Landlord and Tenant (Ground Rents) (No. 2) Bill, 1977: Committee Stage (Resumed) and Final Stages.
Question again proposed: "That section 3 stand part of the Bill."
The debate on section 3 raises the question of the definition of a flat and whether a flat should be included in conjunction with the definition of "dwellinghouses". I undertook for the benefit of Senators Cooney and Molony—I think Senator Alexis FitzGerald raised it also—to indicate the reasons for the exclusion of the definition of the word "flat".
At the time the debate was adjourned on 1 June, the House was discussing the definition of dwellings and the question of the need for a definition of "flats" in connection with the word "dwelling". "Dwelling" is defined so as to exclude "a separate and self-contained flat in premises divided into two or more such flats". Senator Cooney said that the difficulty could arise where a mews building had been converted into two residences under the same roof. He argued that in such a case the parties concerned could be left in genuine doubt as to the effect this legislation would have on them in relation to the occupation of flats.
Senator Molony said that a lease expressed to be a lease for an apartment or, for example, a gate lodge could raise the same kind of difficulty. The Senators mentioned various difficulties of determining if such leases could or would be void. However, on examination it was found that that had nothing to do with the Bill, although it would have been a valid question to ask under the recently enacted No. 1 Bill. The only significance of the exclusion of flats from the scope of this Bill is that the lessee of a flat will not come within the scope of the special five-years purchase scheme proposed in Part III.
Assuming for the moment that the lessee of a flat legally could purchase the fee simple, as I pointed out in the course of the last day's debate the expression "separate and self-contained flat" is used without definition in the various Rent Restriction Acts, 1960 and 1967, and as I understand it, the fact that the definition is not included in those Acts has not given rise to any difficulty. This is a perfectly valid precedent because the rights of tenants under those Acts are if anything more important than the rights under Part III of this Bill. Though it may not be strictly in order to discuss the exclusion of separate and self-contained flats from the No. 1 Bill, as a result of which such flats may continue to be sold by way of lease—this is essentially what the Senators appear to be worried about—to have prohibited the grant of such leases would have created serious problems because it is extremely doubtful if such flats can be sold in fee simple at all and such a prohibition would have presumed to settle that question.
In this context the definition of separate and self-contained flats is considered to be not only unnecessary but also undesirable in the present state of the development of the flats market. I think the Senators themselves will appreciate that point, being legal gentlement. This whole area has been referred to the Landlord and Tenant Commission and I understand it is also under consideration by a committee of the Incorporated Law Society in consultation with the Chartered Surveyor's Institute and the various lending institutions.
In the light of what I have said, it seems to me that the Opposition Senators may be mistaken in suggesting that the distinction is a vital one so far as the Bill now before the House is concerned. The significance of the distinction is that the lessee of the dwelling-house, depending on the kind of lease he has, may benefit under the new Purchase scheme proposed in Part III, while the lessee of the flat cannot do so.
The Bill does not purport to settle the question of whether there can be such a thing as a fee simple interest in a flat. I remarked during the course of my contribution on the last day that this is, of course, a moot question. The proposals in the Bill are designed to give the benefits of the new purchase scheme to the occupying ground rent lessees of ordinary dwelling-houses, and I appeal to the Senators to view this Bill in that light—that it is designed specifically for the occupying ground rent lessees of ordinary dwelling-houses. However, in so far as any difficulty may arise in relation to the proposals in this Bill as to whether a particular dwelling does or does not constitute a flat, the Bill provides a simple and extensive remedy, that is, the lessee can test at arbitration the question whether he has the right to purchase the fee simple or not, and that appears to me to be an equitable remedy. It appears to me to be a reasonable way out of the present impasse.
As I have said—this was reasonably raised by Senators Cooney, Molony and Alexis Fitzgerald on the last occasion—I am not in any way trying to get around the problem. I think I have met the problem with the answer I have given, and I hope the Senators will accept the explanation and carry on to the next section. I have undertaken what I said I would do: I have given the explanation as I saw it and have outlined to them the exact situation as is intended in the Bill before the House.
Senator Molony also raised the question of ejectment for non-payment of ground rent and I undertook to find out for Senator Molony when last an ejectment was ordered by the courts for non-payment of ground rent. Arising out of extensive inquiries, I can indicate that such orders are still being granted fairly regularly. One such order was granted quite recently. It is not, however, possible to get figures largely because the court staffs would not be able to say in relation to orders granted some time ago whether they dealt with a ground lease or an occupational rent. Enforcement, of course, is another matter. The Dublin City Sheriff has indicated that he cannot recollect ever having to enforce an ejectment order for the non-payment of ground rent. That answers basically the principle of the Senator's question.
I am obliged to the Minister for the consideration he has given to this point and for his explanation, which explains the matter, but he does not remove what may be a doubt in the future, but it is only a small doubt. Is the Minister aware of any official reason immediately coming to mind for using the words "or otherwise". They always strike me as dangerous words to put into a definition section because by their very nature they open wide something that it is intended to be a tight difinition. To put such general words in a general definition section seems dangerous because they open wide what it is intended to be tight. It may be just a drafting precedent.
Probably the legal draftsmen have a precedent for it. I am sure that the Senator, arising out of his own experience, will be aware of the existence of such a phrase in other legislation, and indeed in other definitions. It is a drafting precedent, I would respectfully suggest. I can see the Senator's point. "Immediate lessor" means the person for the time being entitled to the next superior interest in land held by any person whether under a lease or other contract of tenancy. The Senator is suggesting that there should be a full point there and that the words "or otherwise" might be excluded. It is a point of view, but I think the Senator can take it that in the circumstances there is a well defined precedent for the inclusion of "or otherwise". It is a matter that might be examined by the Landlord and Tenant Commission.
Question put and agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
This section has the effect of excluding any Minister of Government, the Commissioners of Public Works and the Irish Land Commission from the provisions of this Bill.
This matter was discussed in the Dáil, and I noticed that the Minister for Justice made it quite clear that he did not believe the State was being given any privilage in this regard. I certainly would agree with him in that respect.
I can understand that there are circumstances in which perhaps it would be economically very much to the State's disadvantage to bind it by the provisions of the Bill, but I feel that the section is very loosely worded to take in, perhaps, altogether too many leases granted by the State. There are very many State agencies that would come under the section and would be excluded from the provisions of the Bill. I feel that it is wrong that these people, the lessees, should be deprived of the right to buy out a ground rent where the ground rent was analogous to an ordinary tenant in a housing estate.
It also occurs to me that the State could purchase properties subject to the interest of lessees, and lessees who would previously have had the right to buy out the ground rent and acquire the fee simple of their homes would be deprived of this right simply because the State purchased the head interest. The Minister said in the Dáil that a detailed study was being carried out at that time to look into this. He said it would not be ready for Committee Stage in the Dáil but that he felt it might be ready for discussion in this House. I wonder if the Minister could give us any views, or the results that survey came up with.
The Minister gave a number of undertakings in relation to amendments that he would bring forward to the Seanad. In the main he has discharged his promises in that respect, and a number of the official amendments proposed here by the Minister for Justice directly arise from the undertaking he gave in the Dáil. In respect of the very proper point of view of Senator Molony, I should like first of all to say I thoroughly agree with him. The Minister also indicated in the Dáil that he would examine the prospect of putting the State in the same position as the ordinary citizen. In a democracy that is the way it should be. I would indicate to the Senator that the Minister, though stating that he agreed with the point of view expressed by Senator Molony, said he would undertake a study of the problem. Unfortunately, the study has not been completed and the effect of that is, of course, that the Minister cannot give effect to the undertaking he gave in the Dáil. I assure the Senator that the matter will be dealt with in the third Bill which will come before the Dáil in the first instance and the Seanad subsequently—there is no reason why the Seanad should not take it first. In the circumstances I think the Senator will have a second bite of the cherry and the problem he sees here arising out of what he says will be cured by the third Bill. I assure him that there are certain administrative difficulties arising from the requirement to bring about the conclusion he wishes.
I want to place on the record of the House the general view in relation to the special position of the State. It was generally considered that the State was not bound by statute on the basis of the old British thing that the king may do no wrong. I refer to statutes passed either before or after the Constitution of 1937, unless it was so provided by the statute in question, expressly or by necessary implication.
No expressed provision was made in the 1967 Ground Rents Act. Recently this view has been called into question and it has been decided accordingly that an expressed provision should be included in the Bill that the State, the Commissioners of Public Works in Ireland and the Irish Land Commission as set out in section 4 will not be bound by its provisions. The State under this Bill, as is the present position under the Landlord and Tenant Acts will continue to be entitled as tenant to the benefits of the legislation, which is also an inequity. On the one hand they are excluded and on the other hand they are taking the benefits. This is one of the reasons for the delay in bringing about a resolution of the problem.
However, the effect of the provision is that a ground rent tenant whose landlord is the State, the Commissioners of Public Works or the Irish Land Commission will not be enabled as a right to acquire the fee simple. Tenants of the Commissioners of Irish Lights and the harbour authorities are put in the same position under section 16 (2) of this Bill. The main reason for exempting the State from the obligation to transfer the fee simple is that the State is not involved in the business of leasing land is a lessor only as an incidental aspect of holding land for public purposes, and that to enable the tenant to acquire the fee simple on such land would give him the freedom to engage in development which would be basically undesirable in relation to the public purpose for which the land is held.
Whenever the State can divest itself of land it does so. This is particularly true where the land is to be used for dwellings. The trouble, however, is that in pursuance of this policy the State has allowed some lands to be developed which would associate it with other State activities which in the public interest requires some control to be exercised over the use of these lands. As an example, for the benefit of the House, these lands include Defence lands and airport lands. Sometimes the parties have entered into these arrangements on the clear undertaking that the State may repossess the lands if required for the national purpose.
That is the other side of the coin. The State has its responsibilities. The land is held, by definition of State ownership, in trust for the people and consequently has to be very careful about its use. In certain instances where, for example, the national interest requires it, where a national emergency arises, you might find people being deprived of their dwellings. That is the sort of problem that could arise. I hope it never will.
I accept, as I have already stated, that the State should not be given any privileges in this regard which cannot be fully justified in the public interest, and, as was indicated by Senator Molony without going over the ground again, the Minister gave an undertaking to introduce an appropriate amendment in the Seanad but unfortunately in the circumstances of the administrative difficulties involved in the extended examination, as Senator Cooney would know, other Departments would have a point of view on the particular subject. Taking all these ingredients into account I can assure Senators that the matter will be dealt with—I do not want to give a political promise in that regard—in the No. 3 Bill.
I am disappointed that the report of the survey being carried out has not yet been completed. This is going on for several months now and it occurs to me it cannot be that difficult to form a point of view. I accept completely what the Minister has said, that there are areas of special interest and the State is in a special position either for security or other reasons, but I am particularly concerned because the State nowadays I think gets involved in many areas of enterprise that formerly it did not get involved in. I would feel very hard done by if I were a tenant in a property and the Government purchased the property, and simply by the Government purchasing the property subject to my right, I lost a right to buy out my ground rent. That is something which would have no special public interest. I would urge the Minister to see that this matter is looked after. It could have been looked after in the present Bill. I am sorry that it was not.
I made this point on the Second Stage of the No. 1 Bill. It is not good enough to give the answer to queries we might ask on this side of the House that "We are looking into it and it may be included in the next Bill." This is one good reason why all the Bills should come before us together so that we will know what we are getting and what we are not getting. The Minister has already given an indication in regard to an earlier amendment that it would have been more appropriate to the No. 1 Bill. When we were dealing with Bill No. 1 we had no idea what was in Bill No. 2. Now the Minister is telling us that something is more appropriate and perhaps will be considered under Bill No. 3. It is a hotch-potch and patchwork system that is very bad and will produce bad legislation.
We are dealing with a specific problem in this Bill. The first Bill dealt with its own problem and that was dealt with successfully.
The Minister agrees that there is overlapping?
The function of the parliamentary draftsman is to do the best he can. In the circumstances, the original point raised by the Senator is acceptable while the latter part of his treatise is not quite acceptable.
I would like to make a small point, which is not really a matter for this House as much as for the draftsmen. The side notice to section 4, "Restrictions on application to State", is rather odd. Whatever about a Minister of the Government or a Commissioner of Public Works I would not have thought that the Irish Land Commission were the State. Perhaps before this Bill is printed as an Act somebody might look at this and see if it can be worded more lucidly.
I will undertake to do what I can for the Senator in the interests of sanity.
Question put and agreed to.
SECTION 5.
Question proposed: "That section 5 stand part of the Bill."
Can the Minister tell us at what stage these regulations are? The Bill cannot come into effect until the regulations have been made. The regulations have to lie for 21 sitting days before each House. Having regard to the fact that the current rumours are that the Houses will be up within the next three to four weeks how will the 21 days be achieved? Linking that with the proposed commencement date of 1 August does the Minister see the difficulty?
The Senator has answered something for me which I hoped he would have given me positively, that is the urgency of the passage of this legislation. Maybe the Senator might indicate to me that he will give me the Committee Stage if not the whole Bill today. In relation to the next query, I understand that the regulations will come into effect on 1 August. The problem arises about the 21 days. I assume they will come into effect as soon as we have an opportunity of placing them on the table of the House.
They have to lie for 21 sitting days before each House. I understand that the proposed timetable for the Dáil is that it will go into recess at the end of June which leaves about two sitting weeks left which is six sitting days. Twenty-one sitting days would be seven weeks.
My advisers refer me to the last paragraph of subsection (2) "but without prejudice to the validity of anything previously done under the regulation.
Is that not very unsatisfactory? There is no point in providing for laying them before the House if the same provision contains an exemption for anything done under it before it is considered by the House.
One can only assume that in the circumstances, if they are laid on the table of the House, nobody challenges them. There is no prejudice there.
I hope Senator Cooney will forgive me for laughing because there is really nothing more amusing than the change of spots that comes upon the ministerial leopard when he goes into Opposition. I am certain the Senator in another capacity brought in scores of Bills of this kind with provisions of this kind. Every Bill passed, I should think, in the last 50 years has had this kind of thing. However much one may regret it, one must accept that it is an inevitable part of modern legislation. There is nothing new about it.
That does not excuse it. When the Senator says that he is certain that I brought in such Bills, perhaps he would look them up.
Question put and agreed to.
SECTION 6.
Question proposed: "That section 6 stand part of the Bill."
I think the Seanad is entitled to an explanation for this particular section:
The expenses incurred by the Minister in the administration of this Act shall, to such an extent as may be sanctioned by the Minister for Finance, be paid out of moneys provided by the Oireachtas.
This is the provision for expenses and reenacts section 8 of the 1931 Landlord and Tenant Act with drafting changes and one change of substance. This is the reason I rise to put on the record of the House the change of substance. The change of substance is that the provision for the payment of expenses incurred by the Minister for Finance or the Commissioner of Valuation in the execution of the Act has been dropped and the section now deals only with expenses incurred by the Minister bringing the Act in, namely the Minister for Justice. That is basically it. It is very uncontroversial.
Question put and agreed to.
Sections 7 and 8 agreed to.
SECTION 9.
Question proposed: "That section 9 stand part of the Bill."
Subsection (1) (a) deals with the condition that there are permanent buildings on the land and that the portion of the land not covered by the buildings is subsidiary and ancillary to them. I am just trying to tie this in with section 15 (3) to deal with partly built-on holdings. Section 14 is relevant as well. I wonder if there is any need to allow specifically in this section for holdings where there is a large area of land but part of it may be non-subsidiary or non-ancillary to the buildings.
I lost the thread of this query.
Section 9 (1) (a) states that there are permanent buildings on the land and that the portion of the land not covered by the building is subsidiary and ancillary to them. I am puzzled about the position in relation to that condition of a holding where there is some land attached to buildings which could be said not to be ancillary and subsidiary to them.
The Senator mentioned section 14 so it would clear up what he means. The expression "ancillary and subsidiary", as I understand it, is used in sections 9 and 14, as mentioned by Senator Cooney, in relation to land on which there are permanent buildings and which, when certain other conditions are fulfilled, attracts the right, as I understand it, to acquire the fee simple. The expression is also used in the existing law and its effect there is to deny the lessees whose unbuilt-on land is, to return to the expression "not ancillary and subsidiary to the building", the right to acquire the fee simple. The legal Senators would know that these are called partly built leases. The only remedy available to the leases is to await the termination of the lease and then get an apportionment of the land into (a) the building plus the ancilliary and subsidiary land, and (b) the unbuilt-on land. The lessee is then entitled to get a renewed lease of the portion at (a) and consequently can also get the fee simple of that portion which, as I understand it, comes in under section 6 of the 1958 Act.
It again comes back to Senator Molony's usage of legal jargon and its meaning in relation to what we intend it to mean. I know that this is his particular hobby-horse and I say that with respect. I think that he is right in relation to the drafting of legal documents, that they should be made comprehensible and understandable. When one reads the expression "ancillary and subsidiary" one will immediately go to one's dictionary to find out exactly what the words mean. Nevertheless, there are precedents there again and the legal draftsman has an obligation to give effect to it as near the law as possible to ensure that people are not hurt.
I accept what the Minister says. There is a real problem involved here, not so much because it is difficult to draft Bills but because it is difficult to redesign the country to ensure that every house that has a garden has it right beside it. The definition of "ancillary and subsidiary" is difficult The type of problem that one could run into is where, particularly in towns, people have their house in one place and somewhere else they have a garden which has been used as an amenity to the house but might not be said to be, in the legal sense, ancillary and subsidiary.
I accept, of course, that it is hard to design a Bill like this for every type of situation. I can see this arising as a problem. It would be regrettable that the only way out of it would be for a person to divide his or her title to the property because a leasehold would include the house in one respect and a garden, maybe two doors down, in another respect. Quite frankly, I do not know of any way out of it.
There is a real problem involved here. "Ancillary and subsidiary" is an expression that has been used for a long time in this type of legislation. I wonder if the Minister's advisers could come up with some other definition that would take in the word "amenity", perhaps, or "usage" by the lessees rather than looking at the buildings and referring to land that is ancillary and subsidiary to the buildings.
Attitudes change, the demands of modern living change and consequently people's points of view change. It is fair to say that expressions like "subsidiary and ancillary" are for past times. They are not really relevant in the context of modern usage of modern English language. In the main, they are pretty irrelevant. Surely we could put something more meaningful in to express the intention? However, I would like again to give the undertaking—I know Senator Molony does not like this fall-back position but it is something that arises out of what he said—that I will have the Landlord and Tenant Commission look at the matter with a view to updating the words. I can go as far as that.
Subsection (5) gives very wide powers to the person described as the arbitrator. It says that he may disregard buildings erected in contravention of a covenant if he is of the opinion that it would be unreasonable to order otherwise. Obviously, the arbitrator, if he should so decide, can intervene between two citizens to change their relationship to each other in the matter of property, with serious property consequences. I wonder if it is a bad principle to give such wide power to an arbitrator and take it away from the courts, or if it could be unconstitutional? That is my first point. My second point is that I find it difficult to tie in the reference there to arbitrator with the provision in section 21 subsequently. Is it quite clear in section 9 who the arbitrator is?
It is fair to say that the arbitrator will be a responsible person. He will have to judge each case on its merits. While the problem Senator Cooney has raised may become a real issue, I think he can take it—the Senator would know this from his own experience—that an effort by the arbitrator to change the contractual relations between two parties might be a very dangerous thing to do. I imagine that the expression "if he is of opinion that it would be unreasonable to order otherwise" would be used with a great sense of equity and justice.
The provision in section 9 (5) corresponds to a provision in section 4 (6) of the 1958 Reversionary Leases Act and that gives the Circuit Court, as Senator Cooney knows, discretion to award a reversionary lease for good reason even though the buildings were erected in breach of the lease. That is a fairly equitable, reasonable and just proposition, that in certain circumstances a reversionary lease will be awarded despite the fact that a convenant had been broken. It seems to be a question of the degree of breakage. In all the circumstances, it seems to be reasonable.
An example for the benefit of the Seanad might be a case where the building has long been in existence with the knowledge and consent of the lessor, or had been erected on foot of a separate agreement with the lessor not forming part of the original lease. That is a clear and reasonable example of where the arbitrator might be involved. I know that Senator Cooney's point might not be adequately dealt with in my reply but I think he can take it that we just have to rely on the sense of reasonableness, equity and justice which resides in the person who is arbitrating. I assume that there is a remedy from the arbitrator.
In the Dáil Deputy O'Keefe raised the question of giving such discretion to the arbitrator—as was again properly raised by Senator Cooney—in the course of the first day's Committee Stage debate on 8 March 1978, as reported in the Official Report, Volume 304, columns 1161 and 1162. The Minister undertook on that occasion to look into the matter and to discuss it on Report Stage. He indicated in the Dáil that the provision in section 4 (6) of the 1958 Act stems from a recommendation made in 1954 by the Rents and Leasehold Commission Report on reversionary leases under the Landlord and Tenant Acts and the discretion thus given has been part of the law for 20 years.
I understood that the discretion was given to the Circuit Court under the 1958 Act. Am I right in that?
I am not arguing against the merit of giving discretion. I can see that there could be cases where a breach of convenant could be disregarded. The point I am making is if it is safe constitutionally to give the exercise of this discretion to an arbitrator, particularly when I see the fatal words "if he is of opinion". I have a recollection from student days of a famous constitutional case in which the first Offences Against the State Act fell because those words were in it.
He has his remedy in the event of not being satisfied with the arbitrator. He can appeal to the Circuit Court.
Subsection (5) of section 21.
I ask the Minister to link the references to arbitrator in section 9 with section 21.
The point about subsection (5) is that the arbitrator's discretion is limited to determining the question of the right to buy out only. This is a matter which I have not considered, quite frankly, and I do not know whether I am competent to give a proper reply to the constitutional aspect of the Senator's query. I feel I am not but if I were asked to advise on the street, off the top of my head, I would say that there is no constitutional bar to the arbitrator's powers under this section. That is an entirely off the top of the head opinion and it might not have that much merit. I think that if I pursue the matter further in the circumstances I will come up with the same answer.
Is the arbitrator there the arbitrator under the 1967 Act or the arbitrator under this Act? Who is that person?
I am advised that he is both the county registrar and the Registrar of Titles, so, effectively it might well be seen as the same situation as under the 1967 Act. I imagine that the answer to the Senator's question is "yes".
Question put and agreed to.
SECTION 10.
Question proposed: "That section 10 stand part of the Bill."
This has to do with alternative conditions which must be complied with for those who would qualify to purchase under section 9. This is just a query. Perhaps I am being stupid about it, but I cannot see the reason in subsection (2) why such a condition should be complied with. The first part is all right, "that the lease is for a term of not less than fifty years". It goes on to say:
... and the yearly amount of the rent or the greatest rent reserved thereunder (whether redeemed at any time or not) is of an amount that is less than the amount of the rateable valuation of the property at the date of service under section 4 of the Act of 1967 of notice of intention...
Would the Minister say why such a condition would have to be complied with?
I would never accuse the Senator of stupidity. I understand the rationale behind the PLV rent formula, landlord and tenant law. The valuation/rent formula was first used in the landlord and tenant law in the 1958 Act. As I understand it the situation is quite reasonable. The whole purpose of the formula is to establish that the rent is small and compared to the bricks and mortar to which it relates. It is an important element to establish this in deciding who owns the bricks and mortar interest, particularly in cases where it is otherwise impracticable to establish ownership. The yardstick of PLV/rent was first thought up by the Rents and Leasehold Commission which reported in 1954. They did not record their reasoning and it seems clear that they adopted this yardstick for pragmatic reasons. Again, pragmatism has its merits and, in this instance, it worked, it did its job. It could be said that there was no alternative since the only comprehensive register of property in the State is the valuation lists.
Surely the Minister would agree that the only yardstick as to who owns the bricks and mortar of a house is the market price paid or, alternatively, whether or not the lessee built the house himself?
Why the necessity for such a condition in those circumstances? After all, we all accept that the tenant owns the bricks and mortar where he bought the house. We are talking about a ground rent.
Again, to return to subsection (2), I understand that a new class of lessee is recognised as having the right to purchase the fee simple under the conditions of section 10. On the basis of the Landlord and Tenant Commission's second report, paragraph 68 and paragraph 120, subparagraphs 2 and 5, the lessee qualifies for the right to purchase his fee simple provided his lease is for a term of at least 50 years, at a rent below the amount of the rateable valuation at the date of service of notice, under section 4 of the Act of 1967, of the date of an application, under Part III of the Bill unless the landlord or, of course, a superior landlord, can prove that the buildings on the land were erected by him or his predecessor in title.
The commission's recommendations refer to the date of the demise as the date for comparing rent and rateable valuation. The existing law refers to the date of commencement of the actual purpose of this comparison and the Bill proposes to relate the comparison to a current date. To refer to the rateable valuation in regard to the date of the demise could result in disqualifications of a number of lessees who qualify for rights under the law as it stands, particularly of those who by improving their property since the date of the demise have put the rateable valuation above the level of the rent. In the circumstances it is not unreasonable. Senators Molony is right when he says that ownership can be determined otherwise than by reference to PLV/rent. As I understand the reading of subsection (2) of section 10, what we are dealing here with is an additional class of lessee.
If the rateable valuation of my house is £25 and the annual rent I am paying is £26, am I not entitled to purchase fee simple?
It would depend as the Senator knows on the——
Assuming I satisfy the conditions.
I am not certain what the answer to that question is. The Senator might raise it on Report Stage. It is a fairly complicated mathematical problem which would require reading in the context of subsection (2), but the Senator can take it from me that I will certainly undertake to examine on a future Stage of the Bill the question raised by him.
I do not see that it can be that complicated unless I am being stupid about it.
Maybe it is I who is being, stupid about it.
It says quite clearly "and the yearly amount of the rent or the greatest rent resolved thereunder is of an amount that is less than the amount of the rateable valuation of the property". It seems that there is not any necessity for complicated mathematical examination before the Minister can determine what the position is. I am happy if the Minister is prepared to look into it and see what the position is. There is just one other point that occurs to me. In view of the fact that rates are abolished on private dwellings, will houses have a rateable valuation? I assume at the moment that they have not. How will this condition be worked out?
I would remind the Senator that this section must be read in conjunction with section 9 and that it only requires one of the conditions——
——in conjunction with all the requirements as set out in section 9. I do not think there is that much difficulty in all the circumstances. For the Senator's information, I was approached by a number of people who expressed concerned in relation to subsection (2) and I recommended that they see the legal advisers of the Department of Justice. They were satisfied in relation to the net points they raised with me. I could not answer them frankly. I will undertake to get the Senator a reply before the conclusion of the debate on the Bill.
I accept they are alternative conditions. I am merely concerned about somebody who might qualify under one of the other paragraphs in section 10.
I take the Senator's point, which is a very reasonable one.
Question put and agreed to.
Sections 11 and 12 agreed to.
SECTION 13.
Question proposed: "That section 13 stand part of the Bill."
This very properly seeks to protect the person whose lease expires within ten years before the commencement of this Act and the person under that lease is still in possession, whether as a yearly tenant arising by implication from the acts of the parties or under a statutory tenancy under the Rent Restrictions Acts or as a tenant at will. Then we have those fatal words again "or otherwise". The section could read "where a lease expires within ten years before the commencement of the Act and the lessee is in possession otherwise than the ways set out there". The word "otherwise" could encompass a possession which would not be lawful. He might be overholding, for example. He would not then be the only tenant. He would not be a statutory tenant overholding following a decree in a strict case where the Rent Restrictions Act did not apply. He could have been out of possession and back in possession again. It seems that the word "otherwise" could give rights to a person who would not be entitled to them and who was not intended to benefit. That is the first point I want to make. Those fatal words "or otherwise" could lead to difficulties there.
The second point I want to raise is that in the case of the bona fide person who is bona fide in possession after the expiry of his lease as a yearly tenant. His position seems to be more favourable than the yearly tenant dealt with by section 15. Section 15 applies the Act to a yearly tenant who has been in possession continuously by himself or his predecessors for not less than 25 years. In other words, that yearly tenant has to have 25 years possession before he gets the benefit of the Act, whereas under section 13 one can imagine a case where a person, say, has a ten-year lease which expires and the person then continues as a yearly tenant for two years and 12 years' possession entitles him. I do not see the argument in principle that a person needs a shorter possession merely because his possession commenced with a lease than in the case covered by section 15 where a person just has possession as a yearly tenant. Perhaps the Minister can indicate why the apparent difference between the two provisions.
Again I will return to this question of "or otherwise". I take the Senator's point here. As I have already said, it is my intention to have the matter raised with the Landlord and Tenant Commission. As far as section 13 is concerned, I understand that a provision of this nature has been included in every Landlord and Tenant Act from and including the 1931 Act. Its effect is that even where a lease expired at any time up to the number of years mentioned before the commencement of the legislation—in the case of the 1971 Landlord and Tenant Act the period was eight years and in the case of the earlier Acts it was five years—the lessee shall, during the ensuing 12 months, have the same rights under Part II of the Bill as he would have had if the lease had not expired provided that he is still in possession of the property at the date of the commencement of the legislation and has not entered into any new arrangement with the lessor by way of accepting a new tenancy or acquiring the lessor's interest. The corresponding provisions in the earlier Landlord and Tenant Acts are section 47, subsection (4) of the 1931 Act, section 14 of the 1958 Act, section 3, subsection (6) of the 1967 Act and section 9 of the 1971 Act.
The point I am raising is that contrasting it with section 15, which applies the Act to yearly tenants who must be 25 years in possession as yearly tenants, section 13 allows the situation where the yearly tenant can have a lease with a much shorter length of time. Is there any reason why the figure of 25 years is fixed? Is it an arbitrary figure or is it a traditional figure?
I am not an expert in these matters but to me it seems quite clear what the reason is. Section 15 deals with the situation where one is a yearly tenant and has a tenancy agreement. This section 13 deals with various forms of tenancies arising by implication. In other words, one stays on and the landlord does nothing about it and by implication one becomes a yearly tenant or holds one of the other forms of tenancy laid down in this section. There is no specific tenancy agreement. Where there is a specific tenancy agreement there is no great problem about having as long as period as 25 years. Where it is by implication it would seem reasonable that there should be a lower limit and ten years is probably quite enough.
As the Minister says, it is 25 years.
I was going to make the point that Senator Yeats has made. That should answer the Senator's query. It may not be a satisfactory answer.
Perhaps the Minister would tell me if sections 9 and 10 apply to persons to whom section 13 applies? Does one have to fulfill those conditions?
I understand that is the situation from my own reading of it.
I am puzzled as to how they could apply because sections 9 and 10 set out certain qualifications and they would have gone when the lease expires. They would not have gone in the case of a person who carries on by yearly temporary implication but they might be gone in regard to other tenancies such as the tenant at will.
I would refer the Senator to section 13, paragraph (c):
the lessee shall, during the twelve months after the commencement of this Act, have the same right to acquire the fee simple as he would have if his lease had not expired.
That might take care of the Senator's query.
That answers it. I am obliged to the Minister.
Question put and agreed to.
Sections 14 and 15 agreed to.
SECTION 16
Government amendment No. 1:
In subsection (2) (c), page 9, line 32, to delete "fully" and substitute "substantially".
This amendment is the first official amendment. It arises directly out of a query raised by Deputy O'Keeffe on Committee Stage in the Dáil. It results from one of the promises the Minister for Justice made to the Opposition during that discussion. He said he would examine a number of amendments which could not be dealt with then and they would be dealt with in the Seanad.
In the course of Committee Stage debate in Dáil Éireann, Deputy O'Keeffe questioned the provision of section 16 (2) (c) of the Bill. He wondered whether or not the intention underlying the provision would be satisfied if the covenant mentioned in the provision were "substantially" complied with rather than "fully" complied with as is the proposed requirement. The Minister for Justice undertook to bring the point to the notice of the Landlord and Tenant Commission. The proposed amendment arises out of an ad hoc recommendation which the commission had made to him. The commission remarked that the covenants are generally construed strictly against the person who covenanted to perform particular acts. They also pointed out that covenants whereunder a lessee is obliged to build may take a variety of forms and that questions of construction depend upon the language used. It appeared to the commission that a number of lessees who would seem to have a moral right to purchase would be excluded under the provision in section 16 (2) (c) of the Bill, as it stands. They recommended that a fair compliance with the covenant to build would be ensured if “substantially” were inserted and “fully” were deleted. The provision would simply require that the covenant in question be substantially rather than fully complied with. This is what is proposed in the amendment. It is a reasonable amendment. It brings flexibility into the situation. It is no criticism of the legal draftsmen. It is as a result of a commitment given to the Opposition spokesman on Justice in the Dáil. It is fairly given and now fairly discharged here in the Seanad.
Amendment agreed to.
Section 16, as amended, agreed to.
SECTION 17.
An Leas-Chathaoirleach
Amendments 2, 4, 5 are related and amendments 6, 7 and 8 are consequential. These six amendments are to be discussed together.
Government amendment No. 2:
In subsection (2) (b), page 9, line 51, to delete "twenty-five" and substitute "fifteen".
Section 17 sets out the provisions varying on the determination of the purchase price of the fee simple where that price is being fixed by the arbitrator. Several of these provisions are based on the proposition that an expectant future income that will not begin to accrue for 25 years or more has no saleable value, that money will not be paid today for the sake of an income 25 years or more in the future. Accordingly section 17 (2) (b) directs the arbitrator to take account of the rent, which will almost certainly be an increased rent, that would be reserved on a renewal of the intending purchaser's current lease but only where that renewed rent will be payable within 25 years. Similarly, section 17 (3) excludes the benefit of the maximum purchase price under the formula in that subsection if the purchaser holds under a lease that will expire within 25 years, while section 17 (5) excludes the formula price if the purchaser's lease itself provides for payment of an increased rent within 25 years. The provisions of section 17 represent the re-enactment of corresponding provisions of the 1967 Ground Rents Act. The 1967 Act provisions relating to this figure of 25 years in turn were based on recommendations of the Ground Rents Commission. The commission had evidence that the prospect of an increased rent after the period of 25 years or longer did not affect the sale price of the rent in question.
The question was raised again in the course of the debate on Committee Stage in Dáil Éireann of the appropriateness of the 25-year period. The suggestion was made that present circumstances might indicate an adjustment of the period. The Minister for Justice undertook to examine the proposed reduction from 25 years and this is the reason for the amendment before the House. The Minister for Justice undertook to refer the question to the Landlord and Tenant Commission and this was done. The commission have since furnished the Minister with a recommendation in the matter. They remarked that when the report on ground rent was made in 1964, ground rents had a market value of 14 years' purchase representing a return on investment of 7 per cent and income to commence 25 years or more in the future had in consequence no marketable value. The commission went on to compare that situation with current conditions. On the basis of a current minimum interest rate of 10 per cent, that is ten years' purchase, the corresponding figure is just over 14 years instead of 25 years and the reversion, that is the expected increased future income more than 14 years distant, is as unlikely to attract a purchaser on the open market as was the reversion 25 years distant in 1964.
The commission have in consequence made a further ad hoc recommendation to the Minister that the relevant provision of section 17 should be amended by substituting 15 years for 25 years. This recommendation is accepted by the Minister and it gives rise to amendments 2, 4 and 5 which are related to one another and the consequential amendments Nos. 6, 7 and 8. This matter was again raised in the Dáil on Committee Stage of the debate on the Landlord and Tenant (Ground Rents) (No. 2) Bill, and again the Minister gave an undertaking to have a look at it. The time intervention between passage from the Dáil to the Seanad gave him the opportunity to refer the matter to the Landlord and Tenant Commission. They have taken all the circumstances into account and recommended that the 25-year period be reduced to 15 years. That is the reason for the various official amendments proposed by the Minister for Justice in the Seanad.
Amendment agreed to.
I move amendment No. 3: In subsection (2), page 10, lines 17 to 21, to delete paragraph (g) and substitute the following:
"( ) the price paid by the lessor in purchasing the land and the amount of the site fine paid by the lessee,
( ) the number of years in which the rent has already been paid by the lessee,
( ) the failure of the lessor to make any demand for payment of rent over a period of years,".
In general I find it difficult to see this arbitrator as one who holds the balance of power between two contending parties making equal dispensations of justice in either direction. I do not wish to delay the Committee Stage of this Bill. I appreciate the way in which the Government have to some extent amended the Bill as initiated. The purpose of this Bill is at the least to encourage tenants to buy their ground rents and at the best to abolish ground rents, and in view of what ground rent actually is and in view of the longstanding complaints against it the Government, if they are to fulfil if not the letter then the spirit of the manifesto, should weigh the Bill very heavily in favour of the tenant and encourage the tenant to purchase within the stated period. It is in that spirit that I move the amendments and would ask the Minister again to consider these amendments which were not accepted substantially by the Minister in the Dáil though section (g) was slightly amended.
I suggest that paragraph (g) be deleted. Paragraph (g) lists, as one of the considerations which have to be taken into account in fixing a purchase price, the costs of expenses which would be reasonably incurred by the landlord reinvesting the purchase money payable in respect of the acquisition of fee simple. What we have here is a proposal which runs counter to common sense. We are talking about a transaction whereby what the landlord who is being bought out proposes to do with the money has to be taken into account in fixing the purchase price. If this is a principle of law it is a very strange one. Would it apply to things like selling motor cars or selling a house? It seems to me to be a nonsense. Why should I worry about what my landlord proposes to do with the price he finally gets if I buy out the ground rent? It is none of my business at that stage.
The word "reasonably" though apparently accepted by Deputy O'Keeffe in the Dáil does not really meet my objections or go any way to meet my objections because one assumes that the arbitrator would not take into account unreasonable expenses such as was illustrated in the Dáil, a voyage to China. I would move the deletion of (g) as being opposed to sound sense and I would like the Minister to elaborate on why the Minister for Justice thought in the Dáil that if one abolishes (g) one will in some way give rise to a constitutional objection that impinges on the landlord's rights.
In suggesting that (g) be deleted I also move that the three subsections be substituted. These, too, have been discussed at length in the Dáil. I do not propose to delay on them except to say it seems to me again that among the factors which should be taken into consideration, bearing in mind that the tenant has been the victim of oppression under the ground rents system, is how much the landlord originally paid for the land and the amount of the site fine paid by the lessee because the vast majority of lessees have paid the full market value for the site at the time they purchased it. In most cases they paid more than the market value so there is a strong case for saying that the site fine represents enough compensation for the site. It is germane to consider how much the landlord originally paid for the land and the number of years over which the rent is being paid. Surely there is a vast difference between the tenant who has been paying ground rent for only ten years and the tenant who has been paying it and whose parents perhaps have been paying it for 25 years.
The last point which again was referred to in the Dáil is the failure of the lessor to make any demand for payments. The point there was that where no such demand for payment has been made for a considerable time the landlord must not think very much of the property concerned. I hope, if only that the scriptures in the manifesto might be fulfilled, that the Minister would reconsider these points.
To some extent the arguments put forward by the Senator are somewhat confused. He speaks, for example, of the tenants in most cases paying more than the market value. If a majority of people pay a certain amount that is the market value. One cannot say that most people pay more than the market value. Perhaps one or two people do but not most.
The basic objection I would have to Senator Murphy's amendment is this. The arguments he put forward were perfectly correct. They were sound and acceptable except for one little point that he omitted to put, and that is that it is not a voluntary operation. He is perfectly right when he says if I buy a house or a lease from somebody it is none of my business what expenses they may have in reinvesting it. He is quite correct. This is not such a case. This is a case where people are being compulsorily bought out. I know Senator Murphy thinks in terms of villainous Cromwellian types who have slaughtered the local inhabitants and taken over the land and set up ground rents. So far as there were such people, as indeed there were, that time is long since dead. I prefer to think of the widow whose husband has died leaving her not very well off, probably less well off than many of her tenants, but at any rate she owns certain ground rents. She has a certain income a year. She is compulsorily bought out. She has to get an alternative income. Obviously she is going to start buying shares or investing. She is going to have expenses. It would seem reasonable therefore that allowance should be made for this in order that she should be indemnified, allowing for the fact that it is not, as the Senator would be willing to suggest, a voluntary operation. It is not a case where two willing partners are coming together to agree by themselves. It is a case where somebody is being bought out. That changes the whole thing. The Senator himself takes the line that ground landlords are, per se objectionable, dishonest or whatever one might like to say and if one can kick them in the teeth one should.
Then of course one would have a constitutional problem. However objectionable certain people are one is not entitled to take their income away from them in this way. There is very little doubt that if this amendment were accepted this section would thereby become unconstitutional.
I accept that the reference to market values was ill-chosen. As for the case of a widow, I do not accept that argument. I do not know what the breakdown of ground landlords or ground landladies is. I should be greatly surprised if the typical ground landlord was a needy and deserving widow. Even if she is, let me say that she was badly advised in the first place to put her money into an unjust form of investment.
I hope the Minister will elaborate on the constitutionality of the section. I would disagree with Senator Yeats because our Constitution lays a great deal of stress on the common good and on the restriction of individual property rights. Our constitution was conceived very much in a Thomistic spirit and St. Thomas, if anyone is aware of that gentleman nowadays, greatly emphasised that property without responsibility, without personal involvement, was not moral and in that respect St. Thomas would probably agree with Proudhon's definition of property as theft and in my book property without responsibility is theft and ground rents are robbery. If one went to the court on the constitutional issue one would get short shrift from any judge who is properly aware of the common good and of the limitations on private property by the common good. My last word is if he is not then it is time we changed the Constitution.
I understand that St. Thomas is widely known. I do not know whether he is widely read or not. I have heard Senator Murphy, the respected Senator for the National University, UCC, use St. Thomas in defence of his arguments before and I do not think they are any less valid or more reasonable because of the interjection of St. Thomas. St. Thomas was very good on the common good in my limited knowledge of him and I am quite satisfied that St. Thomas would be very anxious to ensure that the widows, for whom Senator Murphy does not seem to have too much sympathy, would not suffer any hardship as a result of this legislation. There are quite a large number of widows in this community who have ground rent investments. That is an ascertainable fact and I believe St. Thomas would, in all the circumstances, take into account the widow's common good and her place in the general commonality of the good of society. She has a place there and we have to protect her against the type of thinking which is produced by Senator Murphy and backed up, according to him, by St. Thomas. That is totally unacceptable. Without any shadow of a doubt, and I am sure the legal Senators in the Seanad would help me in this regard, if we were to produce the amendment as proposed by Senator Murphy, it would be damned unconstitutional. It would have no relation to what the Constitution says, good, bad or indifferent, and the court would throw it out as quickly as the Government intends throwing it out. What Senator Murphy was very careful not to mention was that this was originally a quadrupartite amendment and that one part of that four corners was actually accepted by the Minister in the Dáil and incorporated more or less as paragraph (h). It was included by way of amendment in Dáil Éireann.
Senator Murphy's whole proposition is, in this instance, confiscatory. In this society of ours landlords have certain rights and when we were, and when indeed the previous Government were, examining this whole area of ground rents we had to take into account the rights of the landlord as much as we had to take into account the rights of the tenant. One has to balance one right with the other and in the circumstances we came up with the proper formula. If we were to include what Senator Murphy wants to include in this package under this section we would find ourselves in very serious constitutional difficulties despite all the usage of Thomism to back up his arguments. I am not being disrespectful to the Senator in this respect but I find it very difficult to rationalise his dismissal of what he considers to be a few widows in our society who have actually invested in ground rents. When we look at legislation we have to take into account our responsibilities to them in this society. That is my attitude to the proposed amendments.
The official attitude was articulated by the Minister for Justice in the Dáil and, as I have already stated, apart from one change, the amendment is similar to Opposition amendments that were moved both on Committee Stage and Report Stage in the Dáil and they were withdrawn following debate by men who are solicitors and who know the highways and byways of the landlord and tenant law. They were withdrawn after reasonable argument. If they could see their way to withdrawing these amendments on the basis of their experience, both current and past and, hopefully, future experience, then I do not see any reason why the Senator, in all the circumstances, cannot be prevailed upon to withdraw these amendments.
As I have stated already, apart from one change the amendment is similar to that proposed by the Opposition in the Dáil. The change is that the present amendment does not include one paragraph that was included in the amendment in the other House. The substance of that paragraph was accepted by the Minister and has formed the subject of an official amendment that was agreed to on Report Stage in the Dáil. It is now section 17 (2). However, the arguments against acceptance of this amendment are as valid now as when they were made in Dáil Éireann by both the Minister and by people speaking behind the Minister. These arguments were accepted by reasonable people on the Opposition side of the Dáil.
Section 17 (2) provides that the purchase price of the fee simple shall be, subject to certain provisions contained in subsequent subsections of the section, the sum that in the opinion of the arbitrator a willing purchaser would give and a willing vendor would accept having regard to a number of considerations. These considerations are set out in a number of paragraphs in the subsection. They are only a guide to the arbitrator for settling the purchase price and they are not intended to be exhaustive as paragraph (j) makes clear. Again, paragraph (j) states that such other matters are in the opinion of the arbitrator relevant to the determination of the purchase price. That is totally reasonable.
The provisions of section 17 (2) taken together comprise a package which was first set out in legislation in section 18 of the 1967 Ground Rents Act which was based on recommendations of the Ground Rents Commission, recommendations which were made with full regard to the constitutional issues involved and which were manifestly fair to all the parties concerned.
The answer to the query as to the constitutionality of the Senator's amendment is quite clear but if the Landlord and Tenant Commission accept the constitutionality of these it may be taken that the constitutional efficacy of what is proposed by the Senator does not bear examination. The amendment seeks to do two things: first, to delete one of the considerations set out in the subsection, that is, that which requires the arbitrator to take into account the costs and expenses of the landlord in investing the purchase money and secondly, to add new considerations to the list as set out. Paragraph (g) in section 17 (2), which the amendment seeks to delete, was amended on Report Stage in Dáil Éireann and the amendment excludes any possibility of unreasonable costs and expenses of investment being argued in support of an inflated purchase price. The amendment was moved by the Minister for Justice in response to arguments advanced by the Opposition on Committee Stage in that House and it removes whatever sound objections there might have been in the wording of the provision in paragraph (g) which, as has been indicated, originated in substance in a recommendation of the Ground Rents Commission and which has stood the test of experience since its incorporation in the 1967 Rents Act. To tamper with the package represented by section 17 (2) so as to weigh its provisions unjustifiably towards a lower purchase price could lead to its being held to be confiscatory and this would immediately raise constitutional problems. Deliberately to exclude paragraph (g) would be unjustifiable and would risk the consequences mentioned. On the other hand, no suggestions have come from any quarter that the corresponding provisions of the 1967 Ground Rents Act have led to any difficulty.
As regards the additional paragraphs which the amendment seeks to insert in section 17 (2), the same argument, of course, continues to apply and so far as they would tend towards an unjustifiably low purchase price they would raise the question of confiscation and of constitutionality. Clearly the only possible effect the insertion of these additional paragraphs could have would be to depress that price unjustifiably. What the lessor originally paid for the land and what the lessee paid for the grant of the lease have no justifiable bearing on the price to be paid for what has now been bought out, that is, the lessor's interest under the lease. The number of years during which rent has been paid and the question of whether the lessor demands rent are likewise irrelevant to the determination of a fair purchase price.
That, in addition to what I have already stated, answers Senator Murphy's query as to the constitutional effect of his amendment. There is no doubt whatsoever but that the courts would adjudicate negatively, that, in other words, they would find Senator Murphy's amendment to be unacceptable under the constitutional heading.
There are two general points arising out of what the Minister has said. I do not want to go back over the poor widows except to say that there are lots of widows that my heart would bleed for before I begin to bleed for widows who are in possession of ground rent. The very fact that they are in possession of ground rent argues a certain financial privilege in the first place. The other matter is the logic of the Minister's point that there are men skilled in the law on the Opposition benches in the other House who saw the Minister's point and that a fortiori I should see the Minister's point. The logic of that is, of course, that no layman——
I never suggested that Senator Murphy should see anybody else's point of view.
——should have the presumption to discuss in Committee the clauses of a Bill and certainly I am not taking that point.
On some of the points that have been raised in regard to the constitutionality of these amendments I sympathise very much with what Senator Murphy has said generally. Let me say very briefly that when I read the Fianna Fáil manifesto last year and saw that they were going to abolish ground rents I wondered what formula they were going to devise that could overcome the constitutional difficulties, but of course in the event in principle it is the very same legislation as we had before. The major problem we had when we were talking about widows or very wealthy speculators in effect does not matter because all the rights of private property are guaranteed under the Constitution.
I have referred already to some of the comments made by ACRA and made in the Dáil and again made here by Senator Murphy on the question of what a judge should do in relation to the common good. I do not claim in any sense to be a constitutional lawyer but I see great difficulties for the adoption of these amendments so far as the ultimate Act would be concerned. I believe that they would be found to be repugnant to the Constitution and I do not think there is any great wisdom in passing legislation that is bound to end up in the Supreme Court or in the High Court or in any other court and ultimately found to be wanting in that respect. If we are going to get around this difficulty we will have to change the Constitution. That is the reality of it. Perhaps we should be discussing whether we should set about doing that because there is this conflict between the interests of private property owners, or speculators, or whatever, on the one hand, and the interests of justice to other people on the other hand. One of the difficulties I suppose with a written Constitution is that you have this dilemma. Having said that much I could not support the amendments.
On a general point I would like to ask the Minister if he could give me a figure under the formula for working out the capitalised value of ground rents for a figure of, say, £20. I do not know whether he can do that now.
Later will do all right. It seems important under this section.
I will reply to that at the end of the debate on the section.
Very briefly, it seems that if the Constitution says that the State shall protect as best it may from unjust attack and so on the right, person, good name and property rights of every citizen is there not a strong case for saying that the property rights of a citizen who has been screwed for ground rent in perpetuity are violated? Is not that far greater violation than the violation of the rights of a man who gives nothing in return for investment? However, there is no point in belabouring the issue and there is certainly no point in pressing the amendment so I beg leave to withdraw it with what grace I may.
Amendment, by leave, withdrawn.
Government amendment No. 4:
In subsection 3 (b), page 10, line 40, to delete "twenty-five" and substitute "fifteen".
Amendment agreed to.
Government amendment No. 5:
In subsection (5), page 10, line 58, to delete "twenty-five" and substitute "fifteen".
Amendment agreed to.
Government amendment No. 6:
In subsection (6) (b), page 11, line 4, to delete "twenty-five" and substitute "fifteen".
Amendment agreed to.
Government amendment No. 7:
In subsection (6), page 11, line 11, to to delete "twenty-fifth" and substitute "fifteenth".
Amendment agreed to.
Government amendment No. 8:
In subsection (6), page 11, line 12, to delete "twenty-fifth" and substitute "fifteenth".
Amendment agreed to.
Question proposed: "That section 17, as amended, stand part of the Bill."
This is the end of Part II of the Bill which in effect re-enacts the 1967 provisions and extends them. Anybody to whom Part III applies for the time in which Part III will be in operation can take advantage of Part III as well. Perhaps the Minister would confirm that I am right in thinking that when Part III ends any person under Part II to whom Part III does not apply now and who wants to buy out his ground rent does it in effect under the 1967 regime and will have to pay the lessor's costs.
The Senator is absolutely correct. The situation reverts to the 1967 legislation.
So that ACRA would be right in saying that this scheme does not lead to the abolition of ground rents but is just a purchase scheme?
No: ACRA have been with the Minister for Justice on a number of occasions. They are quite happy with the provisions of this Bill. Unless the Senator has an absolute quote I do not think that ACRA ever made such a far-reaching statement. When we were in Opposition a year ago we had many meetings with that very responsible group of people and we listened with great attention to what they had to say. Much of what they brought to our attention then has now been incorporated in both the No. 1 and No. 2 Bills. Naturally the Minister for Justice would be concerned to get ACRA's viewpoint in relation to the No. 3 Bill in time, and that is as it should be. There should be continuing consultation between the State on the one hand and the representatives of the combined residents' associations on the other. Therefore, I do not think the Senator is right but if he can give me a direct quote I will do my utmost to reply to him. I have a document from ACRA and I have no doubt that the former Minister for Justice, Senator Cooney, will be raising the contents of that document in due course. I was looking through this document with great attention. I was ticking off and comparing like with legislative like and was pleasantly surprised to see that much of what this document seeks has been provided for in this and other legislation. The Senator might pick something out of the document which, by inference, would give substance to what he said, but I do not think he can substantiate it unless, of course, Senator Molony will produce the statement and then I am really in trouble. But, either in Government or in Opposition we are too good to be in trouble. ACRA and ourselves are deeply devoted to one another.
I was surprised to hear the Minister say that ACRA were entirely satisfied with the legislation.
We cannot satisfy everyone.
The Minister has said that their attitude should be put on the record of the House. Everybody in the House has got a copy of ACRA's reaction to the Landlord and Tenant Bill as passed through the Dáil. I do not want to read the whole submission——
Read the whole submission, because you might be selective in your reading.
I will read the whole submission then:
We enclose a copy of the ACRA document dealing with Ground Rents which was circulated to TDs recently.
It would be appreciated if you would ensure that the contents are enshrined in legislation which is due to become law on the 1 August 1978.
We do appreciate that some of the requirements are conceded—however the Bill still falls far short of what our members demand. The main points——
Would the Senator come back to the original part of it?
I am reading the letter that I received from ACRA.
Is this entire submission related to section 17?
Some of the points are. The Minister did ask me to put on the record of the House what ACRA's reaction was, and I feel I should do so at this stage.
Yes. Some of them are very pertinent to section 17. I was just going on to list the points with which ACRA were concerned. These were, and I quote:
The main points where the Bill falls short of ACRA's requirements are in the following areas:
(1) No account taken of what the householder has already paid by way of site fine, ground rent, paid to date etc.
The second paragraph does not seem appropriate to section 17 but the third paragraph would seem to be relevant. It is as follows:
The Government scheme as we see it is only a purchase scheme and not one that leads to the total abolition of ground rents.
That speaks for itself as far as ACRA's general reaction to the legislation is concerned. The other paragraphs are concerned with later sections, and I shall certainly be pleased to oblige the Minister and record them when the occasion arises.
I would be delighted to listen to them. That is a selective reading of——
If the Leas-Chathaoirleach will allow me I will put the entire submission, the original and the follow-up letter, on the records of the House.
The Senator has said that ACRA are concerned. I do not want to ask Senator Molony how many meetings he has had with ACRA. It would be unfair to expect a reply from him, because I believe he has had none.
Does the Minister wish to ask me?
No. I am answering rhetorically. In the circumstances you will find that the relationships between Fianna Fáil in Opposition and ACRA and Fianna Fáil in Government and ACRA are very good. What the Senator is trying to do is to drive a wedge between these harmonious relations. I can see a lot of damage arising out of his attempt to do that.
I protest, because all I have done is as the Minister requested.
An Leas-Chathaoirleach
The Minister is in possession.
It was at his request and invitation that I read into the records of the House a letter I received from ACRA, no more and no less. I did not comment on it.
That is even more naïve than I expected. The Senator did not comment on it but he did say that the ACRA observations spoke for themselves. That is, by definition, a comment. In the circumstances I am very surprised at the Senator's——
The Minister seems very sensitive to what ACRA have to say.
The Senator is quite right. We are very sensitive to what ACRA have to say and we are very sensitive to what any other organisation have to say on any legislation.
Does the Minister accept what ACRA have to say?
I accept that ACRA are concerned as we are concerned to facilitate them as best we can in all the circumstances. I do not want to engage in badinage. It would not improve the debate.
Question put and agreed to.
SECTION 18.
I move amendment No. 9:
In page 11, line 20, to delete "five" and substitute "ten".
This is the section that limits to five years the opportunities that people will have to avail of the bargains as the Minister for Justice described them. There are a number of points that arise in this. Our amendment is to increase this period from five to ten years. There are practical as well as policy reasons for our thinking that this amendment should be adopted.
In the first place we did not produce the figure which was given by the Minister, that was, that there were potentially 250,000 tenants who because of the passage of this legislation would have the right to buy out their fees simple. From a practical point of view if the Land Registry are to deal with that number of applications during a period of five years they will have to deal with an average of 1,000 applications per week. Candidly if it happens—there are complaints about the Land Registry already because they are understaffed and inevitably slow in dealing with their work as a result—that there are an average of 1,000 applications per week during the next five years or during the five years commencing 1 August there will be, perhaps, a complete standstill in the operations of the Land Registry.
I accept the desirability of getting this done as quickly as possible and if it is limited to five years I accept the argument that people are more likely to be alive to the situation. However, a five-year period is altogether too short for the job that will have to be done. The second point that arises on a matter of policy goes to the root of the whole thing because if ground rents are to be abolished the reality is that you make it compulsory for people to buy out their fees simple. The alternative to that is to adopt Senator Murphy's approach and that is throw the situation wide open but I acknowledge that there are constitutional difficulties involved here. If Fianna Fáil are to be true to their promise and introduce a scheme that will lead to the abolition of ground rents they must ensure that at the end of this five-year period all ground rents have been bought out. If you accept that and say that there are 250,000 potential applicants, a limit of five years is grossly impractical and will cause unnecessary and endless difficulties in the Land Registry. A period of ten years might not even prove to be adequate because in those circumstances the average number of applications would probably be 500 per week. The reality is that it must be extended to at least ten years and possibly may have to be extended after that.
Senator Molony must know that even Fianna Fáil cannot compel people to buy ground rents.
Question put: "That the words proposed to be deleted stand."
The Committee divided: Tá 27; Níl, 18.
Tá
- Brennan, Séamus.
- Brugha, Ruairí.
- Cassidy, Eileen.
- Conroy, Richard.
- Cranitch, Micheál.
- de Brún, Séamus.
- Donnelly, Michael Patrick.
- Dowling, Joseph.
- Ellis, John.
- Goulding, Lady.
- Hanafin, Des.
- Harney, Mary.
- Herbert, Anthony.
- Honan, Tras.
- Hyland, Liam.
- Jago, R. Valentine.
- Kiely, Rory.
- Kitt, Michael.
- Lambert, C. Gordon.
- Lanigan, Michael.
- McGlinchey, Bernard.
- McGowan, Patrick.
- Mulcahy, Noel William.
- O'Toole, Martin J.
- Ryan, Eoin.
- Ryan, William.
- Whitaker, Thomas Kenneth.
Níl
- Blennerhassett, John.
- Butler, Pierce.
- Connaughton, Paul.
- Cooney, Patrick Mark.
- FitzGerald, Alexis.
- Governey, Desmond.
- Harte, John.
- Howard, Michael.
- Kennedy, Fintan.
- Kilbride, Thomas.
- McCartin, John Joseph.
- Markey, Bernard.
- Molony, David.
- Moynihan, Michael.
- Murphy, John A.
- O'Brien, Andy.
- Reynolds, Patrick Joseph.
- Staunton, Myles.
Tellers: Tá, Senators W. Ryan and Brennan; Níl, Senators Reynolds and Harte.
Question declared carried.
Amendment declared lost.
Section 18 agreed to.
Sections 19 and 20 agreed to.
SECTION 21.
Question proposed: "That section 21 stand part of the Bill."
I have a query on section 21(3) which reads:
The Registrar of Titles shall determine the application by arbitration.
I should like the Minister to tell me who will pay the lessor's cost of contending in such cases of arbitration. Presumably this is a case where the fee simple cannot be vested by consent and the lessor is rejecting the application or querying the right of the lessee to have the fee simple vested in him and the matter as provided in the section goes to the Registrar of Titles for arbitration. That could be a long procedure and there might be serious property rights involved. The lessor might decide to be legally represented. The question then is: who pays the lessor's costs on the arbitration? I take it that it will not be the Registrar of Titles or the lessee because under this section the lessee's fee is confined to £12 in accordance with section 21(1). The question arises: does the lessor have to pay his own costs on the arbitration? If so, does that not in effect represent a considerable reduction in the purchase price coming to his hands? Is there not an element of involuntary confiscation introduced into the procedure?
I understand that the point made by the Senator, in other words the suggestion of involuntary confiscation, was examined very thoroughly and it does not arise. The advice is that the constitutionality of this section does stand up. In relation to the net point, who pays the lessor's costs. I understand that the lessor pays his own costs in the circumstances.
Is there any question of costs following the event, or will the arbitrator have any discretion to award costs arising out of the proceedings before him?
I imagine that the arbitrator would examine the particular case on its merits and would adjudicate there and then. Consequential costs, as far as I understand the situation, may well not arise.
The point I am making is, will the costs follow the event? In other words, will the successful party get his costs against the unsuccessful party, or can the arbitrator award costs?
It would be a matter for the reasonableness of the parties. In certain circumstances I would envisage that if there was an unreasonable attitude taken by one or other of the parties, the arbitrator would be bound to take note of the attitude of one or other of the parties and award costs. The Senator's point is reasonable. In circumstances he should appreciate that the section will be operated with a sense of proper justice to the individual case as it comes before the arbitrator.
Question put and agreed to.
SECTION 22.
Question proposed: "That section 22 stand part of the Bill."
This is a long section and there are some comments of a general nature I should like to make to start with. If the Minister has no objection there may be other points arising out of his reply.
Section 22 introduces the idea of a vesting certificate. This is a very good idea because it can cut out a lot of unnecessary investigation of tying up of intermediate and original interests in the title. There is provision for a vesting certificate which will be issued by consent of all the parties involved. That presents no problems. There is then a vesting certificate which can be issued subject to arbitration, and which will be issued following arbitration. So far as the giving of notice to people who have intermediate interests in a title is concerned, the only obligation is to serve notice on people who appear to have been the owners of an estate so far as is reasonably practicable. Perhaps that is just about as far as one can go.
My main concern is that there is no obligation on the holder of a vesting certificate to register that vesting certificate either in the Land Registry or in the Registry of Deeds. Subsection (3) of section 22 provides an out for these people in that it declares that:
The vesting certificate shall be deemed to be a conveyance on sale for the purpose of sections 24 and 25 of the Registration of Title Act, 1964, and shall be deemed to be an instrument in the prescribed form for the purposes of section 51 of that Act (which provides for transfer of registered land).
That, in effect, would absolve somebody from the necessity of registering their newly-found title, or this new branch of title, which goes to the very root of the tree, because in itself it will transfer to the tenant the fee simple. I accept that it is sensible to find a way around the cumbersome and involved investigation and the bringing together of the various interests that may lie in the title, but I am very concerned about one point. For example, if somebody is the holder of a vesting certificate and, therefore the owner of the fee simple, what is the position of someone who carries out a search in the land Registry or in the Registry of Deeds for a nonregistered property and discovers that the interest lies with—whoever it may be? Presumably it will lie with the previous ground landlord.
Provision should have been made to make the registration of vesting certificates compulsory, not so much to protect the tenant but to protect, for example, someone to whom the tenant owes a substantial debt. He carries out an investigation in the Land Registry and discovers that such and such is the case. Somebody may wish to see if, for example, I am a landlord and have an estate in this city where all the tenants have acquired the fee simple by way of this vesting certificate, but none of them has registered his vesting certificate in the Land Registry or in the Registry of Deeds, in the case of unregistered land. If I tell someone I am the owner of X number of ground rents, or I am producing evidence from the Registry of Deeds that I am the owner of deeds, there is no change in the Registry of Deeds and the vesting orders being issued. On Second Stage the Minister said that was desirable, but I wonder should it not be compulsory. We have a system at the moment in the Registry of Deeds where you can rely implicitly on the results of any search carried out there, and the effect of this legislation will be to put in question the validity of searches in the Registry of Deeds.
I note the Senator's concern. On Second Stage I raised the very point the Senator raised and dealt with it adequately, I hope. It is a reasonable question and therefore I would hope the reply would be equally reasonable. I understand that in the event of the registration of title issue which might be raised, the following is the reply to the Senator's questions. As the Senator rightly pointed out, the Bill does not compel purchasing tenants to register renewed titles. He is saying that perhaps there should be an element of compulsion in the Bill. However, I think he would agree that despite the fact that the title is not registered does not necessarily make the title useless.
It does the opposite, the title is guaranteed, I accept that.
It will be a perfectly good title whether the house is built on registered or unregistered land. Section 22 (1) says it will be a statutory title declared to "operate as a conveyance free from incumbrances of the fee simple and of any intermediate interests". In addition it is proposed to keep separate registers of such certificates and of arbitration. In these two regards the vesting certificate will be a better instrument—I think that is the point the Senator wishes me to bring out.
I think we misunderstand each other. I accept that the vesting certificate of itself will transfer the fee simple. There is no doubt about that. It is a statutory title. It is as sound a title as you will be able to get. What I am concerned with is the fact that there will be loose ends left in the Registry of Deeds. Take, for example, the tenant in a house presently registered in the Registry of Deeds in a leasehold title, who buys out the fee simple. There will be a register kept of vesting certificates. I accept that but it is a bad principle to change the Registry of Deeds, on which for many years one had relied for a precise position on a title. Now that will no longer necessarily be the case. Nobody likes to make anything compulsory. If anybody buys a fee simple property in the market today, his title is not guaranteed and he has not got priority over any other interest, until he registers it. That system of registration has guaranteed not just the title but our whole system of conveyancing. The creation of a new register is fine in its own right, but I cannot see any reason why the issuing of vesting certificates should not or could not be registered in the Registry of Deeds. Only by doing that will you ensure that the information presently available in the Registry of Deeds is complete. Otherwise the information someone will get in the Registry of Deeds will not only be misleading but will be wrong.
I take the Senator's point.
Why not have it compulsory?
The Senator is right when he says it is not desirable to have compulsion in this context.
Nevertheless in the circumstances it might be right that there should not be compulsory registration. A point was made that another purchaser—and perhaps this might answer the Senator's question—could acquire title to the property if the vesting certificate has not been registered in the Registry of Deeds. That is an unreal proposition. I do not think it could happen. There would be no question of the second purchaser getting possession of the house which, of course, is not the landlord's to sell. If only the ground rent was being sold to him he has no security for it, while the former tenant had his statutory fee simple. Why the second purchaser should purchase such a property is beyond my comprehension in many ways.
If registration were to be compulsory it could only be justified on the basis of giving the service free and this was fully considered both in the context of Senator Cooney's Bill, as I understand it, when he was Minister for Justice, and the present one. I do not think it was ever the intention to give such a service. As pointed out some time ago, this Bill proposes a reduction to minimal proportions of the legal cost of purchase. The Government's financial commitment is substantial and there can be no question of having the taxpayer also footing the bill for registration, either in the Land Registry or the Registry of Deeds. The physical impact of having to register as many as 250,000 extra cases over five years could not be achieved.
It does not seem to bother the Minister or the Land Registry.
In this respect I would like to apologise to the Senator for not replying to his amendment seeking to delete "five years" and substituting "ten years". I had an obligation to reply to him on that aspect of the Bill and I will give a more comprehensive explanation as to why it was unacceptable in the circumstances. On Second Stage I asked the Senator to put down an amendment in the terms set out in his proposed amendment, and I did not have the courtesy to reply to him. To be quite frank, the reason I did not reply was that my attention was distracted on that occasion.
Section 22 provides that the vesting certificates shall be for all intents and purposes a transfer of registered land and it will be subject to compulsory registration. I am wondering how the mapping problems will arise if the holder of the vesting certificate presents it for registration. To complete his title he must have it registered because it is subject to compulsory registration. What will the Land Registry say to him if he presents them without a map, or will the arbitrator in giving it to him provide for a map to be attached to it?
In the circumstances the arbitrator might provide a suitable map. I cannot see any difficulty arising on that point and it would be for the arbitrator to adjudicate in the circumstances.
That would be very satisfactory. Could the Minister indicate in regard to subsection (4) what other documents the registrar may require to provide for registration?
Subsection (4) proposes that where a vesting certificate is issued in a county with compulsory registration, the registrar would initiate the registration of the vesting certificate. The subsection implies that the vesting certificate will not simply be given to the purchaser in those cases but the purchaser, besides complying with the other requirements of the section, will also be asked to lodge whatever additional documents are necessary to procure registration of the vesting certificate.
Normally to register one lodges the transfer, and other documents arise only in the case of first registration or where equities are being discharged and earlier title has to be gone into. In this case section 22 (1) provides that the vesting certificate will convey a fee simple free from encumbrances, so the earlier title is not relevant. I am puzzled as to what documents could be required by subsection (4).
The arbitrator might find no additional documents are required, but if he does I am sure the parties would agree to the acceptability of his decision in the matter.
Perhaps one of the documents he will require will be a map.
That is a point. In those circumstances the arbitrator would call for a map to be added to the vesting certificate.
On the registration question I wonder whether there should be any significant cost involved in this. The Land Registry will be dealing with these vesting certificates. Would it not be possible for the Land Registry to communicate with their own registration department and with the Registry of Deeds on the question of those properties or those tenants in respect of whom vesting certificates have been issued, and let the Registry of Deeds in their own time close off the history of title that exists in the Registry of Deeds or in the Land Registry? I am very disturbed about this because people rely on these institutions and the information there is going to be misleading and wrong. I would urge the Minister to consider that point and perhaps on Report Stage bring about a change. It is a pity to see an institution like that being abused.
When the Senator said that "people rely on these institutions", he did not mean "people", he meant solicitors.
Solicitors know their way around. Every solicitor will know the moment this Bill is passed. If you are selling a premises the solicitor knows all kinds of searches have to be made. He has to see where the drains are, if somebody has a right to dig up the back garden or to lay a cable or something of this kind, or if there is a right of way. He looks up those things. If he does not he can be held for an action in negligence. After this, any solicitor buying or selling ground rents or similar leases knows he has to look in the registry and see if a vesting order has been made. If he does not do that then his client can sue him for negligence. I do not see any problem there. That will be another chore for solicitors—perhaps another telephone call or visit—but it is not a very serious matter. To require general compulsory registration at the expense of the taxpayer would not be in order. I do not think we need worry too much about giving solicitors more work.
Now that Senator Yeats has made that point, let me say that a search is carried out at a cost. This means an additional cost to every house purchaser or every person selling a house ad infinitum. Every time there is a change of ownership there will be a search carried out in this new register of vesting certificates. This will mean additional work for solicitors, but there will also be stamp duty costs and a search fee cost which will be passed on to the solicitor's client. I do not think that is a good enough reason to destroy the inviolability of the information one gets from the Registry of Deeds. It is a pity to have a situation in which a search carried out in the Registry of Deeds may be imperfect. I accept that it is largely solicitors you are dealing with and in that sense I do not think all our conveyancing is going to be turned upside down by this.
I am approaching this in a practical way, and in a way that I think solicitors would like it to be approached. Nowadays there are people who try to convey their own property. Whether you are talking about a private individual, solicitors or anybody else, it is a general principle that the fewer institutions involved the better and the simpler the system the better. We are talking about a very small cost—the cost of registration. The cost of a memorandum is £4. The cost of a search—it depends on the amount of searching involved—would certainly be £3 or £4. It would be simple, practical and would maintain the reliance that solicitors and private individuals place on the Registry of Deeds searches.
Question put and agreed to.
SECTION 23.
Question proposed: "That section 23 stand part of the Bill."
I would like an explanation from the Minister on this. If the application of a person applying to buy the fee simple is contested by the ground landlord the applicant, that is the tenant, has to pay fees of £17 to obtain his vesting certificate. He now has his vesting certificate but that does not complete his title. He has to register his title to comply with the provisions of the Registration of Title Act, 1964 because it is only on registration that his title becomes total. He then has to go to the registrar to register this vesting certificate. I have no doubt that the first thing the registrar will direct him to do is to get an accurate map of the property, certified by a competent engineer and drawn to a sufficient scale to identify the property. The cost of this map will not be less than £15 or £20 and it could go as much as £35. We will take a mean figure of £20. An extra £20 has to be added to the £17 he has paid for the vesting certificate. In addition subsection (3) says that:
With the exception of fees fixed in respect of the cases mentioned in sub-section (1)
that is, the £5 and £12
the fees shall, so far as possible,
the fees to be charged by the registrar for registering the vesting certificate
be so fixed as to meet the full cost of dealing with the relevant application.
There is an unknown fee still to be paid by the person getting this tremendous bargain. He is already liable for up to £17, £20 for a map, plus an unknown fee yet to be fixed. In accordance with the normal practice of Land Registry law the Land Registry has to be self-supporting financially and it is provided in this legislation that that principle be continued and that the fees fixed shall meet the full cost of dealing with the relevant applications.
I would be glad to know if the Minister at this stage has any idea of what the level of fees will be for registering vesting certificates so as to complete the title of the people who buy out their ground rents compulsorily. As I indicated, they already have had to pay up to £17 for the vesting certificate, plus £20 for the map, plus any other documents which may be required by the registrar—I do not know what they might be but they could be expensive. He would also have to pay the fee to the Land Registry, a fee which must be the economic cost of that particular dealing. I would like the Minister to give us some idea what the level of these fees will be. The Minister indicated on Second Stage that extra staff have been, or are in the course of being, recruited into the Land Registry. I would be grateful if he would tell us the number of staff involved, the annual cost of such staff and where they are going to be housed. I do not think there is any more room in the Land Registry. I may be wrong in that, but I understood it is already overcrowded. Are they going to be housed in the Land Registry or will they be in some other building—I recall that some parts of the mapping section of the Land Registry are already housed in other buildings—and if so, what will be the cost of these extra or new buildings? Then we will have some idea of the cost to the State of this new procedure. That cost has to be recouped from the applicants. When the person's title is finally registered, this cheap scheme might not be as cheap as he was originally led to believe when the question of the simple £5 note was being dangled in front of him. It was only the beginning of the story.
As I already stated, the Minister for Justice in the Dáil and elsewhere mentioned that the fee to be taken by the Land Registry for the issuing of the vesting certificate under section 22 in cases where the applicant is in occupation of the dwelling-house will be £5, and for an arbitration under section 21 it will be an extra £12 where the applicant is in occupation of the dwelling-house and where there may be some contest over it. In those circumstances the Minister for Justice described the fees and the general purchase of the ground rent as the bargain of a lifetime. This does not apply to Senator Cooney's point but I think it highlights one of the basic principles involved in this piece of legislation.
In other words, to buy out your fee simple it is £5 if it is uncontested and if there is some question about it there is an additional £12, £17 in all, which I regard as an extraordinarily reasonable figure. The fees fixed by subsection (1) are, as I have mentioned, little more than nominal and will involve support from State funds for purchasers in occupation who apply under Part III. However, no case exists for extending that financial support to ground rent tenants of dwelling-houses who are not in occupation and who wish to purchase the fee simple. Such persons in relation to the dwelling-house in question are in a position quite different from that of the ground rent tenant who is concerned to obtain the full ownership of his own home.
The non-occupying ground rent tenant stands rather in a business relationship to the property and has the option of acquiring the fee simple under the 1967 Ground Rents Act procedure. It is of some interest in this connection that non-occupying ground rent tenants in certain cases are excluded from the right of purchase under the 1967 Act and are now being given the right under the proposals in Part II of this Bill. The change arises from the deletion of section 3 (2) (d) of the 1967 Act that in certain cases the property must comprise a tenement. One of the requirements of a tenement is that a tenant is in occupation of the property. This requirement in this instance is being dropped, and accordingly non-occupying ground rent tenants who apply to purchase the fee simple through the Land Registry should be subject to the ordinary rule that the Land Registry, as Senator Cooney quite properly pointed out, must be self-supporting in its operation. Therefore, subsection (3) proposes in effect that the fees payable by such applicants shall as far as possible be fixed so as to meet the cost of dealing with the applications. What that cost will be will have to be estimated to begin with and corrected later, if necessary, on the basis of experience.
Subsection (2) includes provision for fixing the fees and if necessary varying, so I cannot answer the Senator's question in relation to the exact amount of the fee that will be required. That will be worked out, I understand, from the experience of day to day dealings between the individuals concerned, but I assure the Senator that these fees will be kept to a very minimal figure in all the circumstances.
The Senator also raised the question of the number of additional persons who will be taken on to perform the functions of the requirements of the Bill. He also raised the question of accommodation for those people and the cost. I am not certain whether they are available but I assure him that in all the circumstances the number of people who will be inducted into the section will be adequate to deal with the number of applicants during the next five years.
I understand that more than 50 extra posts sanctioned recently to deal with the general situation have been or are in the course of being filled in advance of the operation of the scheme. Eight to ten posts have been sanctioned and are being filled for ground rents work alone. The Senator might regard that as a beginning. Altogether 50 extra posts to deal with the general situation have been sanctioned and are in the course of being filled and in the advance of the operation of the scheme under the Bill, eight to ten posts are being created.
Will the applications be dealt with in the Land Registry building?
I assume they will; but, as the Senator says, this is a physical problem—you can only have so many people in a room.
This Bill is to come into force on 1 August.
I understand that initially it will be housed in the particular building but that, with the expansion and so on of the operation of the scheme, I think extra accommodation will have to be arranged. Initially, I understand, the building itself will be utilised for the extra induction of staff immediately. If there is any increase in the staff and physical difficulties arise and consequently alternative accommodation will have to be arranged, I understand that separate accommodation outside the Four Courts area will be arranged.
For this specific purpose or for generally——
For both purposes—for Land Registry and other work.
Does the Minister seriously expect that eight or ten people will be able to deal with an average of 1,000 applications a week or does the Minister believe that the Land Registry will handle 250,000 applications in the next five years in respect of this?
This is our objective. We have set out quite clearly that——
The facilities are not being provided.
One must see these figures in the light of the beginning of the operation of the scheme. When the scheme develops and when the general public, the 250,000 ground rent lessees, come to know that there is a scheme in operation which they can take advantage of, I think you will find that the scheme will work very well. All we can do is gain experience from experience. We can do no more, no less than that. We are going into an entirely new area, as the Senator will appreciate, and we have to work out from the ground as it were. After that we will just expand according to the requirements.
Would the Minister tell us whether he is prepared to find some other scheme that would lead to abolition of ground rents if in, say, 12 months only 25,000 people had applied or in two years time only 50,000 people have applied. This, it seems to me, should mean the abolition of ground rents within five years. You could examine it in 12 months or in two years and say "We have 250,000 potential applicants but only 50,000 have applied." Will it be reviewed in these circumstances?
Of course it must be reviewed if, for example, the scheme is found not to be working for some reason or other. We say, of course, that the scheme will work perfectly. We believe we can achieve that perfection. What we are saying is that in the light of our experience we will adjust the scheme to ensure that every individual holder of a ground rent or applicant who seeks to buy out the fee simple will be notified. All we can do is to bring continually to the attention of the people, the public—the 250,000 people the Senator has mentioned—the proposals in this scheme. There is no compulsion on the Government or indeed there is no requirement in the Bill to catch somebody by the neck and tell him "Come on up to the Land Registry, get your vesting certificate and buy out your ground rent". We cannot do that. After the operation of the scheme for 12 or 18 months we will see how many people have availed of the opportunity of this bargain of a lifetime. If those people can see that they are being given the bargain of a lifetime we will try to give it to them as best we can and we will try to give them the knowledge and the information they require to see the advantages of the scheme.
The Minister therefore accepts that this scheme may not lead to the abolition of ground rents. Would the Minister accept that this scheme may not lead to the abolition of ground rents. I must put it to the Minister that if in the course of the next five years we do not have 250,000 tenants applying to the Land Registry we will still have ground rents. Therefore, this purchase scheme will not in effect lead to the abolition of ground rents. Does the Minister accept this?
No, I do not. For example, if people do not buy out their ground rent then they continue to exist, but I stand my ground in respect of the effects of the Bill. I say this without any qualification whatsoever. What the Senator's side are saying is that the Bill will not resolve the ground rent situation.
It is our obligation to ensure that it will. All we can do is to make the public aware of the benefits of this Bill. It is up to them to decide whether they will accept the opportunity and advantages provided by the Bill.
As long as the Minister will acknowledge that his obligation, or the obligation of his Government, is to bring about the abolition of ground rents I accept what he says. I put it to him that this scheme will not do it. We will wait and see, because time will unfold the answer.
This is what it is all about. I thoroughly agree with the Senator. Time will unfold the answer.
The Government's obligation exists completely to abolish ground rents.
If the scheme is taken advantage of by the public the provisions of the Bill are quite clear and the opportunities are there and the obligation is on us, the Government, to indicate the advantages of the scheme. If people decide that they do not want to take the opportunities provided in the scheme that is a matter entirely for themselves. We are, after all, living in a democracy.
In those circumstances the scheme will not lead to the abolition of ground rents.
In the case of a person who has a vesting certificate from the Registrar of Titles and who wants to register that vesting certificate in the Land Registry so as to perfect his title, will that person have to pay Land Registry Fees on that application.
If my information is correct the cost of the registration of the vesting certificate in the Registry of Deeds will be £4. The cost of registration of a house valued £20 in the Land Registry would be £5.50. The cost of transfer from leasehold register to freehold register of land with a ground rent of £10 would be £12.90. The cost of registering a fee simple of a house valued £20 on registered land would be £5.60.
The Minister is reading that from the existing Land Registry fees.
These are the fees that will apply, and they will have to be paid by the purchasing tenant when he sends his certificate to the Land Registry for registration.
Question put and agreed to.
Sections 24 and 25 agreed to.
SECTION 26
Amendment No. 11 is consequential and may be taken with amendment No. 10.
I move amendment No. 10:
In subsection (2), page 14, lines 3 and 4, to delete "for the period of twenty-five years from the date of the lease or"
This is in connection with the position of local authority dwellings. In the Bill which fell with the last Dáil, local authority dwellings were excluded. I will not go into the argument now as to why they were excluded because I made those arguments on the Ground Rents (No. 1) Bill. My successor has now taken the view that local authority dwellings should be included. That is fair enough—it is the argument on which it balances: he has come down on one side and I came down on the other. What I am anxious to ensure is that when the Minister decided to include local authority dwellings and announced to local authority tenants that they would be included, they should be placed on exactly the same footing as all other purchasing tenants. However, in the Bill they are put in a different category for 25 years.
I seek, by my amendment, to exclude this question of making their purchase terms different. I want to exclude any conditions hanging over them for 25 years and I want to put them on exactly the same footing as all other purchasing tenants. The question is whether they should be in totally or not in at all. My view is that if they come in it should be totally. I reject the Minister's compromise as drafted in the Bill. My amendment is drafted to clear the matter.
I do not want to appear unreasonable to the Senator, and I agree that he felt that local authority tenants in all the circumstances should have the same rights as the citizen who owns his or her own house. I do not want to raise that argument again. In all the circumstances the amendment proposed is not acceptable. The Chair has said that amendment No. 11 is consequential. As I understand it, Senator Cooney, speaking on the Second Stage of the Landlord and Tenant (Ground Rents) Bill, 1978 indicated that he did not agree with the principle of selling local authority houses in fee simple because of the cost to the community of the provision of such houses and the likelihood that they would pass completely from public control. To say the least of it, it is unusual that this amendment should be raised in the light of the Senator's philosophy. Senator Molony did not agree with Senator Cooney on that occasion. This subsection as originally proposed provided that the 25-year period would be calculated from the date of acquisition of the fee simple by the purchaser. It was proposed at Committee Stage in the Dáil and accepted by the Minister for Justice that the public interest could be satisfactorily protected by allowing the 25-year period to operate from the date of the original leasing by the housing authority rather than the date of acquisition of the fee simple by the purchaser.
This is really a significant and reasonable breakthrough. The result of the amendment in the Dáil to that section is that the present owners of thousands of local authority houses will be able to obtain the unfettered fee simple interest in the dwellings where the houses were sold by local authorities more than 25 years ago and payment of the purchase price has been fully discharged. I think that the Senators would agree that having regard to the cost to the community of local authority houses to which Senator Cooney previously alluded, and also the fact that because these houses are sold on subsidised terms to tenants, it is only reasonable that local authorities should be in a position to ensure that the houses will continue to be used as normal dwelling-houses and that a tenant purchaser does not resell his house at a profit and then apply to a local authority to be rehoused.
They are not being put on similar terms as ordinary ground rent tenants. I went for the other way, the Minister for this way. Be honest about it and go the whole way.
I think it is reasonable in the circumstances of the expenditure of public moneys by local authorities.
That was my argument for excluding them.
The circumstances are that the local authorities should have the right to have a hold on the houses for the period suggested. I should like to make it very clear that the proposal in the amendment by the Minister for Justice in the Dáil that the public interest could be satisfactorily protected by allowing the 25-year period to operate from the date of the acquisition of the fee simple by the purchaser is a considerable breakthrough. It goes away basically from the intention of the Bill as originally drafted. In the nature of things I do not think many tenants will be adversely affected by the section. It is a principle that should be adhered to and I do not see any reason to depart from it.
Amendment, by leave, withdrawn.
Amendment No. 11 not moved.
Government amendment No. 12:
In page 14, between lines 37 and 38, to insert:
"(11) In this section references to a lease are to the grant of a leasehold interest in consideration of a purchase price."
Amendment agreed to.
Section 26, as amended, agreed to.
Sections 27 to 29, inclusive, agreed to.
Title agreed to.
Bill reported with amendments.
Agreed to take remaining Stages today.
Bill received for final consideration and passed.
