This amendment is intended to meet a point made by Senator Higgins during the Second Reading. He wondered if a purchaser who, through ignorance, paid auctioneer's fees after the passing of the Bill could recover the fees paid. I am advised that the probability is that such a person could recover, but I have put down this amendment which puts the question of right of recovery beyond doubt. The amendment provides that any moneys paid in such a way "shall be recoverable as a simple contract debt". Without this, while there probably would be legal cause for a person in that situation recovering his money, one would be getting into a rather murky area of contract law. I think this amendment simplifies the matter.
Private Business. - Auctioneers and House Agents Bill, 1973: Committee and Final Stages.
Section 1 agreed to.
SECTION 2.
Government amendment No. 1:
In page 2, line 22, after "void" to insert the following: ", and any moneys paid under or on foot of such a provision shall be recoverable as a simple contract debt in a court of competent jurisdiction".
Amendment agreed to.
Question proposed: "That section 2, as amended, stand part of the Bill".
I wonder whether the Minister was able to consider a point I made on Second Reading with regard to the possible effect of this section in circumstances where an auctioneer has provided, contrary to the law, to the effect that the purchaser must pay commission on his ability to sign under the Statute of Frauds a contract binding the purchaser on the day or the day after the auction. This is a matter of a law based on the interpretation of the Statute of Frauds. Has consideration been given to the question as to whether or not this section, which contains a provision obliging the purchaser to pay fees, in any way gives a purchaser a freedom to say that the auctioneer has no longer power to bind him under the Statute of Frauds, so as to create an enforceable contract against him?
There is another point I should like to raise. It is, perhaps, a question I should be able to answer myself. Do we have a definition of personal chattels which entirely, completely and satisfactorily excludes what is intended to be free from the particular transaction which is to be avoided? I do not find anything in the Principal Auctioneers Act which this Bill is amending. While in that Act there is no definition of a personal chattel there is a reference to some particular type of goods which are excluded from the requirement of a licence. If an auction of fresh fish, for example, is not to be the subject of the requirement of the provisions of subsection (1) of section 6, has it to be there spelled out that, as such, it is not a personal chattel? At what stage does it become a personal chattel? When it reaches your dish or when it has been extracted from the sea——
When it is no longer fresh.
Yes, but there are many Senators present who could absorb the time of the House for quite a while discussing this. At this stage I should simply like to know, not as a "red herring", whether this could be considered. Perhaps the Minister could give us the benefit of the consideration that may already have been given to this matter.
There is no definition in the Statute or in the parent Act of personal chattels. But "personal chattels" has been for so long a legal term that it now has a certain legal standing. If the Senator wishes I can quote for him a definition from Wharton's Law Lexicon where "personal chattels" is defined. When the Senator hears the definition he will be quite satisfied that no difficulty will arise in interpreting the Act and deciding what it applies to.
Chattels personal or in a more narrow and more modern sense, “chattels” means movable property or effects which belong personally to the owner and for which if they are injuriously withheld from him he has, in general, no other remedy than by personal action ... while a mixed action of ejectment in which the plaintiff could recover the specific property was available in the case of “chattels real”.
The Administration of Estates Act, 1925, was an English Act. The distinction between "personal chattels" and "chattels real" is of such long standing and is so clearly known that I do not envisage any difficulty with regard to the use of that particular term in the Act as being an exclusion. I could not quite follow the point as to the fresh fish but personal chattels and fresh fish will be on all fours, if I may introduce the phrase in that context. They will both be excluded.
With regards to the position as regards the Statute of Frauds, this Bill will not make any difference to the situation that arises with regard to binding a purchaser. He is supposed to comply with the requirements of the Statute of Frauds. The relief of the necessity to pay fees will not alter his position. The liability of a purchaser which existed prior to this Bill will remain exactly the same.
Question put and agreed to.
SECTION 3.
Since amendments Nos. 2 and 3 are similar it is agreed and ordered that these two amendments be taken together.
Government amendment No. 2:
In page 2, line 34, to delete "£7,500" and insert "£10,000".
In the course of the Second Reading several Senators expressed the opinion that the increase proposed in the Bill in the amount of the bond that auctioneers and estate agents are obliged to maintain in the High Court was too small. Some Senators thought that a much higher figure was required. In order to provide complete insurance against defaultation an elaborate compensation fund such as that operated by solicitors would be required. The alternative would be to have the bond comparable to the highest amount held by the biggest firm of auctioneers in the country, if there was to be absolute security. I have had discussions with representatives of the auctioneers and estate agents and have suggested that consideration could possibly be given to establishing such a scheme as exists in the case of solicitors. I would be prepared to consider any proposals put forward in this regard. I welcome the amendment moved by Senators Lenihan and Ryan which corresponds to the Government amendment which proposes that the amount of the deposit maintained in the High Court be raised to £10,000.
I have nothing to say. This is exactly what we require. The only criticism I have with regard to the amendment is that the figure is still too low.
I should just like to raise two points with the Minister. First of all, for someone who is starting off in the auctioneering or house agent profession and who may have the relevant integrity and qualifications necessary but who does not have any capital at his disposal, what is the procedure for raising the money necessary, which will now be £10,000? Does he have to take out an insurance policy and pay a premium? I want to ensure that someone who is a suitable person would not be debarred from becoming an auctioneer or house agent on purely financial grounds. That profession should be open to people irrespective of whatever income or capital they may have before they start.
The Minister has touched on the second point I wish to raise. What are the qualifications necessary or by what standards is judgment made on whether or not a person is suitable to go into this profession?
I will deal with the points raised by Senators Lenihan and West. The figure of £10,000 was arrived at as a compromise. It is possibly too low to ensure complete protection, but to raise the figure would restrict entry into the profession. This would also possibly impose an undue burden on some existing practitioners.
The premium on a bond of £10,000, we have estimated, will range from about £60 to £80, that is, taking it on a pro rata basis for the present figure of £5,000. Anything more than that might be an undue burden on bona fide existing practitioners and might also unduly restrict the entry of new members into the profession. In order unwittingly not to do that, it was decided to arrive at this compromise figure of £10,000. I also share certain reservations about the size of it. They are the reasons the compromise has been arrived at.
In law, there are no restrictions beyond that the applicant be a person of good character. This is the only qualification that a person needs in order to obtain a certificate to practise as an auctioneer. Of course, the application for a certificate of good character has to be obtained from the court. The applicant has to advertise publicly his intention of making the application in order to give the public an opportunity of objecting if the person in question is not suitable. It is then a matter for the courts to decide on the integrity of the particular applicant and if he is a person fit to receive a certificate of qualification and to receive a licence. The licence is issued by the Revenue Commissioners. The applicant does not, of course, maintain a cash deposit in the High Court. He maintains an indemnity bond with an insurance company for the sum in question.
Does the Minister envisage the situation changing so that an applicant necessarily has to have some professional qualification or diploma before he enters the profession?
I have had discussions with two bodies representing auctioneers and each have expressed to me their concern about the need for having entry qualifications into the profession. They have told me that they would be making submissions to me in this regard. I would be glad to receive the submissions from them.
As a member of the Irish Auctioneers and Valuers Institute and their representative in this House, I welcome the increase from £7,500 to £10,000. My association feel that the amount is not large enough in the present situation. I personally feel that it is not large enough either. I would suggest that something between £10,000 and £20,000 would be a more realistic figure.
I can see the point made by Senator West when he raised the question of debarring people from coming into the profession because they might not be able to pay the bond. If one wants to buy a farm he must have the money for it. One cannot become a publican unless he has the money to buy the public house. Therefore, I do not think one should become an auctioneer if he has not the money for the bond. I do not think that there would be any bar on anybody wanting to enter into the profession if the figure were raised from £10,000 to £20,000.
Regarding the question of personal fitness, the courts have always held that if the applicant was not of good standing or good character he would not get a licence. I now feel we have reached a stage where property is becoming so valuable that the question of personal fitness must arise when people are entrusting large deposits. My association have a scheme whereby a boy, after serving three years' apprenticeship, can qualify as an auctioneer on having sat for an examination. I think the day should come when this scheme should be enforced.
Like some of the other Senators who have spoken, I am not convinced that a bond is sufficient protection for the public even when the sum involved has been raised to £10,000. The Minister referred to the question of the auctioneers setting up a compensation fund, which I raised on Second Stage. I should like to ask the Minister if he has since clarified a matter which was not clear on Second Stage, that is, whether it is accurate, as he stated in his second Reading speech:
that 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.
There seemed to be a difference of opinion as to whether large amounts of public money are in fact held by auctioneers. I note that in both the standard conditions of sale for auctioneers and the conditions of sale of the Incorporated Law Society the memorandum authorises that the deposit of 25 per cent may be paid to the vendor's solicitor or auctioneer. It is quite clear in both these standard forms, and therefore it is accepted, obviously, by the Incorporated Law Society, that the auctioneer is entitled as agent for the vendor to accept the deposit of 25 per cent on house purchases. I am interested to know if this occurs frequently and if auctioneers hold large amounts of public money, as the Minister suggested in his Second Reading Speech? If this is so, then clearly this bond of £10,000 is no real protection at all.
One serious disadvantage, which Senator Alexis FitzGerald pointed out on Second Reading, is that the bond, when claimed, goes to the first claimant. It is not apportioned and, therefore, the first person in, if an auctioneer defaults would get the whole £10,000 should the debt be for that amount. Clearly, a large firm of auctioneers, especially if deposits of 25 per cent of house purchases were being taken, as well as booking fees, would, in all circumstances, far exceed the bond of £10,000.
Therefore, I do not think that it is satisfactory for the Minister to say in introducing a Bill of this sort that a suggestion has been made about setting up a compensation fund. A compensation fund was set up by the Oireachtas in the Solicitors Act, 1954. It was very clear that members of the Incorporated Law Society who wished to hold their licences were obliged to subscribe to this fund. This fund now totals some hundreds of thousands of pounds and it is a real protection to the public. I think that negotiations should have been held before this with the representatives of the auctioneers when the question of the compensation fund should have been clarified and then written into this Bill, or else the Minister should perhaps indicate that another Bill will be introduced in the very near future which will give this form of protection. I think this is even more necessary in the case of auctioneers when, as we have heard from various speakers, there are no particular qualifications required. Many of them have formed themselves into limited liability companies so that on every score the public is without the sort of protection which at this stage is necessary in a profession of this sort.
I should like to comment on the figure of £10,000, because I did a rather rough and crude calculation on the consumer price index from 1947 to 1972. The original figure in the Bill of £7,500 kept pace with the change in depreciation of the value of money. I would reckon that somewhere around £6,500 in present-day money terms would compare with £2,000 in 1947, so that £7,500 was a little bit ahead in monetary terms. Now it is going up to £10,000. Given present-day rates of inflation, it may merely be cushioning one for a period of about seven years in order to keep pace with the changes in monetary values. Should we not be looking at changes in property values rather than changes in money values? That is what the auctioneers are concerned with, and we are interested in it to a greater extent. The Minister has indicated that there is a compromise in this figure and perhaps he may, at some future time, in dealing with it in the other House be prepared to compromise even a little bit further, up the line again.
On Second Reading I was not worried about whether it was £2,000, £7,000 or £10,000. The auctioneers' institute are looking for £12,000. It does not make any difference to the auctioneers whether it is £10,000 or £12,000. I do not think it would deter anyone from becoming an auctioneer, as their numbers are increasing every year. I went to an auction the other night and the auctioneer, who had only become an auctioneer that day, sold his own hay for £800 and saved himself 800 shillings by doing so.
The deposit at the moment is £7,500. If an auctioneer has a big sale on hands he never deals with the deposit himself. I have seen people offering deposits to the auctioneer and the auctioneer telling them to see their solicitor about it. When they go to their solicitor the auctioneer's fee plus the 25 per cent deposit is collected, because the auctioneer does not want to deal with the question of his fees. For that reason I do not think that we will deter anyone from coming into that profession even if we make the deposit £20,000. Auctioneers, to their credit, have a good record. The insurance people who gave them public liability bonds never approached them for one penny in the case of auctioneers owing them money. Taking into account their good record down through the years, there is no need to increase the bond to a figure such as £18,000. It is very good business for the Revenue Commissioners to have the bond at £20,000, but it is not good for the auctioneers. There are too many auctioneers in business and no matter how much we increase the bond it will not deter new people from becoming auctioneers.
While I am in favour of the amendment which increases the bond to £10,000, the type of auctioneer most affected by the increase in the bond will be the young auctioneer who is working for a firm of auctioneers or for a mart. Most co-operative marts—and there are many of them in the country at present—employ young auctioneers. It is quite unfair that young auctioneers, who have no responsibility so far as the money is concerned, have to enter into a bond of even £5,000. I should like the Minister to take notice of that point.
It is not just the auctioneering firm that has to take out the bond rather than each individual auctioneer? I understood from reading the Principal Act that a single bond was required for each firm so that it would not affect young auctioneers in a firm.
In a mart they employ an auctioneer and, therefore, it is the mart that should take out the bond rather than the auctioneer selling for them.
In the case of cattle marts, auctioneers who are licensed auctioneers are employed. Before auctioneers can obtain their licences they have to get a certificate from the courts and to get that certificate they have to show that they, individually, maintain a bond. In the case of marts, each auctioneer standing up to auction cattle would have a bond because he is a licensed auctioneer.
The limited liability company just have one bond. Is that not right?
Any person who conducts an auction must have one.
In some partnership firms one of the persons is nominated as the person to stand up and conduct the auctions, but the partners may be jointly licensed under one bond. My recollection is that one bond would cover them.
Yes, but the question then arises that the auctioneer can have an assistant who is covered by the auctioneer's bond. The assistant works on the principal's bond. He can employ a man to do an auction, he can get a licence from the excise people and he is covered by a bond. If I employ a man I am responsible, as he is working for me and the one bonds covers us both.
I asked whether the Minister has ascertained to what extent moneys are held by auctioneers and also if there was to be a firm undertaking that a compensation fund would be set up.
First of all, there are no statistics available as to what proportion of deposits are paid to solicitors and paid to auctioneers. It would be impossible to establish that. As a rough guess, one could say that in the case of public auctions the deposit is paid to the auctioneer and in the case of private treaty sales it is paid to the solicitor. Again, that is not an invariable rule. It is only an approximation of what happens. I have no idea what percentage of deposits is paid to the solicitors and how much to the auctioneers. It would be quite impossible to determine that.
On the question of the compensation fund, I am not in a position to give any firm undertaking. It is something I should like to see because it would represent real security. I have no doubt that in the submissions which the two auctioneering institutions will be making to me they will put forward submissions in this regard along with proposals for the education of their apprentices. As soon as I have those proposals I will have them examined and if there is any need for future legislation I will see that it is introduced as speedily as possible.
Amendment agreed to.
Amendment No. 3 not moved.
Section 3, as amended, agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
I raised a point on this on Second Reading, and I wonder if the Minister has had an opportunity of considering it? We are making quite an important change in the substance of the law here and there should be very adequate notice given to all the people who may possibly be affected by this change in the law. To bring this Act into operation on the expiration of one month from the beginning of the date of the passing thereof would not be adequate notice. The Minister ought to propose to the House that it should come into operation when he makes an order that it should, so that he can have all the opportunities he ought to have to consider the effects of this legislation. Most of us here are speculating as to the possible effects it might have. We will get to know more about these possible effects as time goes on. The Minister does not, obviously, have to provide that in the section but he could, in fact, consult with these associations that he has referred to and which have been referred to by others here, associations who will be able to give him information as to what would be an appropriate time.
Senator Robinson referred to two sets of printed conditions of sale. I imagine there is provision in these conditions of sale for the payment of auction fees by the purchaser. I imagine in the memorandum at the end of it this will be set out and printed. All this will take time to change. There are many people who do not follow the proceedings of Seanad Éireann and Dáil Éireann as closely as they ought to because they are busy doing other things, but they may walk into individual traps of importance to those whom we should be most concerned to protect. We should ensure that sufficient time passes to enable the Incorporated Law Society and the auctioneers' association to get a reprinted memorandum which would not contain a provision for the payment of the auction fees by the purchaser but which would contemplate what will be the new requirement of the law: that they should be paid by the vendor.
There may be a complete answer to all I have said, but this is my strong view.
I agree in principle with Senator Alexis FitzGerald but I disagree with this method and timetable. I dislike legislation by ministerial order. The point made by Senator Alexis FitzGerald regarding the preparatory work necessary in various fields to implement this legislation is very sound. What might be regarded as the stock type of conditions of sale applicable to auctions will require some re-drafting. In many cases it will be a simple matter for the solicitor settling the conditions of sale to strike out the reference to the auctioneer's commission. But there may be mistakes until the whole thing is tidied up, and it would seem to me to be preferable to give a somewhat longer period than one month. However, whether one adheres to one month or makes it two or three months, the all-important thing is the point Senator FitzGerald has been bringing out, that is, the necessity to ensure that everyone concerned will have a knowledge of the change in the law which is taking place.
I am not sure how that can be achieved. There would be less possibility of having it achieved and publicised if we were dependent for the coming into operation of the Bill as law on the making of an order by the Minister. If that suggestion were made it would be open to the Minister, theoretically, to make his order to provide that the Bill comes into operation in less than one month, after it is passed. The Minister probably would not do this. But the time of the making of the ministerial order may go unnoticed, whereas if you have a particular period spelled out in the Act it is more likely to come across to those concerned. The Department of Justice, on the one hand, and the two bodies concerned with the auctioneers' profession, on the other, should take some space in newspapers and advertise in order to bring to the notice of all concerned, and in particular purchasers, the change in the law that is being effected by this Bill.
I agree with Senator O'Higgins that, although it is a valid point that it will be necessary to bring this to the attention of the various parties concerned, this is not a valid reason for delaying the Bill. This Bill has been welcomed on all sides of the House and the sooner it is implemented the better. It has received a good deal of publicity. It is generally known that it has changed this particular point and that the purchaser is no longer required to pay the auctioneer's fees and the 5 per cent. The parties particularly concerned—that is solicitors, auctioneers and their association—have been very well informed. They have sent a brief to Members of this House, so they must be informed about the terms of the Bill. As Senator O'Higgins said, it requires only a change in the phrase "and shall pay to the auctioneer 5 per cent". This can be struck out. In the memorandum it is only a single sentence. It can either be struck out or new standard forms can be issued by the auctioneers and by the Incorporated Law Society.
The individual purchasers are not concerned; they use these standard forms. The auctioneers' association ought to know, particularly when this Bill will be debated again and presumably will receive much publicity in the other House. I welcome the fact that this Bill is not to be brought into effect in the indefinite future by order of the Minister but is to be brought in within a month of its passing through the Houses of the Oireachtas.
Senator O'Higgins made the point that the purchaser might not know he was not liable for the 5 per cent auctioneer's commission but I assure the House and Senator O'Higgins that the public are well aware of this. Some of them are trying to get out of it before the Bill has been enacted. I wondered, when Senator Robinson raised the point about the 5 per cent fee, if the Minister was thinking of fixing a fee. I have not read that in the Bill.
It is here.
There is not an amount fixed.
It is in the conditions of sale.
I simply have to live in a real world, where people do not know all they ought to. Some very capable people are so busy doing their bit of a thing they do not know the devil about something else. If my primary occupation—which thank God, it is not—is to look after litigation and suddenly I am told someone is selling a house, I grab at conditions of sale, try to make out what the title is and I shove it in, I forget all about this last thing as I am not interested in auctioneers' fees.
There will be serious questions of law, which will bring great profit to the Bar, as to what is the effect of not deleting a provision of this kind which was printed before this Bill was made law. I am open on the question of whether it should be on ministerial order. That does not delegate legislation, with respect to my colleague, on the right to have the Minister entitled to make an order declaring when it is to come into effect. One month after the passing of this Bill is too short a time for its coming into effect.
If Senator FitzGerald allows a client to sign a contract providing for the payment of fees after this Bill is enacted the client will have two causes of action, one against Senator FitzGerald and the other against the auctioneer to recover the 5 per cent in accordance with the amendment of section I which we have introduced today. There should not be any administrative difficulties from the point of view of the printed form of contract which was normally used. As Senator Robinson has pointed out, a short stroke of a pen will amend it to take cognisance of the new position.
It is difficult to know what should be the time limit before the Bill comes into force. At first sight one would think that a month seems short. Three parties will be affected by the change: the auctioneers, the vendors and the purchasers. Every auctioneer in the country is well aware of the impending change. If you prolong the coming into operation you will be in ease of purchasers; but, conversely, you will be in ease of vendors if you prolong it, because their liability will not accrue until it comes into operation. On the other hand, you are prolonging the liability of the purchaser. If you shorten it you are reversing the procedure and easing the lot of the purchaser. He is being relieved of his liability that much earlier. I think that, in all circumstances a month is a reasonable period. It would enable deals which are under way to be completed. It would not cause purchasers to postpone completion of deals until such time as the Act comes into operation to relieve themselves of the liability.
Another point about the time of one month is that there is no long period of uncertainty. It is important, when the new legislation comes into operation, that it will do so reasonably quickly and with reasonable notice. The parties which will be affected by this legislation know about it and one month is a reasonable time. It is difficult to logically sustain one month as opposed to two weeks or one month as opposed to two months. They have a certain ring about them, but that is all. There are conflicting interests involved here between the vendor and the purchaser. One month after the Bill becomes law for it to come into operation is reasonable.
The only person I would see suffering positive hardship would be the person who has bought a property, and on that purchase has had to pay auction fees, and who has a property of his own to sell. If the change in law took place between those two events he would have to pay double fees—the fees on his purchase and, as vendor, those on his sale. A working period of one month would be sufficient to relieve that person of any hardship which might accrue to him.
I have had representations and I have listened to the views of the auctioneers and the Senators here, both today and on the last day, on this question of the time when the Act should come into operation. I have not heard anything to convince me that one month is the wrong period of time.
Question put and agreed to.
Title agreed to.
Bill reported with amendments, received for final consideration and passed.