Do we deal with the sections one by one?
Landlord and Tenant (Ground Rents) Bill, 1977: Report Stage.
We will dispose of the amendments first. If you have anything you wish to raise you can do so after the amendments.
We do not have a debate on the sections on Report Stage?
No.
As a preliminary point, while personally welcoming the Minister of State at the Department of Foreign Affairs here, it is disappointing that there is yet another change of pilot for this Bill. The Minister of State was here for the Second Stage and he gave his views on it. We then had a different representative of the Government here for Committee Stage. As the House knows, Committee Stage is a detailed Stage and there is a lot of detailed argument and detailed discussion. In the course of that, the Minister for Fisheries indicated his willingness to consider certain matters for Report Stage. I have no doubt that the Minister of State here now had the benefit——
I would remind the Senator that he should speak on the amendments.
I take what the Cathaoirleach says but if the debate on the amendments is to be as full a debate as this House would wish it to be, the Government should pay the House the minimum of respect of ensuring that detailed matters are processed through the House by one Minister and that we do not have sent to the House whichever member of the Government happens to be available and willing to come. It is not good enough for the Government to treat the House in that way.
I move amendment No. 1:
In page 2, line 20 after "Act" to insert "other than a lease made pursuant to a contract entered into before the passing of this Act".
This is in relation to section 2. Section 2 says that a lease of land made after the passage of the Bill shall be void if the lessee would, apart from this section, have the right under section 3, to enlarge its interests into a fee simple. In effect this is the kernal of the Bill. This is the provision that restricts the creation of future ground rents.
Our amendment is designed to insert the words "other than a lease made pursuant to a contract entered into before the passing of this Act". In the absence of these words there could be a certain number of parties prejudiced, through no fault of their own, by the passing of this Bill. They would be in a transitory position in regard to their title. They would have entered into a contract to purchase a site. The contract would have provided that the sale would be by way of lease. In the meantime, the Bill would pass and after its passage the lease, as I read the Section, would be void and the person would not be able to avail of the provisions under subsection (4) and consequently would be prejudiced.
We believe that this amendment, having transitory effect and essentially having only a temporary life until such time as any such contracts have been exhausted, is desirable, and it protects certain members of the community who might find themselves in this position. It does not infringe or in any way act detrimentally to the principle that is being achieved by subsection (1) of section 2. We had the arguments at length on Committee Stage and it is my recollection that the Minister agreed to look at it before Report Stage. I am trying to get the reference in the Official Report. It was at column 882 of the Report of 19 April. The Minister said that he would look into this question before Report Stage and it might be possible on the basis of a time limitation. He was worried about writing in something that would last for ever and he thought it might be possible to write in protection for a party who would enter into a contract but to put a time limit on that protection so as to compel these parties to complete the contract expeditiously and of course tidy up the matter.
I would like to support the amendment. There is a very common commercial transaction when people are purchasing houses that they enter into a contract to get a lease and at the same time enter into a building contract with a builder and there is the danger that they could have a contract for the lease that might be unenforceable because of the provisions of this Bill and have a building agreement that is quite enforceable. I do not think that it can happen in many instances because, as the Minister for Fisheries who took the Committee Stage of the Bill in the Seanad mentioned, people will know the law and will take precautions. I think that if there is any danger of anybody being put in a prejudiced position because of the passage of this Bill and we have a way of getting out of it—which we would have with this amendment—we should take it. I support the amendment.
To reply to Senator Cooney's observations in the first instance in connection with the availability or non-availability of Ministers and so on, it is a matter of fact that the Minister for Justice himself is taking parliamentary questions in the Dáil this moment, possibly. As Senator Cooney said, I took the Second Stage of the Bill before us but unfortunately I could not take the Committee Stage because I was out of the country at a Council of Ministers' meeting. We did undoubtedly try to preserve the continuity of the presence of the individual who took the Bill from beginning to end and I am now back here to give effect to that attempted continuity.
If it is of any consolation to Senator Cooney and, indeed, Senator Molony who made all the running on Committee Stage, I would like to say to them that I made it my business to consult with the Minister for Fisheries and the Minister for Justice and I also consulted the Official Report of the Seanad on the Committee Stage of the Bill. So, as far as that is concerned, I do not think it will prejudice the contents of the debate as such. I also feel, and I am sure the Seanad will agree with me, that they had a very full and long discussion on Committee Stage. In all the circumstances they have had their day in every respect.
To reply specifically to the points made and to give effect to the undertaking given by the Minister for Fisheries, Deputy Lenihan, that he would scrutinise in depth the points raised on Committee Stage in relation to this amendment, I understand the amendment here on Report Stage is similar to that of the amendment on Committee Stage.
As I understand the Bill, its purpose is to prohibit the creation of future ground rents on ordinary dwelling houses. The Bill proposes to do this by making void any future attempted lease of such a dwelling that would create a ground rent, apart from renewals of existing ground leases. I think that is a fair point to put in. The amendment seeks to validate such leases provided a contract for the leases has been entered into before—I think this is the point the Senators might consider—the Bill has become law. As I understand it, reading the Reports and consulting with the Minister for Fisheries, the main burden of the argument on Committee Stage was that at the time the Bill becomes law some unknown number of persons will have contracted to take such ground leases but will not actually have taken them.
If section 2 (1) as presently set out in the Bill before us stands part of the Bill as enacted into law, such a person, my advice is, will have a contract for a void lease—a nullity—and such a contract is probably—subject to the lawyers and others—unenforceable. On the other hand, that person has already paid the builder and the builder may, after the Bill has become law, demand a large extra payment for the grant of the fee simple of the property or indeed he might ask that the site be returned to him.
I think it is necessary to repeat, as I said in the course of the previous debate on this Bill, that no ground rent lease of a dwelling-house made after this Bill has become law can be recognised and valid. Having studied this, apart altogether from it being a matter of law, logic can come into it. This is why I understand that the Senator's amendment should fall in the circumstances. What we want to do is to give this Bill certainty. I know that there may be a certain amount of uncertainty: you can say that and I can say what we want to do is to give it this absolute certainty. We believe that the section as presently drafted will give it certainty for all time. I can only offer that as my opinion— Having offered it as my opinion I have no doubt that if one had the money and so on one could go to another lawyer and get a different opinion— but I expect that is what the law is about.
However, to admit of exceptions would make for uncertainties, as I have already said, in the future, perhaps the distant future, as to whether some unknown number of ground leases were valid. Every person concerned has been on notice for a considerable period of time that ground rents on dwelling houses are being abolished and, indeed, on the practicable level, ordinary home purchasers are unlikely to have been able to arrange loan finance, even bridging finance, unless firm arrangements have also been made to complete any intended lease before this Bill has become law.
Again, as I understand it, and my advice is that the Incorporated Law Society and solicitors representing lending institutions were made fully aware that once the Bill becomes law no ground lease of a dwelling can be made and the law society indicated that it was advising its members to that effect. I accept that it is not a very strong point in the overall argument, but the practitioners themselves have been advised by their law society, by their own institution, about the realities of the Bill when it becomes law.
We are talking about existing contracts.
Yes, I appreciate that point but what I am speaking about is certainty. What I am speaking about is notice. What I am speaking about is the fact that this Bill may come into law in two or three months' time. I am not quite certain in that respect. I do not know what the final programme for the Bill is in the context of putting it on to the Statute Book but I think that if we go back to what Senator Molony is looking for in the meantime——
I would imagine in a couple of weeks' time. Will it not become law when it is signed?
Very well, a couple of weeks' time. Let us look back and see how long it has been in existence, how long we have been dealing with it. As I say, it is not a very strong point and I am not making it to any great extent. However, the need to establish a clear watershed in conveyancing practices is such that were the date of enactment into law of this Bill not to be a cut-off date for all ground leases of dwelling houses, it would be better to postpone the operation of the new Act altogether. But, again, if we were to postpone the Act, of course, we would have been wasting our time for months past. Consequently, in all the circumstances, a postponement is unacceptable.
On a final point—again a point which was made on Committee Stage —it does remain the case that any person who has given consideration for a lease that is void under section 2 (1) is in section 2 (4) of the Bill before us being given the right to acquire the fee simple at the expense of the purported lessor.
That is fine.
Quite. I think that it is not impossible that this right might extend to a person whose consideration for the lease has been paid on foot of a contract for that lease. That is not an unacceptable proposition.
It is not the position under the Bill.
I cannot see how an action to enforce a contract for the consideration implied could be taken.
What we are saying is that in other words it is not to be taken for granted that such a person is at the mercy of the builder and I think that is basically the main burden of the Senator's argument, that in some way this individual would be at the mercy of the builder. I think that is what has been suggested. We do not accept that.
I realise that the amendment has been put down by two Senators who are dealing with leases on a day-to-day basis and I realise that it was put down with the feeling that it would protect what the Senators consider to be an imperfect instrument. I realise all that and that it was put down, as they see it, to improve the legislation but what we want to do, and what the Minister for Justice wants to do, is to give a certainty to the legislation, to make it absolutely watertight within the ability of the draftsmen, the ability of the legal advisers and so on. That is what we are offering to the House. We are offering what we consider to be a perfect piece of legislation and while I realise that the amendment was put down with all sincerity, I fear that in all the circumstances, it is not acceptable.
I am most disappointed that the Minister in effect accepts the validity of our arguments but refuses to give pupose to its acceptance by agreeing to the amendment being made. He accepts that an injustice can arise for a person who has entered into a contract, before the passing of the Act, to take a lease, who may have made certain commitments and engaged in certain financial arrangements and finds then by virtue of the new law that all those arrangements have to be forgotten and finds himself in a position where he cannot complete the title to his plot and cannot build his house.
The Minister in his reply accepts that that will be the position, that A makes a contract with B to give a lease to B of the site for a house. Before the actual lease is granted this Bill becomes law. A can then say to B: "I will not give you the fee simple; my contract with you is to give you a lease." Or he can tell B: "I will give you a lease" but, by virtue of the Bill we are enacting that lease is void and he is left with no title to his site. That is the position that that person will be in.
Surely, under the Bill, B has a remedy against A and he can cure that?
B has no remedy against A because the consideration has been rendered void by virtue of this Bill. He has no action against A.
If we do not take the amendment into account and we take the Bill as it stands, in those circumstances B has a remedy against A and he can convert what purports to be——
He cannot convert anything until he gets the lease and he cannot compel A to give him a lease after the passing of the Act on foot of a contract made before the Act because at that stage that contract will in fact be void by virtue of the Act. It would be unenforceable. There will be no consideration. Consideration will have failed. There will be all sorts of technical contractive reasons under the law of contract whereby he cannot make A give him a contract. If he could, that would be fine because he could then use his powers under subsection (4) and he could convert it into a fee simple. But he cannot do that and that is why we feel that B is going to be most seriously prejudiced if his builder changes his mind and reckons that he was given the lease on too favourable terms.
He should consult a good solicitor.
The best solicitor in the world would not help him there because he has a perfectly valid contract and we are going to change the legal status of the parties vis-á-vis each other by virtue of this Bill. The builder might say: “This is my chance to get back this site. It is more valuable back with me for further development elsewhere.” By virtue of this Bill, we are leaving B in the position that he has a contract for a lease which is not worth the paper that it is written on. His house may be up to first storey level; he may have commitments in bridging finance and interest accumulated. All that goes by the board.
Is the Senator serious about this?
Absolutely serious.
I would say that a court of law would look at that in a particular way.
The court must have a law to deal with. It must have a law. A court of law cannot——
If this amendment was accepted I think a court of law in those circumstances would deal with that very, very clearly and carefully.
If the amendment were accepted there would be no need to invoke a court of law at all.
Even more so.
I am horrified to hear the Minister say that a court of law could deal with that situation. As a matter of basic law it could not deal with it.
I could not accept that at all.
That is the legal position. It is such a basic proposition that I am horrified to hear the Minister suggest that a court of law could come to the aid of B in the example I have mentioned. B is totally and completely prejudiced and the Minister's argument to console the citizen who is put in that position is that we have finality in the Bill: this Bill is to be a watershed; we do not want anything hanging over.
I would respectfully submit that it is a poor argument when the result of it is to cause a grave inequity to the citizen and there could be a substantial number of citizens who are at the stage of having entered into contracts to take leases, then find the Bill is passed, then find that the contracts to enforce the leases are unenforceable and they are left with nothing. That is what the Minister is offering to the citizens of this country.
That is what you are alleging I am offering, Senator. I do not accept that.
Sorry, what the Minister has said by way of not accepting is that B could go to the court.
No, in certain circumstances, Senator. I think that we should get the facts right.
There are no legal circumstances in which B could go to the court for a lease and that is so basic that I am appalled to hear the Minister suggest that there might be.
The Minister has already accepted that the contract is unenforceable.
B is absolutely prejudiced.
Absolutely not.
The Minister is putting forward legal propositions that have no basis at all.
Your amendment, for example, is unacceptable quite simply and we do not accept your interpretation of the effect the section would have.
Senators must realise that we are not on Committee Stage; we are on Report Stage and Senators are entitled to speak once only except for the proposer of the amendment who may reply.
The Minister, in his reply, accepted the position as I have outlined it, that it would be a void and unenforceable contract. Now he proposes to say that the victim of this contract can go to court to force something that is void and unenforceable on the Minister's own statement.
The Senator is putting words into my mouth.
The record will prove what the Minister read out for us. It was not something that he said, it was something he read out, that such a contract is void and unenforceable. I am only pleading for the unfortunate citizen who is the victim of void and unenforcable contract. It is a simple amendment which would cover the transitional period until these contracts have been exhausted and completed. If the Minister wants to have a watershed and wants to have a cut-off point and bring the finality that he is seeking he can put a time limit on the transition period for the contract I am, quite frankly amazed.
We are saying that the Bill is perfect and the Senator's amendment will make a perfect Bill imperfect. That is our proposition and the Senator is going on the reverse direction.
On the Minister's own admission the Bill is imperfect in regard to the unfortunate citizen who has entered into a contract to take a lease which is not completed before the Bill is passed. That citizen is left with nothing. The Minister has admitted that and a Bill that leaves any citizen in that position is not a perfect Bill. It is a travesty of a Bill and it would be extremely wrong for the Houses of the Oireachtas to pass a law that will prejudice any citizen to such an appalling degree. Our amendment will avoid that without in any way taking from the principle of the Bill, without in any way impeding its finality. We cannot quantify the number of contracts that must be in this position but they must be comparatively few. I am suggesting to the Minister to let those contracts proceed. It will be a matter for the conveyancer afterwards to ensure that the lease, which would be technically granted after the passing of the Act, was granted in pursuance of a contract entered into before the Act. That would be a matter for the conveyancer afterwards and it is not something which would prejudice a borrower with a lending institution or anything else.
Is the Senator really making that statement?
Of course I am as a person who has been conveyancing for many years, and who, I respectfully suggest to the Minister, knows a lot more about it than he does.
Does the Senator know that a lending institution will only give money on a certainty? He is proposing otherwise.
I am not. There are people coming in here, through no fault of their own, to debate matters that they are not capable of debating.
That is not so.
The Minister has already said that contracts entered into before the passing of this Act will be void and unenforceable and that the person who has entered into that contract will be seriously prejudiced. I am suggesting a compromise to save that person from that predicament. I am suggesting that that compromise will not prejudice the principle in the Bill, will not halt the Bill in its rapid rush towards finality; it will not stop it from being, as the Minister said, a watershed in this conveyancing area. I am just pleading that the unfortunate number of citizens—we do not know who they are or how many of them there are—should not be put in that position,
Amendment put.
The Seanad divided : Tá, 18; Níl, 23.
Tá
- Blennerhassett, John.
- Burke, Liam.
- Butler, Pierce.
- Connaughton, Paul.
- Cooney, Patrick Mark.
- Governey, Desmond.
- Harte, John.
- Kilbride, Thomas.
- Lynch, Gerard.
- McAuliffe, Timothy.
- McCartin, John Joseph.
- Markey, Bernard.
- Molony, David.
- Moynihan, Michael.
- O'Brien, Andy.
- Reynolds, Patrick Joseph.
- Robinson, Mary T. W.
- Staunton, Myles.
Níl
- Brennan, Séamus.
- Brugha, Ruairí.
- Cassidy, Eileen.
- Conroy, Richard.
- Cranitch, Mícheál.
- de Brún, Séamus.
- Donnelly, Michael Patrick.
- Ellis, John.
- Hanafin, Des.
- Harney, Mary.
- Herbert, Anthony.
- Hillery, Brian.
- Hyland, Liam.
- Jago, R. Valentine.
- Kiely, Rory.
- Kitt, Michael.
- Lanigan, Michael.
- McGlinchey, Bernard.
- McGowan, Patrick.
- Mulcahy, Noel William.
- O'Toole, Martin J.
- Ryan, Eoin.
- Ryan, William.
Tellers: Tá, Senators Burke and Harte; Níl, Senator W. Ryan and Brennan.
Amendment declared lost.
I move amendment No. 2:
In page 3, to delete lines 1 to 19 and substitute:
"(5) (a) Where a person—
(i) immediately before the passing of this Act holds land under a lease for a term of not less than 99 years, of which at least 50 years are unexpired, and
(ii) obtains permission under Part IV of the Local Government (Planning and Development) Act, 1963 for development of the land, wholly or mainly by the construction of dwellings,
that person shall have the right to acquire under the Act of 1967 the feel simple in the land and any intermediate interests therein."
The existing subsection (5) provides for a situation in effect that where somebody holds land on lease and on the passing of the Act permission exists for the development of it into a housing estate, that that person who holds the land on lease will have the right within one year to acquire the fee simple. It is a logical and sensible provision in that the purpose of it is to ensure that the person who holds the land will get the fee simple rather than perhaps having a series of 100 or 200 sub-leases and then putting the onus on the tenants under the sub-leases to buy out the fee simple individually. We support the general purpose of the section in that sense but we feel that it would be better if it were provided that where a person holds land under a long lease and even after the passing of the Act he gets planning permission, that he should have the similar right to acquire the fee simple. Our main reason for saying that is that we feel that if the amendment is not accepted there could be an effective sterilising of potential development land. Somebody who holds land under a lease and who has not obtained planning permission at the time of the passing of this Act—it can sometimes take years to get planning permission particularly for some of the big housing estates— cannot have that type of notice in relation to this. I do not think that argument is a valid one against the amendment.
The Minister for Fisheries proposed in the House on Committee Stage that lawyers could find ways around the Bill. He acknowledged that there could be difficulties and he was, in many ways, willing to consider the proposition we put to him at that time but he withdrew from it for some reason. We have now changed the amendment quite substantially. It is a compromise, in effect, between the amendment we had on Committee Stage and the Bill itself. Where there is the danger of sterilising development land with the cost of such land and the difficulties we have in creating sufficient houses for our needs, we should avoid that. We should also avoid the danger that builders will be employing lawyers and experts to find ways around the Bill. The Bill as it stands is riddled with difficulties and, possibly, loopholes but I do not think the way the Minister for Fisheries suggested is the proper way to get over a problem like this. I cannot see that there should be any valid objection to the amendment and I would ask that it be accepted.
I should like to support the amendment. The section as drafted provides that where a person has land for lease of not less than 99 years with 50 years unexpired and permission exists at the time of the passing of the Act for the erection of dwellings that a person then has one year in which to get in the fee simple. If there is land held under the long lease but no permission existing at the time of the passing of the Act, then that person never has the right compulsorily to get in the fee simple. The question then arises as to whether that person will be ever in a position to sell sites on the land. It appears to me from reading the Bill that he will not. The Minister might enlighten us in this regard.
I have in mind the situation of a person living within a mile or two, maybe three miles, of a developing urban area, living on land that has been in his family for generations and is possibly held under an old fee farm grant or under an old long lease. That type of title is not unusual on the outskirts of towns in Ireland. At the moment that land may be agricultural land and not used for anything else. But the pressures of development over the years will bring building closer to it and there will be pressure then to develop that land. If the adjoining town is to develop, that land will have to come into the development area and will have to be built on. That pressure might not come for another two years. At the time of the passing of this Act there may not be planning permission on it but in the future planning permission may be sought.
As I read the Bill, that person will be unable to acquire compulsorily the fee simple when the pressures come on him to allow his land to be developed for building and commercial purposes. It appears to me that that land will have to be left there idle. I am sure that that is not a consequence intended, nor would the Minister like to see the landowner personally prejudiced or to see the land left incapable of being used for development purposes because the title is wrong—and the title cannot be remedied due to the narrow constraints of this subsection.
I do not think relief can be had under subsection (4) of section 2. It would be straining the section if one were to read it that the landowner holding under the long lease proceeded to give a lease to a would-be developer or would-be purchaser and that would-be purchaser then relied on his rights under subsection (4). That certainly would be a strained interpretation to put on it. It would be a rather ridiculous position to put the parties into.
All we are asking in our amendment is to provide that, if planning permission is obtained at any time, at that stage the person would become entitled to acquire the fee simple compulsorily and develop his land by making conveyances in fee simple. There would have to be planning permission, but of course planning permission would not be available from the local authority until such time as it would be in the interests of ordinary development and obedience to good planning principles to grant that permission. Consequently, it would be socially and economically desirable that the land would be developed and the fee simple would be compulsorily acquirable by the lessee.
I do not think the position of the lessor comes into the picture. He is not going to be prejudiced any more under that provision than he would be under the provision in the Bill. He will have to sell and the maximum purchase price provisions will not apply. They are specifically excluded. We would be continuing that exclusion so that the lessor could not claim that he was being prejudiced by this provision. The value of the reversal to a lessor must be small, because the type of lease I am talking about is usually for 999 years or is generally a fee farm rent. The value of the lessor interest is, accordingly, of no great significance. Consequently, compulsory purchase is not going to see him in any way prejudiced. Should the odd case arise where it would be valuable, then the county registrar, the arbitration authority, whoever that might be, is not constrained by section 18 (1) (b) of the 1967 Act in regard to the maximum purchase prices.
We are asking the Minister, by accepting this amendment, to ensure that land of the type I have described within a reasonable distance of towns and villages throughout the country can be used for development purposes in the years to come. I cannot see on reading of the Bill how that land can be used because of the prohibition in creating leases. It would be an extreme interpretation if one had to say that the owner of the land could grant leases in the knowledge that what he was granting was void and that the person taking the lease could then compel the fee simple to be granted to him. It would be an odd sort of Act that would compel people to get the legal rights by insisting initially that the process starts by the granting of something declared void by an Act of Parliament.
I would be glad to hear from the Minister whether he thinks the section will have the effect we think it will have, that it will freeze building or development land in years to come, development land that is held otherwise than in fee simple which has not yet got planning permission but which may in the future be necessary for development. Does the Minister think that that type of land will be frozen in the sense that the owner will be unable to grant a title to a prospective builder? If he thinks it will have that effect will he justify why he will not accept our amendment? If it does not have that effect I will be glad to hear why he thinks it will not have.
As far as the suggestion by Senator Molony is concerned that the Bill, and the section in particular, is in some way riddled with difficulties and loopholes. I must state that that again is Senator Molony's opinion.
It is also the opinion of the Minister for Fisheries.
Again, the Senator is putting a selective interpretation on what the Minister for Fisheries said, to suit his own prejudice.
He was quite definite.
In all the circumstances I reject the suggestion or the allegation that the Bill generally, and the section specifically, is riddled with the loopholes and problems that the Senator says it is riddled with.
I would refer the Minister to column 863 of the Official Report of the debate of 19 April.
I read the debate fully and if the Senator would like to quote from it we will then analyse exactly what the Minister for Fisheries said. The Senator will end by putting his interpretation on it and I will end up by putting my interpretation on it.
All he said was "yes" to suggestions by me that it has loopholes.
And so say all of us.
There is only one interpretation for "yes".
This will end up in a clash with no conclusion. However, the amendment does not find acceptance. I am sorry to sound difficult as far as the Senators are concerned. I know they have tabled the amendment out of the goodness of their hearts and with a hope that by having the amendment accepted in some way they would improve what they consider to be an imperfect legislative instrument. That is their view but I am afraid it is not acceptable to the Minister for Justice. The amendment proposes to substitute a new paragraph for paragraph (a) of section 2 (5). This provision is designed to give relief to any builder or developer who at the time the Bill becomes law is engaged in the residential development of land which either is held by him on a long lease or in respect of which he has an enforceable agreement for a long lease.
The provision proposes that such a person, shall during the period of one year after the Bill becomes law—a very reasonable, clear and understandable provision—have the right to acquire the fee simple in land and any intermediate interests. In either case, planning permission for the development must exist at the time the Bill becomes law. Senator Cooney and Senator Molony moved a somewhat similar amendment when the Bill was taken by the Minister for Fisheries on Committee Stage. I appreciate that the wording in the context of the new amendment is somewhat different but trying to reach the same conclusion.
At the same time the fact is that the wording is different and the amendment on Committee was put to the House and was lost. The amendment now differs from the text of the Bill before us on three grounds.
The Bill requires that immediately before the passing of the Bill planning permission should exist for the proposed development of the land. The amendment would simply require that planning permission for the development be obtained at any date. The second is that the provision in the Bill is transitional and would last for one year only. There is an element of certainty. There is no cut-off date in the proposed amendment. The third and final point is that the amendment makes no provision for a person with an enforceable agreement who is proceeding with a development on the basis of that enforceable agreement. On those grounds alone the amendment is unacceptable.
The main objection to the amendment is that it would make the provision permanent instead of transitional. The sole purpose of this provision is to provide a saver for current developments because, failing such a saver, builders and developers could be held to ransom by the owner of the fee simple or might even, for various reasons, be unable to bargain for the fee simple at any price.
In arguing their somewhat similar amendment on Committee Stage the Senators seemed to assume that unless, a provision, unlimited in regard to time of the type they are now proposing, was included in the Bill, the future development for housing or land held under long leases would be in some way inhibited. There is no good reason to suggest this is the case or that this will be the case. What will happen is that a builder or developer will in future have to acquire the fee simple of the land together with any intermediate interest there is. Here, we have the normal bargaining process instead of as present having to acquire as much of an interest as will support the grant of a ground lease. In other words, he will have to deal with the fee simple owner as well as any lease holders but the process of acquiring the land for his purposes will remain essentially the same.
The proposed amendment is also unacceptable on the grounds that it does not require that planning permission be obtained before the Bill becomes law. I specifically put an emphasis on the words "before the Bill becomes law". This point is central to the transitional nature of the provision which is designed to provide a saver for builders' developers caught in a situation not of their own making. Furthermore, the amendment makes no provision for the case of a builder who, at the time the Bill becomes law, has not a lease of the land but is proceeding with the building of houses or with the preliminary development of the site on the basis of an enforceable agreement. Such a provision, which is clearly necessary, was inserted by official amendment on Committee Stage in the Dáil in response to arguments by the Committee of Senator Molony's and Senator Cooney's law society. The amendment could introduce an inequitable provision into the law by giving the right to acquire the fee simple to a long lease holder of vacant land and on no other grounds than that he had obtained planning permission for housing development.
The right to acquire the fee simple is, however, grounded in the purchaser's brick and mortar interest in this built-on land. The builder/ developer catered for in section 2 (5) (a) is in the same position as a ground rent tenant with a bricks and mortar interest. He has already bargained for and paid for the right to build his houses and if he waited until the houses were built he could buy out the fee simple as an ordinary ground tenant. This is not the position of a long leaseholder of vacant land in other circumstances.
In other words, the amendment proposed would give permanent rights to tenants of unbuilt-on land in a way which is totally alien to the basic tenet of landlord and tenant law to date. Such rights have never been given except where there are permanent buildings on the land and the unbuilt-on land is ancilliary and subsidiary to the buildings.
Subsection (5) of section 2 justified exemption since it is only a transitional provision to cater for the real possibility of hardship but it would be an unwarranted interference in an area which is outside the scope of landlord and tenant relationship, basically the area of agriculture, to extend these permits of rights to lessees of vacant land. The existence of planning permission to be obtained at any time in the future would not remove this objection. On a practical level, if a lessee of land, in the circumstances outlined by the two Senators, wants to develop the land at some future date, he has two real options. One would be to buy the fee simple. This should not be a problem since the development value windfall should cater for the provision of the spoil. The second point is that he can build the houses and that will give him the right to get in the fee simple.
That only applies if the lease is granted after the passing of the Act.
This Bill is the answer to——
How would the building of the houses give him the right to collect the fee simple?
——a social problem which has been bedevilling this country for many years and this Bill, as presented to the Seanad, is as perfect as we can make it. Again, to go back to Senator Molony's allegation that the Bill is riddled with difficulties and loopholes, nothing could be further from the truth. We have dealt with this Bill for a considerable length of time and I do not think I should let the opportunity go without thanking the two Senators for tabling their amendments, however well-intentioned and however unacceptable, but what we want is perfection and we believe that we have reached perfection without the two Senator's amendments.
Would the Minister answer my specific question? Where is it provided that the provision of bricks and mortar will turn a leasehold into a fee simple?
I do not think that I am obliged to answer that question.
Does the Minister not wish to answer the question?
Senator Molony, to reply.
I am not long in this House but I must say that the attitude adopted by the Minister in dealing with this Bill is very difficult to understand. I make this preliminary point in view of the fact that the Minister has made arguments against our amendment. We are not talking here in any sense about something that is political, apart from the fact that we are all in agreement that something should be done to abolish ground rents here.
God forgive the Senator's innocence.
We are all in agreement that the law needs to be changed so that ground rents can be abolished but we are dealing with a Bill that is an extremely complex legal measure. It has ramifications far beyond what we have realised. The Minister made reference to the fact that the law society had suggested changes in this section. The Minister is also aware that the law society complained that they did not have sufficient time to examine this Bill. They made the point—and very rightly so—that this Bill was so complex and had such ramifications that it required consideration over a period of time so that all the possible consequences of the Bill could be considered. I am sorry that the Minister is not prepared to accept the amendment. He has made the point that the amendment was sincerely tabled. It was sincerely tabled, but the consideration which the Minister has given to it is most unsatisfactory and, certainly, some of the arguments he has used against the amendment have no foundation whatever. It should be stitched into the record of this House that Senator Cooney asked the Minister a very fair question in relation to an argument used and he chose deliberately not to reply to it. The reason he chose not to reply to it was that there was no reply; there was only one reply that he could have given and that was that the argument he had used was hogwash and nothing else. The simple fact is that the point the Minister made in that regard was that if a builder held land under a lease, that if he built houses on it, he would automatically acquire the right to buy the fee simple. Senator Cooney asked if it was not the case that under the Bill he would only have that right where the lease was granted after the passing of the Act. The Bill clearly provides that it is only where a lease is granted after the passing of the Act and somebody builds on the land that he will have the right to acquire the fee simple.
In this amendment, and this section generally, we are talking about an existing lease. We made the point on Committee Stage that land could be sterilised because of the provisions of the Bill. The Minister has made the interesting point that this is a transitional section, a section to save the unfortunate builder or developer. It is significant that the Minister is interested in saving the unfortunate builder or developer and is prepared to have in the Bill a transitional section but is not prepared to put in a transition section, as we proposed in our first amendment, to save the innocent house purchaser from the possible consequences of this Bill. It shows truly where his loyalties lie.
In relation to the amendment there are certain specific points I should like to make in reply. In the first instance, the amendment we had on Committee Stage differed quite substantially—not only in words—from the amendment we have here now. I would draw the Minister's attention to the fact that in our amendment on Committee Stage it was provided that the lease should have just ten years' unexpired term remaining. The amendment which we have before the House now provides that at least 50 years are unexpired. That is similar to the original section. It differs very much in that respect. When answering our amendment on Committee Stage, the Minister for Fisheries made the point that our amendment was unacceptable for that reason. The Minister has already said the Bill is perfect. I doubt very much that it is. I do not claim our amendment is perfect but we can improve on the section by allowing for this amendment.
The only purpose behind the amendment is to provide that where a builder or a developer or anybody else has land under a lease, but does not at the passing of the Act have planning permission, if he gets planning permission and proposes to build a housing estate, he will have the right to acquire the fee simple.
It is worth considering the position as it would be if the Bill is passed without the amendment. There is, in fact, in Rathfarnham a lease which was granted in 1679 and which in effect, would come under the provisions of this Bill and would be affected by the provisions of this transitional paragraph. I am not in a position to say that there is planning permission in respect of all of the land that comes under that lease but there is a portion of the take of that lease which has not yet been developed and, being where it is, and with the demand that exists for housing in Dublin, it is a prime spot and it is obviously desirable that if somebody wishes to develop that land in the future he should be in a position to do so.
I speak of the existence of that lease because I know of it. I cannot say that the consequences I will point out will, in fact, apply to it but I would apprehend that they might and this is the point we wish to get across in this debate. That land is held under a lease. If, in fact, planning permission does not exist on the passing of this Bill, the effect after the passing of the Bill in its present form will be that that land will not, in our view, be capable of development. The title to the land will be a lease. The developer will not have the right to acquire the fee simple. Therefore, he is in the position that he cannot grant to potential purchasers anything but a sub-lease; he can only grant a portion of what he has himself or an assignment of what he has himself. The Bill does not allow him the right to acquire the fee simple. The only consequence of that is that that land is sterilised as a result of this Bill.
I would be delighted to learn that I was wrong in that; I do not think I am. We have discussed this on Committee Stage. I have heard the Minister's argument against the amendment in this House and, frankly, I am not at all impressed. I feel that there is the likelihood, as Senator Cooney has already pointed out, that, under old fee farm grants or old leases around the country generally, the situation of which I speak could be multiplied and the problems multiplied throughout the length and breadth of Ireland and at a time when we need so much housing this is a very dangerous and bad development. I can see no harm whatever in the right being given to somebody who has leasehold land and who gets planning permission to acquire the fee simple at any stage. It is a sane provision. I do not see how it is objectionable. The Minister did not answer the amendment when he attempted it a short while ago.
There is no other point I want to make but I should like again to record my regret at the attitude adopted by the Minister.
Amendment put and declared lost.
An Leas-Chathaoirleach
Members may wish to be reminded at this stage that they may speak only once on matters relevant to the question "That the Bill, as amended, be received for final consideration." Members wishing to raise such relevant matters should therefore include all of them in one contribution. Matters relating to undertakings given on Committee Stage would be relevant now.
The matters which were agreed by the other Minister to be considered by him are dealt with in column 882 of the Official Report where he indicated that he was attracted by the principle of the amendment that was being moved on that occasion. The Minister appeared to be sympathetic to the predicament of persons who had entered into contracts before the passing of the Act but had not obtained their leases before the passing of the Act. He did not seem to consider that the need for what the present Minister determines finality to mark the watershed nature of this legislation would be a superior need to that of the prejuliced citizen. He indicated that he would look at the matter. He thought that the protection for contracts could have a time limit on it in the sense that they would be given a year or 18 months to enforce their contracts. This would appear to be adequate.
I am disappointed that the sympathetic spark which the Minister for Fisheries showed has not been repeated here by his colleague, the Minister of State at the Department of Foreign Affairs. I do not think there is any point in repeating the arguments that we made beyond puting it on record that the Bill when passed will be to the serious prejudice of that unknown number of citizens who have entered into contracts to take leases but have not succeeded in obtaining their leases before the Act was passed. The Act will then have the effect of saying that those people have nothing. We proposed an amendment to safeguard those people. The Minister has rejected that amendment on the ground that he wants the Bill to be final and certain and to be a watershed and hump John Citizen.
The other matter that was to be considered and which the Minister indicated he would look at at column 888 was in connection with our amendment to expand the saver in section 2 (4). We felt that subsection (4) only gave protection to persons taking a lease that happened to be void under subsection (1). You would have an equally innocent party under subsection (3). Yet there is no protection for that person. Our reading of the section is not total and there is somewhere in the Landlord and Tenant code protection for the person under subsection (3). We fail to see why subsection (4) cannot be extended to subsection (3) as well as subsection (1).
Senator Molony gave a graphic example of the consequences in practice of subsection (3) where he took the situation of A making a lease of an industrial site to B. The lease was made for industrial purposes but did not prohibit the erection of dwellings. If for some reason the lessee wanted to be rid of his obligations under that lease all he had to do was erect permanent buildings for use fully or principally as a dwelling and the lease became void and by using the provisions of subsection (3) that lessee had escaped his contractual obligations to his lessor. It seems to me to be a clear consequence of subsection (3). It would be wrong to pass legislation which could have that effect.
The Minister, when he heard that example, said that he would certainly have it examined because the example was a valid one of what might happen. He said that it would obviously be undesirable. I would be glad to hear from the Minister if he considers that that example could take place. If it is a valid example he should fulfil the wish of his colleague that it should be looked at as being obviously undesirable.
The other matter which the Minister said he would look at before Report Stage was the question of whether the right of a county registrar to arbitrate in cases arising under section 2 (5) would be constitutional in view of the removal of the limitation on purchase prices to be fixed by the county registrar. Section 18 (1) (b) of the 1967 Act which refers to maximum purchase prices is said not to apply to the provision of subsection (5). I read that as meaning that there was no limitation on the amount of compensation which a county registrar could award. I suggested to the Minister that to give unlimited jurisdiction to a county registrar might be unconstitutional because at that stage he was doing more than just arbitrating in accordance with criteria laid down by a statute. He would then be exercising what would, in effect, be a judicial discretion and the provision might consequently be unconstitutional. The Minister said that he would look at it.
There is only one point which I would like to make. It is a point which has already been covered by Senator Cooney but I would like to make it clear because I think it is a very important matter. The position under this Bill is that where any lease is made for commercial purposes, say for example, I lease to the Minister five acres of land for the purpose of the erection of a factory and for some reason or another the Minister wishes to get out of his contractual obligations, he can do so simply by the erection of a dwelling because the Bill provides that where a dwelling is built on land that is held under a lease made after the passing of the Act the erection of that building would make the lease void. The Minister for Fisheries agreed to look into that. It is a very wild consequence, to say the least of it, if in fact this can happen.
Senator Molony mentioned the point, having regard to my attitude and the unacceptability of the last amendment, that we were bending over backwards, or words to that effect, to assist the builder-developer and that in all the circumstances that was understandable. That is obviously an allegation that Fianna Fáil in some way are protective of builders-developers and "Hump John Citizen" I think, was the expression used by Senator Cooney. I think it is only proper that I should put——
In a different——
I am relating the two of them. I am entitled to do it. I know that when the Coalition Government were in power the general movement was towards liberality and anti-democratic practices and in the final analysis the Opposition might have found themselves in jail. We know that but I am pointing out to the former Minister for Justice and to his young Senator colleague, Senator Molony, a statement made by Senator Cooney during the course of the Second Stage debate on this Bill. If we are talking about where affections lie in relation to John Citizen or otherwise, I think that this statement by Senator Cooney is high in the grasp of class distinction.
In column 212 of the Official Seanad Report of 8 February 1978, Senator Cooney said:
One point, which raises a matter of principle, is the question of extending the powers of the Bill albeit in a limited way, to local authority houses. The original Bill excluded local authority houses from any of the changes proposed for other types of dwellings. This was done in recognition of the fact that this situation of a purchaser of a local authority house is not analogous to that of a person purchasing a private dwelling. In the case of a local authority house, the site would be provided by the community and the house would have been built by the community. In the case of the private person he would have bought his own site and he would have built his own house. It is clear that there is no analogy between the two situations. Because the community was involved in providing these houses, the community should be left with control over those houses. Very often there is extreme pressure of space in urban areas, and it is important that local authority houses should be kept under the control of the housing authority, so that they be kept available as residences.
I will let that quotation speak for itself. When Senator Molony makes allegations against me of the nature that he has made in the context of this Bill, he should have as good a memory as I in relation to what was said.
In relation to undertakings given by the Minister for Fisheries, Deputy Lenihan dealt with the Committee Stage very effectively, and properly said, in his own reasonable fashion, that he would examine certain points made by Senator Molony and Senator Cooney. The Minister examined in consultation with the Minister for Justice, his officials and the draftsman, the amendments proposed by the two Senators. I am coming back now to deliver the message that the amendments proposed are unacceptable. However, there are a number of undertakings which I must discharge on behalf of the Minister for Fisheries in relation to points raised by Senator Cooney and Senator Molony.
Section 2 (5) (a) of the Bill gives a person, a builder or developer, who on the date the Bill becomes law, has leasehold land in the course of development for dwelling houses the right, for a period of one year, to acquire the fee simple under the 1967 Ground Rents Act. Section 2 (5) (b) excludes in such a case the provision for a maximum purchase price for the fee simple in section 18 (1) (b) of the 1967 Act. The Opposition amendment that was debated on Committee Stage would have removed from the county registrar the function of arbitrating on a disputed price in a section 2 (5) (a) case and would have given to the Circuit Court direct—instead of only on appeal —the function of determining that price. In the course of debate this amendment and another amendment which would remove from arbitration and give direct to the Circuit Court the apportionment of a rent under section 2 (7) (c) (ii) of the Bill, were withdrawn.
The Minister for Fisheries undertook to consider the question of the constitutionality of leaving to the arbitration of a country registrar the determination of a purchase price in a section 2 (5) (a) case and, more generally, the constitutionality of the whole arbitration function given to the county registrars by section 17 of the 1967 Ground Rents Act.
The matters have been examined extensively. As regards the constitutionality of section 17 of the 1967 Ground Rents Act generally, it appears that the Minister for Justice in the previous Government had the advice of the Attorney General of the time on this question. I understand that this advice was that the arbitration functions given to county registrars by the 1967 Act are "limited functions". within the meaning of Article 37 of the Constitution and are constitutionally valid. The then Attorney General, now Judge of the High Court, Mr. Declan Costello, pointed out that a non-judical tribunal should not have powers "of far-reaching effect and importance ...calculated...to affect...in far-reaching way the... fortunes of those against whom they are exercised", and he was satisfied that the purchase by payment of a capital sum of an annual rent does not have that kind of far-reaching effect on the "fortunes" of a landlord. The Attorney General also advised that the functions of nonjudicial tribunals should not only not be far-reaching in effect but also should not be numerous.
Because that advice was given by an esteemed lawyer who in his own right has a very high and significant understanding of the law, it should be accepted. The answer to Senator Cooney's query is given by his former colleague, the then Attorney General.
Does the removal of the maximum price limit alter the position?
It does not, as I understand it. In the light of this advice not only is the constitutional validity of section 17 of the 1967 Act reasonably certain, but also the minor extensions of the arbitration functions proposed in section 2 (5) (a) of the Bill and in section 28 of the Bill as amended in Committee by Seanad Éireann. The Attorney General in giving the advice referred to was quite prepared to concede that the arbitration functions given to county registrars by the 1967 Act might be enlarged without danger of constitutional invalidity. The only remaining question is whether the new function proposed for county registrars in section 2 (5) (a) and (8) are or are not "far-reaching".
Section 2 (7) deals with ground leases, one void and one valid. Section 2 (8) deals with appointment of the rent between the two. Apportionment of a ground rent is already a function of county registrars under the 1967 Act, and is clearly a function even less far-reaching than the determination of the purchase price of a fee simple. Section 2 (5) (a) also concerns, in effect, the purchase of the fee simple by a person already having the interest of a ground rent tenant and it is incorrect to suggest that very large sums of money could be involved. This may be more clearly seen if one considers the position of the builder or the developer in a section 2 (5) (a) case who waits until he has built his house before acquiring the fee simple. In that event he can acquire the fee simple as a ground rent tenant entitled to do so under the 1967 Act. Builders would be at a loss if they had to wait in that manner; hence the right of purchase given in section 2 (5) (a). However, the building of the houses in no way affects the rights of superior owners and cannot effect the price to be paid for the fee simple. In the section 2 (5) (a) situation the really important financial transactions have been concluded before the position becomes applicable.
Senator Molony mentioned a lease extending back to 1679 or thereabouts and said in some way the provisions of this Bill would freeze that land in the Rathfarnham area.
I said "could", not "would".
That is important. The answer to that proposition is that that cannot happen.
Why?
Are the Senators suggesting that the sale of a piece of land the purchase of it in fee simple, can be inhibited?
The owner of the fee simple can say "I will not sell".
Only in that case.
That is enough.
The answer to the question raised by Senator Molony was not in the context of what Senator Cooney is looking for.
It was.
An Leas-Chathaoirleach
The Minister has concluded the debate. The Senator may not raise another question.
Bill, as amended, received for final consideration.
Agreed to take Fifth Stage today.