satisfied, however, that there is sufficient protection for the public written into the Bill. I have heard both Senator Lenihan and Senator O'Higgins talking about the auctioneers' profession and the high standards maintained. I do not have any personal knowledge to differ from them, but I note that the auctioneers are in quite a different position from other professions, in particular from the solicitor's profession. Auctioneers are now, almost without exception, limited liability companies. I should like some explanation as to why auctioneers have sought this protection of limited liability.

Secondly, there is no compensation fund equivalent to the compensation fund which is required to be set up and which has been set up under section 69 of the Solicitors Act, 1954, which now stands at some hundreds of thousands of pounds and which is a real protection to the public. If an individual solicitor defaults on a client this fund will compensate the public. In his speech the Minister, in relation to the bond in section 3, states:

The bond or deposit is required to provide some form of insurance for the public in view of the fact that large sums of money are regularly held by auctioneers and house agents on behalf of clients.

If this is so, the bond is not sufficient protection. There has not been recent evidence of default and claims against the bond. Nevertheless, the mechanism is not sufficient and if we are bringing in legislation at this time it should be clearly stated either that auctioneers should not take, for instance, the deposit of 25 per cent on a house purchase or even the fees to bind the sale, if there is no other protection. If one compares the position of a solicitor and the position of an auctioneer, a solicitor is personally liable, and there is the compensation fund of the profession. The public have that protection, whereas the auctioneer is a limited liability company and there is no compensation fund. There is only this bond brought up now to what I regard as a very minimal figure of £7,500. If one thought of an auctioneer's firm which holds deposits on house-buying from five or six clients that would be far in excess of £7,500, and it would not be a protection. The important thing in examining a Bill of this nature is to ensure that it does have that kind of protection. Therefore, I would ask the Minister to consider this point. I should think Senator Lenihan would like to draft an amendment for Committee Stage to this effect.

That bond of £7,500 is less real when it is realised it is only a bond which can probably be obtained for something like £20, and when one realises that the auctioneers do not have any special training or qualifications. Senator O'Higgins made the point that there is no apprenticeship as such, and there must be particular protection to the public in this case.

The scale of fees is an important matter. I agree with Senator Lenihan that this is probably better left to the Prices Commission to inquire into. It is appropriate on the Second Reading of this Bill to emphasise that the fees seem to be out of line with other professional fees. The fees, as the Minister emphasised, bear no relation to the amount of work which may have been involved or the complexity of the sale. They are a standard 5 per cent on the sale price. The auctioneer usually has a very transitory relationship with the person paying the fees who, up to now, has been the purchaser and 5 per cent is an extraordinarily high figure and has led to inflation in house prices. It is out of line with what would be regarded as appropriate in the circumstances. One could again make a comparison with the maximum percentage which a solicitor can charge for his legal fees which, at the top of the scale for the sale of a house for £10,000 would be 2 per cent, and after that would decrease proportionately.

The solicitor would usually have a fiduciary relationship of long standing with the client involved and would usually have to do a great deal more actual work in relation to drawing up the conditions of sale and the requisitions, et cetera. It is appropriate to note that the 5 per cent fees which the auctioneers have been charging and which the purchaser has had to pay up to now have been out of proportion to what I believe can be justified and have been inflationary.

The Bill should not rest at this stage without providing within the wording of the Bill itself or else through some other mechanism, such as the Prices Commission, or through some undertaking by the Government, that when this Bill is to be passed there will be some monitoring of house prices to ensure that there is not a marked increase by about 5 per cent which effectively would mean that the Act may be evaded and the purchaser may be paying that 5 per cent in this indirect way. It is easy to see where the vendor and the auctioneer might come to an agreement that whereas prior to this Act the house might have been sold at £10,000 it can now be sold at 5 per cent more because the auctioneer's fees would have to come out of it. It is necessary not to leave it to the market after the Bill has been passed to establish its own control.

The vendor is in a much better position to bargain with the auctioneer to try to bring down that ludicrous figure of 5 per cent to a more realistic fee for work done as agent of the vendor. There is a danger that unless there is specific monitoring of house prices the good the Minister is trying to achieve will not be brought about by this Bill.

Mr. McAuliffe

I welcome this Bill which is long overdue. I am certain there will be no opposition to this Bill from any side of the House. Auctioneers may lose some business as a result of this Bill. The vendors will not be so keen now to run to the auctioneers; they will make their own bargain without consulting an auctioneer. There may be bargaining with them from a much stronger position by the purchaser. If one buys a house or a piece of land the first thing to do is to go along to the auctioneers with one's deposit. It is sufficient to have increased the bond to £7,500 as auctioneers handle very little money. In the big deal the money is paid to the solicitor. The only money the auctioneer handles is the 5 per cent.

A number of people are under the impression that auctioneers are liable if their clients do not get paid. Unless the auctioneer gets the money from the purchaser he is not liable under law to pay money which was not paid to him. This happened during a bad harvest when people left their machinery on the headlands. The land had cost £30 per acre but the people did not get the full money for the land. The auctioneer was not liable under law to pay it. I do not know if there has been any change in the law since then. As Senator Robinson stated, the public are well covered if anything goes wrong with the solicitors. It is to the credit of the auctioneers that no claims have been made from the insurance companies in connection with any business done. We are perturbed at present there are so many auctioneers. There are five or six in every parish. There seems to be no restriction on the number of auctioneers. If a person is able to get a bond he can begin auctioneering immediately. If he holds a few good auctions his business is established. There should be a limit to the number of auctioneers but it is difficult to apply this when they can take out a bond for £7,500 which, as Senator Robinson said, costs them about £20.

I should like to see this Bill in operation as quickly as possible, and I congratulate the Minister for bringing it to the House.

Mr. Brosnan

We would all welcome any measure which would contribute to the harmony between auctioneers and their clients, who are the general public, and bring about the desirable results which the Minister envisaged in his statement.

I must confess that unlike my colleague Senator Lenihan and the other Senators, my welcome for this Bill is qualified. I am very dubious about the efficacy of this measure to produce the highly desirable results which the Minister mentioned and which we all want. The Minister mentioned in his opening remarks that this measure was part of the control of prices in which his colleague was engaged in in relation to other matters. I hope that the public will not regard this measure as a piece of political window-dressing or as an effort on the part of the Minister to create the illusion that he is reducing prices.

Taking the second part first as Senator Lenihan did, because it has most merit, I agree entirely about the increase in the amount of the deposit, but it is not adequate. In the 1947 Act, the deposit laid down was £2,000. It was increased in 1968 to £5,000. It has now been increased to a mere £7,500. That amount has no relation to the increased value of property or inflation, having regard to the value of property in 1947 and in 1967.

I would ask the Minister to seriously consider increasing the amount of the deposit. It should be commensurate with the value of property today. There should be some realistic ratio between the amount of the deposit and the value of property on the current market. That action would also have the advantage of preventing what a number of Senators have mentioned, that is, the proliferation of this "happy breed" of auctioneers. I do not share the views of some Senators in their eulogies of this profession. In the main, they are genuine, honest and bona fide but there are many who because of the inadequacy of this deposit have become auctioneers. Senator O'Higgins mentioned some who had become ad hoc auctioneers. They have taken out a licence because they were in the position to negotiate a deal, often a very large deal, and it paid them to take out a licence for this purpose. They never engaged in any transactions afterwards. We have too many auctioneers in the country at the moment. This is because of the ease with which anyone can enter the profession. All it requires is a simple application to the District Court, the payment of some small amount of stamp duty—I never heard of these applications being refused—and the lodgement in the High Court of a deposit by way of cash, securities or bond. It does not require any training, credentials or qualifications. It is almost as easy to enter this profession as—I was going to say— enter the Oireachtas. Certainly some restriction should be placed on the number of auctioneers. This deposit, if increased sufficiently, could be used as a deterrent.

The purpose of the deposit is to protect the public and it should be increased for that reason also. It was mentioned on several occasions that no demands were made during the past five years. I find that difficult to believe. I am sure the Minister from his own knowledge and experience as a solicitor must know of many cases of hardship caused by negligence or, perhaps, at time unscrupulous auctioneers. An increase in the deposit would afford further protection for these people to which they are entitled.

The first proposal deals with the transfer of the liability for fees and expenses from the purchaser to the vendor. This will make no difference, good, bad or indifferent. A vendor will know the price of his property. That could be determined by the law of supply and demand. The vendor in seeking the real value of his property will add on to the purchase price, the reserve, the fees and expenses which he must pay. It might appear to the public that we are trying to control the price of property but in actual fact it will not make any difference. The public will not be fooled by this proposal. The auctioneers and members of the public have already expressed their doubts about the efficacy of this measure in relation to the first proposal and I must say that I am very dubious about it.

Mr. Eoin Ryan

I am in favour of the two proposals contained in this Bill for a number of reasons most of which have been dealt with by previous speakers. With regard to section 2 and the question of who pays the auctioneer's fees, it is desirable and logical that the person who employs the auctioneer should be responsible for the fees. There is a good deal in what Senator Brosnan has said that in many cases this will not make a substantial difference in the price which the purchaser will pay for the house because it is quite likely that the vendor will look for a price which will cover the fee which he has to pay to the auctioneer. Nevertheless it will make some difference because the vendor will be in a better position to bargain with the auctioneer and in some cases will be able to settle for a fee that is less than the 5 per cent which is being paid at the moment.

There is another aspect which is very important. Most transactions are concerned with the man-in-the-street buying a family house and he has to obtain a loan from a building society or insurance company to pay for that house. In most cases he gets only a percentage of the price of the house. It may be 75 per cent or 80 per cent. He then has to look after the question of fees himself. Under the provisions of this Bill, even if the vendor puts up the price of the house a little bit, at least the purchaser will be in the position that he will get 70 per cent or 80 per cent of the cost of the house, including the amount of fees that are built into the selling price. Therefore, the man buying a family house who has to borrow money for this purpose and who very often finds it very hard to obtain the necessary money will have the advantage that he will be able to get at least a percentage of that fee that is built into the price of the house. For that kind of transaction, which forms the bulk of the transactions which will come under the heading of this Bill, there is a decided advantage to the purchaser.

In regard to the deposit, I agree with most of the Senators who have already spoken that the deposit should be increased, but I doubt if the increase is sufficient. Having regard to the present price of property £7,500 seems to be an unrealistic figure. It is unrealistic because an auctioneer may have financial difficulties. I am glad to note from the Minister's speech that no such situation has arisen over the last five years and I hope no such situation will arise in the next five years. Nevertheless, if and when it happens, it will not be in relation to one or two transactions. It is something which more than likely will develop over a long period where the auctioneer gets deeper and deeper into trouble, puts off the evil day and finally goes bankrupt. In that situation, if it occurs, the amount is almost certain to be far in excess of £7,500. The amount of the deposit should certainly be increased. The amount suggested in the Bill is unrealistic. I would support a proposal to make it higher than the amount which is mentioned. This might be a burden on auctioneers if they had to make a deposit in cash, but in view of the fact that in the vast majority of cases they are covered by a bond which they can get by paying a very small sum per year, this would be no great burden on auctioneers but it would provide a very necessary and desirable protection for their clients. Weighing one thing against another there is a strong argument for making the deposit higher.

Mr. Burton

I can appreciate the concern of the Minister in introducing this Bill. He mentioned in his opening remarks that it was an effort to stem inflation. As an auctioneer I welcome the second part of the Minister's speech and the second proposal made in the Bill. I feel that all auctioneers of good standing would share my view. I welcome the increase of the deposit from £5,000 to £7,500, but £7,500 is too low a figure. It should be at least £10,000. That, of course, is a personal opinion. I feel it would not be a burden on auctioneers. Those of us who have the advantage of being members of the auctioneers association can get a collective bond. It is easier for us than for an individual auctioneer.

However, I have reservations as regards section 2 of the Bill, which states that, with the passing of this Bill, the responsibility for the payment of fees will be switched from the purchaser to the vendor. Some Senators have said it will not make much difference whether John or Paul pays, because the price will be increased. I have grave doubts with regard to the future of some auctioneers under this heading of the Bill. It will immediately give rise to a cut-price system. As I come from a rural area I am not concerned with what happens in the city. There may be very honourable individuals. Without wishing to be uncharitable, I must say that does not always apply in rural areas. As has already been stated, there are now auctioneers at practically every crossroads and there is vast competition. When a person wishes to sell a house, land or buildings he will approach A and have a chat with him. He will then approach B and put his proposal to him. He will go down the line. In fact, he will approach half a dozen auctioneers. There are plenty of headaches for a very small fee. The Minister is not concerned with that, but that system will be introduced because all auctioneers are not of good standing, human nature being what it is, I can assure the Minister this will happen in rural areas.

As a rural auctioneer I have reservations about that suggested change. I shall develop it further. The first person an individual who is thinking of putting some property on the market will approach is a solicitor. Solicitors are a very honourable profession. When this Bill becomes law the vendor, or the property owner, will wonder what he wants an auctioneer at all for and think that the solicitor will do the job for him. This has been done for a few years now and it was a matter of concern to our association as to how they could be prohibited from so doing. Even though an understanding was arrived at there were some people who, after a short time, did not honour it. One has only to look at the advertisements in the Friday or Saturday newspapers to see the number of solicitors or firms of solicitors with, perhaps, six-inch double columns advertising a property for sale, no auctioneer being involved. I presume there is generally a double fee for doing this.

Mr. Cooney

That is where the Senator presumes in error.

Mr. Burton

This is opening the gate wider, and there will be encouragement for the cut-price job, especially down the country, whereby one person will provide a service for £25 less than somebody else will charge. I can see auctioneers having to reduce their income when this Bill becomes law. This will also improve the position of solicitors. They are an honourable profession, and if that is the way people want this, then I suppose, it must be.

Perhaps I have not interpreted the Bill in the right manner but are livestock sales, machinery, goods of all descriptions, excluded from the Bill? If they are, we will be thankful for small mercies.

Mr. Cooney

Do not say too much about solicitors.

Mr. Burton

Listening to some Senators one would think that an auctioneer does not provide any services or that he did not have any expense. The system in rural areas is that where there is a successful sale one is expected to pay all the expenses. I have reservations regarding the future incomes of auctioneers with the passing of this Bill.

The Minister said a few alternatives presented themselves to him. First of all, he could have scaled down the fee to 5 per cent. I have been an auctioneer for over 30 years and it was 5 per cent when I began. Where it came from I do not know, but that has been observed over the years. Why not have scaled it the same as the Land Commission? The Land Commission have a ceiling of 5 per cent with a substantial revision down along the line.

Secondly, why could a happy medium not be arrived at and both of them be made responsible, 50-50? It would not interfere with the service. I do not think that a purchaser of a property would quibble with that, when he has had the service and advice from an auctioneer or a firm of auctioneers—which reminds me, when I am speaking of an individual I am not speaking about a limited liability company as some Senator suggested. I do not know anything about that, as I come from the country.

There are alternatives there that the Minister could consider. The auctioneer, to my knowledge, is responsible for the payment of conacre lettings if he should have an unsuccessful client who welches on him. I was given to understand from legal opinion that the auctioneer was responsible for paying to the vendor the money agreed on, although some Senator said that he heard legal opinion that it would not be the responsibility of the auctioneer. Further to that, auctioneers are also held responsible for the payment of rates and annuities. I do not know if it is the law or not, but it is the practice in the country. I myself have had bad debts over the years, but I suppose we have them in every business. Auctioneers have responsibilities, as has been agreed on all sides of the House, and they give good service. It is nice to hear that since the fidelity bond to the High Court was introduced five years ago there is nobody welching. At the same time I think that the passing of this Bill will seriously reduce the income of auctioneers. Human nature being what it is, every profession will try to safeguard their rights. I suggest that the Minister should seek a system that is more equitable to the auctioneer, the vendor and the purchaser.

On principle the Bill reads quite well, until you go into the mechanics of it and observe that the profession or individuals are interfered with. It is said that the hardest way in which you can hit anybody is through his pocket and that is substantially true of section 2 of the Bill. The Minister may have an opportunity of considering some other approach that would preserve equity between the three.

Mr. Farrelly

Like the previous speaker, I come from the country. The system in the auctioneering business between the rural areas and the cities differs greatly. I have great fears for the income of auctioneers in the future under the section of the Bill which says that the vendor will be required to pay the auctioneer's fee.

Senator Burton has already said most of the things I intended to say on the Bill, but I wish to refer to the type of horse trading that goes on in rural areas. I believe that the number of auctioneers in the country has trebled in the last three or four years. There is an auctioneer now at every crossroads, but they are not all doing well because the business is not there for them.

When this Bill becomes law, the vendor will be obliged to employ the auctioneer and pay him his commission. Normally, he will give his business to the man who will charge him the lowest fee. I suggest to the Minister that he could take half fee each from the purchaser and the vendor. This would be more equitable and would enable auctioneers to maintain their profession with integrity as most of them have over the years. I greatly fear that, if this type of horse trading goes on, auctioneers will not be able to maintain their integrity and efficiency.

Senator Burton took issue with Senator Brosnan on the question of the auctioneer not being responsible if the customer does not pay up. Auctioneers in Dublin city may not understand that we in the country are put frequently in this position. An auctioneer lets land for a customer—it would not be necessary for him to let it if he did not want the money badly—and immediately the land is let he draws half of the money, if he is able to get it. Before the year is out he usually has received all of the money. However, if the customer does not pay up at the end of the year the auctioneer is left holding the baby until such time as the customer is able to pay.

I have been a long time in the auctioneering business and every cheque is not guaranteed. I found that out to my cost. All through the years, when land was letting for £3 to £5 an acre and the auctioneer was responsible for the rates, the rent and for keeping the vendor happy at the same time, it would not pay the cost of his petrol to let a farm of land. In those areas, when an auctioneer was losing money, he still had to maintain an office, maintain staff and keep up a certain standard. He also had to pay his way between the time he let the land and the time he got something for it.

Those are some of the difficulties that people do not understand because of the inflationary trend in the country today. Prices are high now, auctioneers have had a couple of good years, but they have had many bad years as well.

In the auctioneering business you can also have a clearance sale of goods and chattels. Such a sale might involve old furniture and machinery which is worth very little. In those days cattle might be worth only £3 or £4 a head, of which the auctioneer received only 2½ per cent. Out of that small income he would have to pay a staff, look after the property of the vendor and see that it was not injured in any way. In the end, even if he got paid for his efforts, he would always finish up with a loss. In some cases there was no sale on the property and it might be transferred to somebody else. That happened very often.

Mr. Killilea

The solicitor got the sale.

Mr. Farrelly

Many times they got the sale, but they did not do the auctioning. We cannot sell land without a solicitor, but the solicitor can sell land without the auctioneer and has been doing so. Solicitors should not be so selfish and should be prepared to let the auctioneer have a little.

As regards the 5 per cent fee, it has been there for as long as I can remember. It is not a statutory requirement but is a recognised thing. The first people to scale the fee down were the Irish Land Commission. They scaled down the fee to 3½ per cent and kept scaling it down. I do not think any auctioneer today would object to that figure if it was to be incorporated into legislation. No man would expect to get 5 per cent on a transaction of £100,000. He would not want it; he does not get it. I can assure the House that it never happens although it may be made to appear to happen on paper. If auctioneers were getting that type of commission they would all be millionaires in a couple of years. I suggest that the Minister should reconsider the question of who should pay the fees. Should the auctioneer, the vendor or the purchaser pay them? I suggest to him that they should be shared by all three.

Mr. Killilea

I have only a few small points to make on this Bill. Taking the second section of the Bill first, I do not think there is anything wrong with the increase from £5,000 to £7,500. That figure does not matter a lot. If it went up to £10,000, as Senator Robinson said, it would not really matter, because a quarter of the payment of any sale that has been completed would not be much more than £5,000, £6,000, £7,000 or £8,000. Each one of them is covered in the bond. When the bond can be purchased from £20 to £40, it matters little to an auctioneer if it goes up by £10. As has been pointed out by the Minister, the bond has never been used or abused since its introduction. It speaks well for the integrity of the auctioneers, who have conducted their affairs properly.

We have been told that this Bill was adopted by the previous Government and brought into force by this Government. Who brought the pressure on any Government to bring such a Bill to this House? I do not remember the auctioneers putting pressure on the Government to bring it in. The general public—the purchasers and the vendors—have never complained too loudly. From what was said today one would conclude that it was the solicitors who brought pressure to bear on this situation. It was nice to note that all the solicitors stood up and had their say.

There are some contentious items in this Bill. First, the Minister appeared to make an apology for auctioneers in Dublin as against auctioneers in the country. He said that Dublin auctioneers work on most deals at about 2½ per cent.

Mr. Cooney

In private treaty sales only in Dublin.

Mr. Killilea

In private treaty? There are private treaties on house and land sales in Galway that are worked on down to 1 per cent. I do not see why there should be a difference made between the country and the city, as has been made in this document. By putting the onus on the vendor to pay, it will annihilate many small auctioneers. Many of them are part-time small farmers who use this as a means of subsidising their incomes. It means an end to such people.

I have noticed that, within the last year, the major companies in Dublin have now branched out into the country and have opened offices, or at least have an agent, in most small towns throughout the country. The reason for such a move did not then occur to me, but I now know the reason why. Now we have a movement of the bigger auctioneers who can afford to work on small percentages because their turnovers are so massive, and they will completely annihilate the small auctioneers.

In order to cut down on the number of auctioneers, one should have done as the Land Commission did, namely, registered a set number of auctioneers for each county. Licences should not be given freely. They should not be given to everybody who can walk into a court with a bond. A set number per county should be drawn up. I suggest to the Minister that he could carry out such a scheme. It would leave those small country firms, who are doing a reasonable amount of work, to continue at their business in a peaceful way.

It is all very well to say that the vendor is going to pay all, but we may have the following situation. One company may say: "We will sell it at 1 per cent and it will cost you less than the local man, who wants at least 2½ per cent". That will naturally mean more money to the vendor and more money in the turnover of the bigger company, and so the small man will be eliminated.

Take into account the situation where a vendor must pay the fees. A woman and her husband may buy a house in an urban area with the aid of a building society, but perhaps, because of the death of her husband or for financial reasons, this woman has to sell the house. Immediately it is a liability on that person to be asked to pay a vendor's levy to the auctioneer. That is something to which the Minister must give due consideration.

In the new situation the vendor is the "boss". Having employed the auctioneer the vendor can be selective and pick whom he likes from a list of people supplied to him by the auctioneer to purchase a house, even at the risk of losing money. It is not necessarily the person who might be in the greatest need of a house who will get it. The service the auctioneer offered to the public as a mediator between the buyer and the seller is being eliminated. This is important, too.

I never could see and I still cannot see any reason for a change. Apart from the second section, which deals with the bond, it appears to me that the Bill has been brought about by lawyers. Nothing has been said to enlighten me on that point, but maybe the Minister will tell us something. If one takes into account the way the auctioneering business has been conducted—the proof is there in the Minister's statement that the business has been run in an orderly and ethical manner—and if honesty is required in selling and buying, it has not been the auctioneer who has been wrong at all times. I have only heard of an occasional case where he has been found wrong by a court.

I know of cases where auctioneers sold premises and land during the last two or three years, and for some reason the deeds do not seem to be forthcoming through their solicitors. A very popular statement from solicitors nowdays is that there is a hold-up in Land Registry. I have known of cases where the finalisation of deeds has been held up for three or four years. I have one case myself which has not been completed although the sale was made in 1969. It was not I or the vendor who held it up and it was cerainly not the purchaser who held it up. It was the legal system. There are two or three parties in the auctioneer's trade—the lawyers play a big part in it, too—and I should like to see legislation soon in which the lawyer would be made to play his part in the speeding up and completion of all sales.

Mr. Alexis FitzGerald

I shall not follow Senator Killilea into any discussion of the relative merits of the controls which either of the professions are subjected to, or as to the quality of the services either of the professions give to the people they ought to be concerned to serve.

With regard to the pressures on this Government or the previous one for the production of what is included in this Bill, it may well be—it is something I do not know—that the solicitor's profession, or some members of it, have looked for this as an improvement in our situation. I never gave thought to the proposition contained in section 2 of this Bill until I read it. I have given thought to it since I read it, and have come to the conclusion that, in principle, it is right and desirable, despite the fact that it will have effects of one kind or another, on the transactions between vendors and purchasers, on the position of auctioneers and on their incomes. In principle it seems to me to be correct that the person who is having his property sold should be the person who will pay the auctioneer. The good consequences of that are simply expressed in the old phrase of "He who pays the piper calls the tune". In effect, the tune will be better played and at less cost to the payer of the piper.

A number of Senators mentioned the erosion of incomes of auctioneers and agents as a likely consequence, however unintended or otherwise it may have been, of the adoption of this measure. It is a likely consequence. The vendor, the owner of the property, will be in a position to stipulate for a better bargain in the procurement of the service which is being given to him in the conduct of the auction.

If we forget for a moment about the marketing of houses and think in terms of the marketing of skills, it seems to me we are improving the market for the skill of the auctioneer, which I believe to be an undoubted skill, an essential one for use in very many situations. There are some situations where an auction is not the appropriate method to get the best price or where it is undesirable to have an auction, but in general an auction is the best way to discover what is the best price to be got on the market for the property.

I agree with some of what Senator Brosnan and Senator Eoin Ryan said in regard to the effect on prices. In a situation where the demand for property is limited only by the available sources of finance and where there is restricted supply of what is available, the demand is elastic and there will be a tendency, therefore, for the benefit of this to move onto the price of the property. In our present inflationary situation the vendor is rarely sufficiently well versed or can be even so well advised to be able to learn what ought to be the price he should fix. It is much more a case of what the market will produce for him.

The buyer will be strengthened by the knowledge that his property will be free from stamp duty or subject to a reduced cost of stamp duty and that he will not have to pay the auctioneer's fees. As has already been said, I think this will tend to increase the price of the house to an extent which will reflect the reduction in the cost to him of the agent's or auctioneer's fees which he would have to pay. However, the fact that it will not necessarily have the consequence of immediately reducing the cost of a house to the buyer does not make it an undesirable change. I think it is a desirable change.

I suggest to the Minister for his consideration that this is a significant enough change in the law applicable to a very large number of people in the country—vendors, buyers, lessees or lessors—and that good and adequate notice ought to be given to everybody of the coming into operation of this change in the law. It is a Committee Stage point, but I thought it might be helpful to give notice of the idea at this stage, that the coming into operation of the Act on a date which is one month after the passing will not be adequate. All over the country there are conditions of sale printed and in circulation, all of which have memoranda, all of which provide for the payment of auctioneer's fees.

There are some people who are not aware yet that we are in the EEC. They certainly do not know the legal effect of being in the EEC. Some people have not worked out that VAT has hit them. It takes quite a while for many people, particularly if they are in a small way around the country, to discover that there has been a change in the law. It could lead to unfair consequences unless there has been very considearble notice given. This Act should come into operation on the date fixed by the Minister. Because of the fact that this is something of a seasonal operation—there are times when it is not good to auction—there ought to be considerable consultation between the Minister and the Irish Auctioneers and Valuers Institute as to what would be the most advisable date to bring this Act into effect.

With regard to the suggestion that the bond might be adequate having regard to the price of a house at £7,000 or £8,000, the point that is being missed here is that this bond or deposit is meant to cover all the liabilities that the auctioneer may have. The words used in the original Act are

in relation to the receipt and payment of money and the safe custody of property.

There may be a whole host of transactions. The Minister did not say in his introductory speech that there have been no actions putting in suit these bonds, because there have been. I have taken them myself, so I know that much. He said that there had not been any in the last five years, which is a different proposition.

In the light of what has been said I invite the Minister to give consideration to this whole question of the degree of provision that there is in the auctioneer's code for compensation in respect of claims. I do not know if these bonds could all be made joint and several so that there might be something equivalent to a compensation fund, which solicitors had to have, and which would be available to any unfortunate people.

In the solicitor's profession it is a quarter of a century since one of our customers got stuck. The profession has paid for anybody who suffered from the acts of delinqent solicitors, because solicitors have been taxed each year by their own profession to provide for compensation. It may be that there is no evidence that there is a very great evil at the moment, but an examination might be conducted of the position of auctioneers over a whole period since 1947. There is not much point in seeking the bond if the first comer has used it up, and that is generally what he does. The records may not show all the people who have suffered loss through defaults of auctioneers.

It is no harm to remind the House that in the case of auctions in very many cases—not in all, depending on the draftsman and conditions of sale —the auctioneers gets the deposit and he therefore handles that amount of money. I should add immediately I am not for one moment suggesting that the character of the gentlemen in this profession is anything other than it ought to be. But the general position of standards of performance of auctioneers, the standards to be achieved by auctioneers, ought to be seriously considered. I believe the Auctioneers and Valuers Institute have been looking for this.

There are two views on this question. A Bill was introduced in Britain called the Estate Agents Bill, 1965, which was backed by all the institutes in the profession and it did not get enacted. There are people in my profession who argue that it would be better for the country if we did not have any qualifications and if it was a free-for-all so that anybody, whether trained or not, provided he was able to produce this specific skill to do this specific transaction, could do it as cheaply as he was able to do it. This view has been put forward by the Prices Commission in England.

I should like the Minister to consider the point with regard to the effect of section 2 of the Bill, if enacted, on the ability of an auctioneer to bind the purchaser by signing the conditions of sale under the Sale of Goods Act and the Statute of Frauds. At present the law is that, if the purchaser does not sign but buzzes out the door having bought the property, the auctioneer can bind him if he or his clerk there and then signs it. This is a valid and enforceable agreement under the Statute of Frauds from the point of view of the auctioneer. If an auctioneer has shirked the condition in the conditions of sale providing that the purchaser is not to pay the fees and, as a result, that provision is bad, will this in any way invalidate the authority of the auctioneer to bind the purchaser with regard to the enforceability of the contract? If there is any doubt about this there should be a saver in the section for such a situation.

I should like to ask the Minister if consideration has been given to enacting law here making it illegal, as it is in Britain, for dealers to pay sums of money to other persons to abstain from bidding. That is law in England under the Auctions Bidding Agreement Act, 1927, and there is no equivalent I know of to such in our code. I notice on reading this Bill one must be 21 years of age to obtain an auctioneer's licence. Could that not now be 18 years?

Minister for Justice (Mr. Cooney)

I should like first of all to thank all those who have contributed to this debate and to note the knowledge that has been brought to this subject by auctioneers and by those who are not auctioneers. I thank in particular those who are auctioneers for dealing unemotionally with what must be for them an emotional subject. I am very pleased to have had the opportunity to bring this Bill in the first instance before the Seanad. It is the first Bill I have moved from this stage since my appointment and I assure you it is a genuine pleasure to come to the Seanad. That pleasure has been reinforced by the type of debate we have had.

I will endeavour to deal with some of the points raised during the debate. To deal with the amount of the bond, all seem to be agreed that the change proposed in the Bill is not sufficient and that the new ceiling should be looked at again with a view to increasing it. There are various reasons put forward for justifying this point of view which could be categorised into two classes. If the bond is to provide protection for the public, £7,500 is too low a ceiling. I have much sympathy with that point of view, but if one were to use the bond as being a thorough and effective protection for the public dealing with auctioneers, what ceiling would be really effective and of what magnitude? It may be that the suggested figure of £10,000 might be equally ineffective if the £7,500 is ineffective.

So one looks again at the efficiency of having a bond at all, and that leads me to the second reason which was put forward by those who suggested the bond be increased, and that is that the bond be used as a means of restricting entry to the profession. If the size of the bond is increased, the cost of it will be a deterrent to would-be members of the profession and insurance companies might become much more selective as to the persons to whom they would issue bonds. This opens the whole field of the qualification of auctioneers and the training that entrants into that profession should receive. This is a new field and is not relevant to this Bill. I mention it because it was brought into the debate in the context of considering the size of the bond.

I will certainly bear in mind what was said regarding the increase in the amount of the bond. I was heartened to hear the members of the profession who contributed to say they have no objection to a figure of, say, £10,000. I will give consideration to this before the next Stage.

The main point of the Bill is to shift the liability for the fee from the purchaser back to the vendor, that is the person who employs the auctioneer on whom it should properly lie. There are various reasons why the present procedure is bad. There were no positive arguments put forward by those who disagreed with this change in support of the proposition that the purchaser is the proper person to be charged. This is probably a historical accident in the context of the practice of auctioneering in Ireland. So far as I am aware, it is not common practice elsewhere. There is probably no logical justification for it, otherwise we would have heard of it today. I am heartened in my view that this Bill is proper because of the absence of any positive justification for the present procedure. The arguments used against it again fall under a number of headings.

Firstly, there is the argument put forward by Senators Lenihan, M.J. O'Higgins, Brosnan and some others that shifting the liability from the purchaser to the vendor will not have an anti-inflationary affect. This was one of the motives I indicated in my opening remarks and one of the motives which inspired this Bill and made it attractive to the Government. Those three speakers and others think that shifting the burden to the vendor, on whom it should properly lie in my opinion, will not have the affect of reducing the eventual burden on the purchaser. They say the vendor, knowing he will have to pay, will reckon what his fee will be and add it on to the purchase price.

This may be true in a number of cases. In the vast majority of cases, however, the action of the market place will intervene and we will have bargaining as Senator Burton stated. If we have bargaining there will be a reduction in fees; and, even if fees then are passed to the purchaser, the eventual amount which the purchaser will have to pay will be less and may be related to the amount of work involved in that particular transaction. At the moment, the purchaser pays a flat percentage fee which often bears no relation to the complexity of the job or the skill required or the amount of time involved. On the other hand, if the matter has to be arranged between the vendor and his auctioneer, I have no doubt that a fee realistic to the job in hand will be arrived at; and if that fee has to be passed to the purchaser we have the consolation that he will be paying a realistic fee, which is in contrast to the present position. The situation will work out even better from the point of view of the purchaser.

Again, we must bear in mind that this arrangement will be made between the vendor and his auctioneer when the idea of the sale of the property has been mooted. In that discussion the possible price which will be realised will also be taken into consideration. That discussion will be in the context of the market and going prices in the area for the particular type of property in question. The vendor being a person living in the area as much as the auctioneer will know what his property should fetch. He will know that if his property has to carry an extra 5 per cent he may, in effect, be asking an unrealistic price. Consequently, I do not think he will agree 5 per cent with his auctioneer. So that the asking price is what would be the realistic price plus 5 per cent. I cannot see that happening because a vendor would be making it difficult, if not impossible, to sell his own property.

What I think will happen, contrary to what some Senators believe, is that an agreement will be made between the auctioneer and the vendor for a realistic fee in relation to the services involved and this fee will not be added to the purchase price, that the vendor will be happy to pay a fee for services rendered and that going price for houses will ensure that the price received for the house is the going price in the area and not a price inflated by the addition of auctioneer's fees.

It has been suggested that there will not be a reduction of fees by reason of this transfer but I have demonstrated that it is reasonable to assume there will be a reduction of fees. This is one of the objects of the Bill. We must wait and see will it be achieved and see what the result from the change will be.

As I indicated and as some Senators suggested, perhaps a better way to tackle over large fees would be for the National Prices Commission to investigate the matter. The move we are making today does not exclude that possibility or probability at a later time. The National Prices Commission are devising procedures which will enable them to deal with the professions generally, including the auctioneering profession. They will have the benefit of consultancy advice to enable them to do the job thoroughly.

The question of a scale fee may also have to be considered. It is possible that the change proposed today may render it unnecessary but if the predictions of Senator Brosnan and others prove correct, to the effect that it will not make any difference in the overall costs, then there is the National Prices Commission to carry out their investigations.

Senator Brosnan suggested that a fair compromise—I think he was supported by Senator Farrelly—would be to divide the fee, half to the purchaser and half to the vendor. He made this proposal in the context of an argument that the effect of this measure would be to dry up or seriously diminish the income of many auctioneers. The realism behind his suggestion of splitting the fee 50-50 is to halve his income because the only half which would be paid would be that paid by the purchaser because I cannot imagine a vendor, knowing that the purchaser is caught in the contract for 50 per cent of the fees, voluntarily coming along and paying the other 50 per cent. There would have to be a very tight bit of work by the auctioneer with his client in advance to ensure that situation.

Senator Killilea was suspicious as to the motives and the personages which inspired this Bill. I want to assure him quite categorically that the legal profession had nothing to do with the Bill. I gathered only at the end of his remarks that he is an auctioneer. I was not aware of the fact. If he had made that clear at the beginning of his speech I might not have been so worried for so long during his speech. I want to assure him that the solicitors' profession did not inspire this Bill.

He wondered that he as an auctioneer did not hear of any demand for a change. I am not surprised that he might be blinkered to some extent in that regard. I have not any doubt that if he goes to any new estate in this city or any town in Ireland and talks to newlyweds who have bought their own houses, he will find out very quickly that there is a very live demand for a measure such as this.

It was suggested—again the solicitors were under some fire—that one result of this measure will be to put sales in the way of solicitors. The legal position at the moment is that a solicitor is entitled legally to sell his clients' property. The point is he cannot charge any extra fee for that service other than the conveyance fee to which he is entitled for making the transfer, doing the title work of the property. That is the legal position and in so far as my experience goes that position is strictly observed. Indeed, it is a burden on a solicitor to go through the advertising and negotiating normally done by an auctioneer. Most solicitors prefer when an auctioneer is involved in the sale, because as far as the solicitor is concerned if there is not an auctioneer it means extra work without any extra remuneration. There is no question of the legal profession trying to corner the market and be a sinister backroom influence inspiring this particular Bill.

Senator McAuliffe, perhaps, put his finger on a development which might take place—if it does take place what harm will it do—the situation where a good many vendors, knowing that if they engage an auctioneer will have to pay him, may themselves try to sell their property. They may place advertisements themselves, negotiate with potential customers and effect the sale, then go to the solicitors to have a contract drawn up. If that happens, and it can be done, it is not a reprehensible matter in itself. As Senator FitzGerald indicated, a commission in England are examining the position as to whether any profession should have a monopoly of the service they offer, that the only test would be the skill and ability of the person holding himself out in any particular field of activity. There should not be any legal protection or monopoly for any particular walk in life.

Senator Brosnan, too, made the point, it was in the context of the apparent increase in the number of auctioneers in recent years, that there have been occasions when persons have taken out auctioneers' licences purely for the purpose of carrying out one deal. He called them ad hoc auctioneers. That is something that has happened. I deplore it as much as the bona fide auctioneers do. If it were the case that the vendor had to pay the fees of that person, we would not have seen any such ad hoc auctioneers.

It was suggested that the introduction of scale fees would be a protection for the auctioneers. Senator Burton was apprehensive that shifting the liability to where it should properly lie, on the vendor, would cause horse-trading if it were introduced. As a practising auctioneer he knows very well that horse-trading is already in existence. The measure is there to alleviate to some degree the burden which has been falling on purchasers and I do not think the introduction of scale fees will change that situation unless they were to have a disciplinary effect like those which solicitors have to apply—that if dishonoured there would be a breach of discipline with appropriate sanctions. It certainly would not prevent or in any way inhibit continued horse-trading. Indeed, from the Senator's point of view it might be a disadvantage because the scale fees in many of the ceilings would be less than 5 per cent. If horse-trading had to take place it would take place within or beneath a lower ceiling. The auctioneers' position might be worse than it would be at present, doing a bit of horse-trading with the vendor.

I sympathise with the position of many auctioneers in rural areas who provide a comprehensive service for their clients and I take the points raised by Senators Burton and Farrelly that in the case of 11 month lettings very often the auctioneer has to provide subventions to the owner of the land until such time as the first and second moieties of the letting money are paid. There may be delay in getting the second moiety. As Senator McAuliffe has mentioned, there might be a bad season but the auctioneer may have advanced the entire letting moneys in advance. This is not really a commercial service but a social one which is provided on a large scale by many auctioneers throughout the country.

I should like to conclude on the note that the auctioneering profession renders a very valuable service to the Irish public. The statistics which show that no claims have been made against bonds since 1967 prove that it is a profession composed of persons of integrity. I am confident that the profession, being composed of persons who render a valuable social service, will see the justification and social good referred to by Senator Lenihan in the principle involved in this Bill.

Question put and agreed to.

Committee Stage ordered for Wednesday, 11th July, 1973.