Landlord and Tenant (Amendment) Bill, 1979: [Seanad Bill amended by the Dáil]: Report Stage.

An Leas-Chathaoirleach

This is a Seanad Bill which has been amended by the Dáil. In accordance with Standing Orders, it is deemed to have passed its First, Second and Third Stages in the Seanad and is placed on the Order Paper for Report Stage. On the question "That the Bill be received for final consideration", the Minister may explain the purport of the amendments made by the Dáil and this is looked upon as the report of the Dáil amendments to the Seanad. The only matter, therefore, that may be discussed is the amendments made by the Dáil.

For the convenience of Senators I have arranged for the printing and circulation to them of the amendments made in the Dáil.

Question proposed: "That the Bill be received for final consideration."

An Leas-Chathaoirleach

As Members are aware, they may speak only once on this question.

On a point order, are we getting the script now? I understand that a brief has been prepared to be circulated. I understood you, Sir, to say that the Minister had a script that was available.

An Leas-Chathaoirleach

The Cathaoirleach circulated the amendments that were made by the Dáil for the convenience of Senators.

Not an explanation?

An Leas-Chathaoirleach

That would be a matter for the Minister, if he wanted to circulate a speech or an explanatory memorandum.

The Minister will deal with all the amendments in one speech and we will reply to them all in one speech.

I should like to ask another question on the procedure. Will the Minister speak on all the amendments to start with or will we take it amendment by amendment? Will any points we have to make on all the amendments be made in one statement?

An Leas-Chathaoirleach

That is in accordance with Standing Orders and is outside the scope of the Chair. I am sure the Members will be competent.

The amendments are very comprehensive and if we want to make serious changes we will have to look at the Standing Order to change it.

A considerable number of amendments have been made to this Bill since it was last before this House. Some of those amendments arose out of discussion of the Bill in the Dáil, others out of the discussions in this House that preceded the Dáil debates on the Bill, still others out of difficulties that came to notice since the Bill was last before this House or out of observations that were furnished by the Landlord and Tenant Commission on the proposals in the Bill. In whatever way the amendments arose I hope that Senators will, on consideration of them, agree that they improve the Bill significantly although, of course, some of the amendments bear on the 1978 ground rents legislation rather than on the areas principally covered by this Bill. For the benefit of Senators, I now propose to outline the general purport and scope of the amendments, and if any Senator should require elaboration in regard to any particular amendment or amendments I will do my best to meet any such requirement when I come to make my closing address to the House. In relation to every amendment that I do not specifically mention the House may be assured that a drafting amendment only is in question.

The necessity for amendment No. 1, which widens the scope of the Title of the Bill, arises out of amendments Nos. 38 and 39 and will become clear when I come to deal with those amendments. Amendments Nos. 2, 3 and 5 are designed to resolve a difficulty that arose concerning the effect of the provisions in section 5 (1) (a) (iv) of the Bill. The amendments are designed to ensure that oral lettings for temporary convenience may come within the scope of the provision as well as lettings of that kind that are made in writing and also to ensure that a successor in title is not prevented from relying, in any appropriate case, on the temporary convenience.

Amendment No. 4 arose out of an undertaking that was given by my predecessor in this House. Senators may recall that an Opposition amendment to delete section 4 of the Bill, as introduced, was withdrawn on foot of an undertaking to re-examine the matter. The amendment that was accepted by the Dáil arose out of that re-examination. The amendment is designed to meet a valid objection that was raised in the Seanad to the total exemption of the State—as lessor—from the code of landlord and tenant law.

The objection relates to the case where an occupational tenant finds that he has become a tenant of the State, possibly without either his knowledge or consent, having previously been a tenant of a private landlord. In such a situation the tenant would, apart from the amendment that is proposed, find that whereas he could have had rights against his landlord under the landlord and tenant code, those rights have disappeared where a State authority has taken over as landlord. The amendment proposes that the tenant's existing rights should be preserved in that situation, that is, his right to a renewed occupational tenancy where that right has accrued, and his right to compensation for any improvements he may have carried out. The right to a new tenancy applies on one occasion only in the circumstances catered for in the amendment. Following on the grant of that new tenancy the tenant will thenceforth be in the same position as any other tenant of the State and he will not have a statutory right to a further renewal of his tenancy.

The statutory rights that are being given are restricted to persons who are occupational tenants and are not being extended to ground rent tenants; those, for example, with which Part III of the Bill is concerned. The rights of ground rent tenants whose landlord is a State authority are catered for separately-in section 70 of the Bill.

The purpose of amendment No. 6 is to restrict the scope of subsection (2) of section 5 so that the subsection will apply only where property rented for State purposes is occupied by some branch of the public service. This amendment meets a point that was raised by Senator FitzGerald on Committee Stage debate.

Amendment No. 7 updates the original provisions of subsections (3) and (4) of section 5 to cater for modern arrangements involving a property-holding company and a trading company. Amendment No. 8 is a drafting amendment and makes it clear that the exemption of housing authorities from the obligations of the legislation is being preserved except only where business lettings are concerned.

Amendments Nos. 9 and 10 are of some significance. Amendment No. 9 makes it clear that, provided there has been business use during a three-year period, the right to a new tenancy applies in two kinds of cases under the provisions of section 13 (i) (a):

(a) where an individual person (or firm) has been the occupying tenant for three years, whether under one continuous tenancy or under a series of consecutive tenancies, and

(b) where the occupation has been by a tenant together with his predecessors in title, under a single continous tenancy.

The amendment also rehabilitates a requirement in the corresponding provision of the 1931 Act, that the business use must be bona fide. The Minister for Justice, on careful consideration of the views expressed by Senators FitzGerald and Molony, came to share their views in this regard. Amendment No. 10 is possible only because of the redrafting of sections 13 (1) (a) that was involved in amendment No. 9. Because section 13 (1) (a) now imposes separate requirements on a tenant as to occupation and as to business use for the purposes of acquiring rights under the Bill, a prearranged break in occupation, or tenancy, for the purpose of ensuring that a particular letting remains outside the Bill will still be possible. At the same time, any break in business use, provided occupation is continuous, may be disregarded by the court if it considers it reasonable to disregard it.

Amendments Nos. 13, 14, 27 and 28 are designed to make it clear that the requirement as to planning permission in connection with a landlord's rebuilding or redevelopment plans, where that landlord is opposing the grant of either a renewed occupational tenancy or a reversionary lease, is satisfied only by possession of a current, valid planning permission and not by a planning permission that has lapsed.

Amendments Nos. 15, 17 and 19 arose from an argument put forward in Dáil Eireann, and accepted by the Minister for Justice, that narrow time limits in section 20 could, in practice, delay rather than expedite proceedings in relation to a claim for a new tenancy and moreover could give rise to hardship, since a tenant who failed to serve notice in time would usually be constrained to seek an extension of time under section 83, whatever the expense involved. The effect of these three amendments is that a tenant's right to serve a valid notice claiming a new tenancy will be preserved for a period of three months, instead of only one month, after service by the landlord of notice of the termination of the tenancy.

Amendments Nos. 21 and 30 are of some importance. They make changes in the "gross rent" formulae in relation to renewed occupational tenancies and reversionary leases respectively. These changes arise out of the findings of the Landlord and Tenant Commission who had been asked by the Minister for Justice to re-examine the "gross rent" formula in the light of the comments made by the Supreme Court in the course of delivering judgment in the case of Byrne v. Loftus concerning that formula as it stands in section 29 (f) of the Landlord and Tenant Act, 1931. That re-examination was still in progress when the Bill was last before this House. The effect of the changes made by the amendments is that "gross rent" will mean, in effect, the open market rent of the property, less the value of the tenant's goodwill.

Amendments Nos. 22 to 26 concern section 24 which provides for reviews of the rent in cases where the terms of the new tenancy are fixed by the court. The amendments are of a technical or drafting nature, their purpose being to tighten up the provisions of section 24 in order to ensure that those provisions cannot be operated unfairly, by either landlord or tenant, by reference to the timing of applications for new tenancies and/or rent reviews, and also to clarify the date from which a reviewed rent becomes payable.

Amendment No. 31 is designed to ensure that—in view of the consideration that a landlord has only one month in which to respond to a tenant's improvement notice—full information concerning the proposed improvement is made available to that landlord. The amendment therefore requires that the improvement notice should in every case be accompanied by that information.

Section 64 was inserted in the Bill in the course of the Committee Stage debate in this House. The amendment thereto, No. 33, that was made by the Dáil has the effect of extending the definition of "lease" so as to cover a statutory tenancy on less than a yearly basis that may arise on the expiration of a lease. Accordingly, the benefit of Part V of the Bill is now extended to statutory tenants who hold over on the expiration of a lease, whether or not that lease was on a yearly basis.

I now come to a number of new section that have been inserted in the Bill since it was last before this House. Amendments Nos. 35, 36 and 37 affect the provisions of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978. These amendments add to the classes of persons who are given the right to acquire the fee simple.

Part II of the 1978 No. 2 Act sets out in an intentionally simplified form the classes of ground rent lessees and yearly tenants who are given the right to acquire the fee simple. Such simplification inevitably carries the risk of excluding unusual cases, cases such as have since come to light and are now catered for by these amendments. These three amendments ensure that the right to acquire the fee simple is now given to every class of lessee and tenant that has, to date, been identified as having a ground rent-type relationship with the landlord.

Amendment No. 35 extends the right to acquire the fee simple, under Part II of the 1978 No. 2 Act, to a new class of ground rent lessees, that is those lessees to whom Part II of that Act would apply save that they fail to satisfy condition 5 in section 10 of the Act because in their cases the previous lease mentioned in that condition did not expire or was not surrendered before 31 March 1931. As amended by what is now section 71 of the Bill, condition 5 of section 10 of the 1978 No. 2 Act may apply regardless of the date of expiration or surrender of that previous lease. This change was recommended by the Landlord and Tenant Commission.

Amendment No. 36 extends the same right to acquire the fee simple to a further new class of ground rent lessees. These lessees are those whose leases would satisfy the conditions in section 9 of the 1978 No. 2 Act and, in particular, condition 7 in section 10 of the Act, save that those leases are for terms of less than 50 years. Amendment No. 36, however, requires certain other conditions to be satisfied and the effect of the changes made by the amendment is to ensure recognition as a ground rent lease for every lease made for a term of less than 50 years that would be a "proprietary lease" as defined by section 7 of the Landlord and Tenant (Reversionary Leases) Act, 1958. This change also was recommended by the Landlord and Tenant Commission.

Amendment No. 37 extends the same right to acquire the fee simple to any person to whom section 3 of the 1967 Ground Rents Act applied immediately before the commencement of the 1978 No. 2 Act, or would have applied had he served a notice under section 4 of the 1967 Act. Section 3 of the 1967 Ground Rents Act, apart from subsection (5) of the section, is repealed by the 1978 No. 2 Act. Amendment No. 37 restores the right to acquire the fee simple that was given by the 1967 Ground Rents Act in certain unusual types of cases that are not covered by the simplified categories of ground rent leases set out in Part II of the 1978 No. 2 Act.

Amendment No. 38 is one of the amendments—No. 39 being the other —that necessitated the widening of the scope of the Title of the Bill. The purpose of the amendment is to regularise the position concerning certain interests in land that originated prior to the passing of the Renewable Leasehold Conversion Act, 1849.

A common method of leasing property in Ireland up to the mid-19th century was by the creation of a lease for the terms of the duration of the lives of, usually, three named persons, subject to a rent and covenants, including a covenant by the lessor for the perpetual renewal of the lease for further lives. The Renewable Leasehold Conversion Act, 1849, declared that any future such leases should operate as fee farm grants of the fee simple. It also gave to persons then holding under such a lease the right to obtain a fee farm grant, normally at the same rent, in lieu of the lease.

While many such leases were converted in accordance with the Act, it appears that a number were not so converted. The lessees under such leases have continued in possession and their interests may have become that of yearly tenants with a legal right to obtain a renewal or conversion grant. A yearly tenancy, even if coupled with a right to obtain a fee farm grant, is not registrable in any of the registers of the Land Registry and although the persons in question have complete security of possession, their titles may not be readily marketable as they might not be acceptable to lending institutions, or to purchasers who might be depending on such institutions to finance the purchase, because of the prospect of the costs that would be involved in conversion or renewal proceedings.

The amendment puts the parties to the lease on the same footing as if the lease had been converted under the Act of 1949. It concerns only a lessee who has continued in possession without either conversion to a fee simple or renewal of his lease; such a person has an "interest" in the land and not an "estate". The new fee simple is deemed to be a graft on the previous interest and is subject to any rights or equities arising from its being such a graft. This means that the fee simple is subject to the rents and covenants in the previous lease in the same manner as if a conversion had been effected under the Act of 1849.

Amendment No. 39 is a new provision in landlord and tenant law and is intended to bring the rights of tenants of certain houses provided by public utility societies more into line with the rights enjoyed by occupational tenants generally. Grants were paid under the Housing (Financial and Miscellaneous Provisions) Acts, 1932 and 1962, to a small number of public utility societies in respect of the erection of houses for letting. The grants, generally known as "public utility society letting grants", were paid subject to a statutory condition that an undertaking be given by the recipient society that the houses would not be sold but would be let on a monthly or lesser tenancy to persons of the working classes or agricultural labourers. The tenants of the houses in question are, therefore, precluded from purchasing the landlord's rights in their houses even where the landlord is willing to sell. The general purpose of the amendment is to remove this disability by enabling the houses to be sold within the consent of the Minister for the Environment.

In conclusion, I should like to express on behalf of the Minister his appreciation of the diligent consideration that this Bill has received in the Seanad and in the other House. The Bill is, I feel sure, much the better for the time and energy that was devoted to it by both Houses and by the various professional bodies and individuals who took the trouble to examine its provisions and furnish their observations thereon to the Minister. In particular, the members of the Landlord and Tenant Commission are deserving of gratitude for their assistance with this complex legislation.

It is a matter of regret to me and my colleagues that the diligent consideration the Minister mentioned that was given to previous debates cannot now be continued because of our rules and procedure. The Minister has just delivered an eight page statement, every page and paragraph of which is highly technical in this area of highly technical and complex law. There were a large number of amendments dealt with by the Minister arising out of the debate in this House and in the other House. Many of these amendments are substantial and make very serious and major changes in the Bill since it left this House. Quite obviously it is not possible for us to consider these amendments to the degree necessary to ensure a full debate and to ensure that we are satisfied that we fully comprehend the amendments and their effect. It is not possible to do that having regard to the method of procedure that is open to the House. I do not blame the Minister or anybody for that. That is a matter for ourselves to change. I suggest that the appropriate committee of this House might look at our procedures so that when a large number of technical amendments come back from the other House we will be able to deal with them one by one rather than have an omnibus statement by the Minister which we have to try to assimilate as he is reading it—an impossible task I must confess—and reply in a way that has any value or merit towards improving the quality of the legislation.

Having regard to the technical nature of these amendments and the number of them, we will have to devise a procedure for ourselves whereby the Minister can deal with each of them individually, give an explanation for it, put it in the context of the Bill and thereby provoke some sort of a worthwhile response from this side of the House. Possibly I am doing my colleagues an injustice by suggesting that the response from them will be less than worth while but I feel insufficient as regards the response I propose to make. I shall have to limit it to two matters that I can take up more or less immediately.

The first concerns amendments Nos. 9 and 10. These are amendments to section 13. Section 13 provides for a right to a new tenancy. The first part of section 13 gives the conditions in which the new tenancy arises and the second part of that section, subsection (2), as originally drafted provided that an unforeseen and temporary break in the use of the tenement could be disregarded by the court. The section has been changed substantially as the Minister says. There are now two conditions to be fulfilled as I read it, but without having time to consider this, my reading may not be accurate.

With regard to section 13(1)(a) the tenement for the whole of three years had to be continuously in the occupation of the person concerned or his predecessors entitled and the second condition that they be used bona fides wholly or partly for the purpose of carrying on a business. Subsection (2), which deals with a temporary break, only applies if the temporary break has not been in the occupation but in the use. I wonder what is the meaning of subsection (2) in making the distinction between occupation and use because I fail to see how use can arise unless there is occupation. I do not think one can have use without occupation. One can possibly have legal possession without physical occupation but one cannot use a premises without having physical occupation.

I cannot see how one can come to disregard use to any benefit of a person where there is a temporary break, which the Landlord and Tenant Commission had in mind, if the condition regarding continuous occupation is not also brought into the same category. Subsection (2), as I see it, is meaningless because I cannot visualise a situation to which it could apply. If I am wrong in that, and that is very likely, the question that arises under subsection (2) is that the temporary break in the use shall be disregarded if the court considers it reasonable to disregard it.

As was raised on Committee Stage, I consider this to be an extraordinary provision. We are asking the court, without giving it any guidelines to determine what is reasonable. One cannot give guidelines in a vacuum or in theory. We have to rely on the common sense of the court in the particular case before it and the facts produced to it. We rely on the good sense of the court to decide what is reasonable between the parties. This seems to be putting an undue burden on the courts and an undue risk on the litigants. Will the decision of the court with regard to what is reasonable or not be influenced by the standard of advocacy that is produced by either party? Will it be affected by the court's view of the demeanour and nature of the evidence of either party? I recall when I was a student studying jurisprudence and giving consideration to the sources of law, we were all very tickled when one theory in the source of the law was told to us. It was produced by an Amercian school of jurisprudence which acquired the nickname "the digestive school of jurisprudence". It said that one of the main factors in creating law is what they called the inarticulate major premise that might be influencing a particular judge at a particular time. As an example of what inarticulate major premise might be they said that the judge could be suffering from a severe attack of indigestion. Would such an inarticulate major premise be operating to decide what the court would find reasonable in a particular case?

Some effort should have been made to give guidelines to the court. The whole test of the greater hardship would have been an apt test to introduce in this regard. That is precisely what is involved. The courts should have been directed to decide where the balance of hardship lay. That might have cured that objection. I would be glad to hear how the Minister foresees section 13 (2) operating in practice if it only applies to a break in use whereas the break in occupation is not permitted, because subsection 1, paragraph (a) quite specifically says that the occupation must be continuous. I read continuous to mean without a break.

The other matter concerns the changes proposed in amendments Nos. 21 and 30. These are the amendments affecting the basis on which a gross rent is to be decided on by the court. As originally drafted, one of the matters to which the court had to give attention in deciding a gross rent was that the circumstances would be such that there would be a supply of similar tenements sufficient to meet the demand for them and that competition for them would be normal. That condition was repeating a provision in the existing landlord and tenant code. The intention was to ensure that in times of abnormal demand or of inflation the court would preclude such abnormal conditions and would approach it on the basis that demand would be normal, supply would be normal and competition would be normal so as to prevent in a particular area the court being coerced by the existence in that area of inflated rents due to some particular circumstances pertinent to that area only. That was the intention of it.

The Minister referred to the case of Byrne v Loftus. I confess that I am not familiar with what that case decided. I seem to recall, but I am subject to correction, that this was a case concerning the fixing of a rent. The court held that it could take into account the extraordinary situation that had arisen because of the failure to update the law up to now and that it could omit the words which are now proposed to be omitted by the definition and provide for a level of rent that would be out of line with what should be the normal commercial rent, if the law had been changed with the changing times.

Now that the law is being changed, the circumstances which constrained the court in Byrne v. Loftus to find a formula to permit an unusually high level of rent should be now disregarded. We should revert to the old formula which provides for equal demand and normal competition. In excluding those words, we now have the worst of both worlds and we could be setting the renewal of rents at a much higher plateau than the market really justifies. We all know when leases were renewed over the last number of years, the initial rent was pitched at an unusually high level to compensate for the fact that it was not going to be changed for 21 years. That led to a great inflation in the level of rents and has made many of them unreal. We should get away from that because there is now provision for a frequent review. I regret that that condition from the landlord and tenant code, which was in the Bill as drafted, is now being excluded. It will lead to unjust and unfair situations between landlords and tenants in various parts of the country.

I welcome the fact that the Bill, which is possibly 20 years overdue, is now at its final stage. The Minister in his speech made the point that, since the 1978 Act was passed certain matters have come to light which were not foreseen when it was going through the Houses. He is using this, the earliest opportunity, to cure those matters. I suggest to the Minister that when the Landlord and Tenant (Amendment) Bill, 1979 becomes law, inevitably in its operation there will be various matters which will come to light and showing inadequacies of injustices. I urge the Minister to come back to the Oireachtas speedily, even frequently—it is better to have a number of amending Acts rather than have the situation that existed in the past where between 1931 and 1979 the law was not changed. As the need arises, I urge the Minister not to hesitate to come back to the Oireachtas.

I wish to raise a number of matters which affect all the amendments and the Bill also. I do not know whether I am in order in doing so, but perhaps the Minister would be willing to reply to me as it is a question of great importance which has been put to me by many of my colleagues in the legal profession.

The Senator may refer only to the amendments made by the Dáil.

This would affect all the amendments as well, and the question is whether the Bill will be brought into operation immediately owing to the fact that there has recently been a judgment in the High Court by Mr. Justice McWilliams that large sections of the Landlord and Tenant legislation are unconstitutional, and whether the Minister would prefer to wait to bring this Bill into operation until after this matter has been decided by the Supreme Court. It is a matter that will affect all practitioners as to whether this legislation will come into operation rapidly or whether in fact the Minister will wait until the Supreme Court has decided on the appeal from Mr. Justice McWilliams' decision.

I would like to re-echo some of the sentiments expressed by Senator Cooney with regard to our procedure. I go so far as to say that I find it an offence to the dignity of this House that we have new sections brought in. I do not suggest for a minute that the Minister is being offensive, but our procedure is such that it is offensive to the dignity of this House that there are new sections and new provisions introduced in this Bill and we cannot even discuss the purport or the content of these sections. We have listened to the Minister's explanation as to their importance and the reason they have been introduced. I would like to thank him for the trouble he has gone to in producing this script because in very difficult circumstances it has helped us considerably, but it seems most unusual that the lower House could introduce new sections and new provisions into the Bill and that we cannot discuss them, only listen to what the Minister has to say and offer comment on them.

There is another point that does not arise by way of procedure. It arises generally in the way business is transacted between the Dáil and the Seanad and it is this: it is today for the first time that I discovered that the Landlord and Tenant Bill was coming back into the Seanad. If I had known it was coming back I could at least during the past week have looked at the Dáil debates and seen what changes had been made. Before I came into the Chamber I obtained a copy of the Bill as passed by the Dáil.

The list of amendments was certainly very useful, but to try to put them all together is very difficult indeed, particularly because the list of amendments, as always, occurs after Report Stage in either House, does not relate to the sections but rather relate to pages and lines in the Bill, so you are literally going through the list of amendments to the Bill and then you have to work out the sections. You then look at the Minister's remarks and perhaps then you are going back to a Committee Stage discussion in this House. It is a task that is almost impossible. I do not believe that it leads in any way to reasonable or proper consideration by us of the proposals that come before us. There are a couple of points that I would like to make in relation to some of the amendments, and again like Senator Cooney——

That procedure was laid down by the House and not by the Chair.

I appreciate that it has been laid down for years and that it is our own procedure. I have been self-critical rather than critical of anybody else. I want to re-echo what Senator Cooney said in relation to many of my remarks. I do not feel competent to stand over everything that I say—I would rather like to ask questions. In some instances where I feel that the amended Bill has not gone far enough and that the change is not entirely appropriate, I hope that any criticism that I imply or express will be taken in that context.

First of all, I welcome the reinclusion of the words "bona fide" so far as business user is concerned. That point was made here first and it is welcomed back into it. The other point that has been conceded is a point made by Senator Alexis FitzGerald in the Seanad in relation to the exemption of the State as far as liability to tenants is concerned. The change now, if I understand it correctly, relates to tenants who after the passage of this Act become tenants of the State, but before this Act or at some stage in their lease or in their period of tenancy were tenants of a private landlord. That is welcomed because people could never anticipate that they would become tenants of the State and it would have been unreasonable that they should suddenly lose their rights merely because the State purchased the land's interest. I am not sure if I am correct in saying this, but I see that this is limited, and I quote from the Minister's speech:

The right to a new tenancy applies on one occasion only in the circumstances catered for in this amendment. Following on the grant of that new tenancy the tenant will thenceforth be in the same position as any other tenant of the State and he will not have a statutory right to a further renewal of his tenancy.

That is only postponing the date of harshness to such a tenant. Take the example of somebody who obtains a five year lease from a private landlord. Under the Bill as it was drafted first, once the State purchased the landlord's interest the tenant would lose his rights to obtain a new tenancy.

The amended Bill as it now stands provides that at the end of the five years, if the State has taken over the landlord's position, the tenant will be entitled to a 35-year lease. But on the next occasion when his lease runs out he will not have that right. If you accept in the first instance that when the tenant, having moved into the premises with a private landlord, looks for his first renewal, he should, because he had a private landlord from the start, be permitted to get his new tenancy. I think it should follow right through his tenancy until the tenant himself decides to pull out of that particular premises. It is being inconsistent to allow him only the right of business equity, as it is known, in relation to his first application for renewal.

I expressed the view on Second Stage and Committee Stage in the debate in this House, and I still hold the view, that the State, except in so far as certain premises that perhaps relate to security matters or the like are concerned should be in the very same position as a private landlord. If the State is going to engage in investment of the nation's funds in investment property I believe that the tenants who occupy those investment properties are entitled to the very same rights and there should not be any exclusion. I regret very much that that amendment did not go as far as it could have gone.

The next point I would like to make is in relation to one Senator Cooney made. It relates to amendments Nos. 9 and 10, the right of any tenant to a new tenancy. The Bill as it is changed is welcome to the extent that the word "unforeseen" has been dropped. The position at the moment is that a tenant who obtains a lease for a period less than three years does not acquire any business equity. In the past we had many situations where landlords would let a tenant in for two years and 11 months, would then break the tenancy and subsequently after a week or two let him in again to break his right to acquire business equity.

During the past few years the courts have tended to question a landlord's right in this respect and an air of uncertainty has crept into the law. When this Bill came to this House first I had hoped that what would happen would be that as a matter of policy the Government would decide, whether right or not, that a landlord would have the right, but I felt that the most important thing was that the position be clear and certain so that from the tenant's point of view he would know what his position was—when he went into a premises whether he would have a right to get a new tenancy at the end of the term. That is important. From a landlord's point of view it is important and fair and just that if he were to let a premises he would know whether at the end of the period of the letting the tenant would be entitled to renewal.

What this Bill has done even in its amended form is merely to cloud the issue further. The dropping of the word "unforeseen" is a help in that it appears that if a planned break occurred the tenant would not be entitled to have a new tenancy. At least as far as the landlord and tenant are concerned, in circumstances when it was between landlord and tenant that the break was intentional, the break was there for the purpose of breaking the period in which a tenant was in occupation, then the position would have been certain and the landlord and tenant could have been advised by their legal advisers and by whoever was concerned and would know what their position was. They would not have to challenge something in court, incur legal expenses and with no certainty at the end of it. But unfortunately the amendments in section 13 have gone further and the section now provides:

(1) This Part applies to a tenement at any time if—

(a) the tenement was, during the whole of the period of three years ending at that time, continuously in the occupation of the person who was the tenant immediately before that time or of his predecessors in title and bona fide used wholly or partly for the purpose of carrying on a business, or

(b) the tenement was, during the whole of the period of 20 years ending at that time, continuously in the occupation of the person who was the tenant immediately before that time or of his predecessors in title, or

(c) improvements have been made on the tenement and the tenant would, if this Part did not apply to the tenement, be entitled to compensation for those improvements under Part IV and not less than one-half of the letting value of the tenement at that time is attributable to those improvements.

(2) For the purpose of subsection (1) (a) a temporary break in the use of the tenement shall be disregarded if the Court considers it reasonable to disregard it.

The whole purpose of taking out the word "unforeseen" was to ensure that where a planned break occurred the tenant would simply not be entitled to a new tenancy and certainty would prevail. The appearance of subsection (2) there, giving the court the opportunity to ignore a temporary break if the court considers it reasonable to disregard it, destroys the whole intention of removing the word "unforeseen".

I can appreciate that there may be unusual circumstances. For example if there was a fire and it is unforeseen in that sense and people have to get out and the landlord is left to meet the obligation of the original lease to put the premises back in good repair that is fine and I would appreciate the purpose of subsection (2) for that reason. But subsection (2) should have been spelled out to ensure that in relation to a break that was planned to break the tenant's use and occupation the tenant would not be entitled to a new tenancy.

I may be wrong in my interpretation of section 13 as it now stands in its amended form, but it is open to doubt, and I think this whole question of uncertainty is about the worst thing you can have in this area of our law. I hope the Minister is able to tell me that I am wrong in my interpretation. If I am not wrong I would ask him to look at it and to improve it whether by a new Bill or whatever is necessary because the uncertainty in this is a burden to landlords and tenants.

The Minister referred to amendments Nos. 13, 14, 27 and 28. These relate to section 17. Section 17 is concerned with the restrictions on a tenant in relation to his right to a new tenancy. The old law, and the law that it is proposed to continue, enables a landlord to refuse a new tenancy where he has some major plan for the investment, whether he intends to redevelop it, put it into offices or whatever. The idea is to ensure that in circumstances like that one or two tenants in ordinary premises could not stop a landlord redeveloping his property.

That is a fairly good idea as it stands and I agree with the intention behind it, but all a landlord had to do under the Bill as it stood in the condition it left the Seanad, was to have obtained planning permission for the development at some stage. The amendment as it now comes before us improves that situation, but only to a limited extent. A landlord must have current planning permission for the property. It cannot be planning permission he had obtained over five years before he makes his application to court that would have expired under the 1976 Planning Act.

What still has not happened, and it is something we asked for in this House, relates to a landlord who obtains planning permission but does not put the planning permission into effect. We asked that a tenant be given some rights when a landlord has his planning permission, applies to court, obtains the leave of the court to refuse the tenant his right to a new tenancy and then leaves the court and forgets about planning permission and forgets the redevelopment. You have a situation here where a tenant is thrown out on the basis that a landlord will redevelop, and what we asked for and what we have not got in the Bill is that a landlord may then ignore his planning permission, may ignore all his plans for redevelopment and the tenant is out on his ear because of it. I very much regret that the Bill has not gone to the stage that we asked that it should go to, although I welcome the limited amendment that has been made.

I would also like to welcome—this is something we sought in this House as well—the amendments Nos. 15, 17 and 19 to section 20. There was a rather narrow time limit laid down for a tenant to serve a notice. He was obliged to serve a notice within, generally speaking, one month of the relevant date relating to the determination of his tenancy. That period has been extended to three months, and I think that is a very useful and good idea.

The next point I would make is in relation to that touched on by Senator Cooney, and I tread very warily here. This is the case of Byrne and Loftus and rent review clauses and all the rest of it. It is complicated, complex, technical and difficult and I have just had a few moments to look at it. I fear that the Bill is inadequate as it stands and I fear, although I do not agree with everything that Senator Cooney says in relation to it, that problems will arise from it.

Section 23 as it stands gives the court the right to fix the terms of the new tenancy. There is no provision in that section that gives the court the right to insert terms in a tenancy agreement or in a lease providing for rent reviews, but section 24 provides that the parties to an agreement can apply to the court after a period of five years and ask the court to review the rent. So far as that goes I have no complaint, but I think the decision in Byrne and Loftus, coupled with section 23 or particularly with the lack of a power in section 23 to enable the court to insert such a term, will create a complication. If I can explain myself logically and reasonably I will try to do so. The decision in Byrne and Loftus first of all referred scathingly to the concept of a willing lessor because properly, the court pointed out, that if a man were obliged to let a property for 21 years by law he could hardly be described as a willing lessor so far as the rent was concerned because he did not have any right to have the rent reviewed, and in inflationary times this presents great difficulties. The court pointed out that many judges around the country were ignoring that term in the 1931 legislation.

The decision in Byrne v. Loftus went on to say that what would happen in the future so far as the law is concerned is that the court would have to consider that there would be no rent review, that some allowance would have to be made for inflation in determining the rent at the beginning. In other words, the court would have to be aware of the fact that there would not be an opportunity to revert to reviewing the rent for a period of 21 years.

Now what will happen is that the court will grant a new lease, but will not be able to insert a rent review clause in the lease, it will not have power to do so. Either party can apply after five years for a rent review, but because there is not a rent review clause in the lease, I believe that the court will have to follow the decision in Byrne and Loftus and set a rent that presupposes that no further rent review will take place, which means that a court determining a rent will have to presuppose that there will be no further rent review for a period of 30 years.

You can imagine the rent that would be imposed upon people if you try and set a rent now for an office building in Dublin for the next 30 years and allow for inflation. I do not believe that the court would be able to look at the next section and say that parties will have the right to apply to the court after five years. The reality is that the court will be dealing with a lease that has no provision for a rent review clause in it. Even if the court looks at such a lease, it cannot presume that there will be an application.

The only way out of this problem, and I will stress again that the problem would be resolved, would be if the court were given a right in section 23 to insert in every lease that it grants, a rent review clause. I put that to the Minister for what it is worth and ask him to consider it. I hope I am wrong, because I do not foresee another Landlord and Tenant Bill coming up in this House for a long time again, but if I am not wrong it makes a complete farce out of section 24. This rent review clause is going to lose all its functions and all its importance if the court is going to have to follow the rules. There is no provision in the Act that affects the decision of the Supreme Court in Byrne and Loftus. So far as the Circuit Courts of this country are concerned, they must follow a ruling of the Supreme Court of that nature. There is nothing in the Bill that can tell them they need not look at this decision of Byrne and Loftus any more. I do not think I am wrong in my interpretation of the position, and I would be very anxious to obtain some encouragement, some word from the Minister that I have been talking through my hat.

In conclusion, I want to place on the record of this House my regret that we had not an opportunity to look at the 39 sections that have been amended, major amendments of great significance that have taken place, and to say that it is just not possible to give a Bill at this stage the proper consideration that it deserves.

I agree with the previous speaker as regards the short time we have been given to consider all these amendments. As one who is not a member of the legal profession I want to try to get a few points clear, in my own simple way, from the Minister when he is replying. Amendment No. 9, in page 9, lines 29 to 31, deletes so and so and substitutes the following. It deals with a tenement during the whole of the period of three years continuously in the occupation of the person who was the tenant immediately before that time or his predecessors in title and bona fide used wholly or partly for the purpose of carrying on a business.

The question that I want to pose to the Minister is that where a tenant in a business premises has qualified under that amendment, the three years continuity in business, does it mean that the occupier or the landlord must in such a case then give a 35-year lease to that tenant, and can that tenancy, if it is written into the agreement, be subject to a review? I felt before that it was three-yearly reviews but I suspect that it is provided somewhere in this Bill that it is five-yearly reviews. A 35-year lease is a very long lease and if it is subject to review every five years there can be certain problems. A person who is getting on in life and who is the landlord of a property would be in the position that all the odds would be against him still being alive when the 35 years would have run out, and may have arrangements made to pass on that property to somebody else. As far as I can see that, the landlord or his successor can never come back to have clear title to that property. At the end of 35 years, can the tenant seek a further lease of 35 years, or what number of years is it?

The other question I want to pose is that if the people concerned, the landlord and the tenant, sign a 35-year lease containing a clause that at the end of that time the tenant will not look for a further lease, will that stand up in law even if one of the parties is still alive, or even if both of them have become deceased in the meantime? In my own common or garden way I pose that question to the Minister. What are the options open to a person when the property or the business premises have been occupied for three years or more years continuously? Is there any provision in this Bill whereby a shorter lease, without a renewal, can come into operation, or are they completely tied by this Bill?

I will first take Senator Cooney's comments on section 13 first, and I will try as far as possible to give a fairly comprehensive reply. Under section 19 (1) (a) of the 1931 Act, the right to a new tenancy is given inter alia to a tenant where the tenancy is on a yearly basis at least, and where the tenement has been used for business for three years by the tenant for the time being. In the 1931 Act, and this Bill, the relevant part of the definition of “tenant” is the person for the time being entitled to the occupation of a tenement. On the basis that the right to a new tenancy is and was intended to apply where a tenant, with his predecessors, had used the property for business for three years, the qualification for the time being in section 19 (1) (a) of the 1931 Act was dropped. Section 13 (1) (a) in the Bill as it stands refers simply to the tenant.

In their comments on the Bill, the Landlord and Tenant Commission recommended that the subsection be amended to make it clear that the reference to "tenant" includes a reference to the predecessors in title of the tenant. Moreover, apart from this recommendation of the Commission, two cases have come to notice that bear on the meaning of that expression: O'Neill versus Whelan and Gatien Motor Company versus Continental Oil Company of Ireland Limited.

The decisions in these cases raise a doubt as to the circumstances in which the right to a tenancy arises under the relevant provision of the 1931 Act. In particular they leave unclear whether that right applies whenever there has been three years business use, perhaps for periods of unrelated businesses, whether under a single tenancy or a series of different tenancies, provided only that both business use and the tenancies, if more than one, have been continuous.

The amendment makes it clear that provided there has been continuous business use for a three-year period, the right to a new tenancy applies in two kinds of cases, where an individual person or firm has been the tenant for three years under one continuous tenancy or a series of consecutive tenancies. A degree of uncertainty exists as to the intentions of the registrar as regards section 19 (1) (a) of the 1931 Act, section 13 (1) (a) of this Bill. In the debates on the 1931 Act what was mainly under discussion was the question of the right to a new tenancy for a business tenant who had by three years business user built up a goodwill. It is reasonable to argue that a tenant can, with his predecessors in title, build up that goodwill and thus qualify for a renewal of his tenancy. This interpretation was implicitly adopted by the Landlord and Tenant Commission in the first report, paragraph 154, and explicitly in their recent comments despite the apparent distinction that appears in section 19 of the 1931 Act which refers in section 19 (1) (a) to "the tenant for the time being" and in section 19 (1) (b), (c) and (d) to "the tenant or his predecessors in title".

However, the recent court decisions of O'Neill v. Whelan and Gatien Motor Company Limited v. Continental Oil Company have further clouded the issue. The tendency, admittedly uncertain, of these judgments is that "tenant for the time being" in section 19 (1) (a) of the 1931 Act means, not a particular individual as tenant, but the opposite—the tenant at any particular time whether under one tenancy or a series of tenancies that might be quite unrelated to one another and that might be made to persons having no connection with one another. All that is required is continuous business user under some tenancy or tenancies. If the interpretation of the two court cases referred to is correct then that is clearly not what was intended by the Oireachtas in the 1931 Act. Since the tenant's commitment or goodwill is not involved, there could be no ground in equity on which to base that right in such circumstances. The proposed amendment meets this point by providing that both continuous occupation as tenant and business user for the relevant period are required before rights under the subsection can accrue.

Senator Cooney's claim that the change in the "gross rent" formula will mean rents above market rents can hardly be sustained. Gross rent is the basis on which the rent to be reserved under either a new occupational tenancy or a reversionary lease falls to be calculated. The grant of a new tenancy is provided for in Part II of the Bill and the grant of a reversionary lease in Part III. The formula for determining the gross rent in relation to a new occupational tenancy is set out in section 29 (f) of the 1931 Act. This formula was considered by the Landlord and Tenant Commission and in the first report, paragraphs 266 to 268, they recorded their conclusions. The Commission recommended one change in the formula, and that change is proposed in the Bill. This change permits a comparison to be made with the rents of similar tenements, whether or not these tenements are in the same vicinity, so long as they are in a comparable area. Apart from that, however, the Commission, while accepting that certain criticisms of the "gross rent" formula were well founded, considered that except in a period of continuing inflation it had been possible to work the formula reasonably satisfactorily.

On 28 July 1977 in the course of its judgment in Byrne v. Loftus the Supreme Court commented unfavourably on the provisions of section 29 (f) of the 1931 Act. Arising out of this judgment the question of the "gross rent" formula was referred to the Landlord and Tenant Commission. This re-examination was still in progress at the time the Bill was before the Seanad. In consequence, although the "gross rent" formula came under criticism also in that House, the Minister of State at that time was not in a position to introduce any amendment on your behalf to meet these criticisms.

The views of the Landlord and Tenant Commission have since been received, arising out of their re-examination of the "gross rent" formula. The burden of their findings is that the "gross rent" formula should be revised so that "gross rent" would mean in effect the open market rent of the property, less the value of the tenant's goodwill. The rent to be fixed on the grant of a new occupational tenancy should accordingly be that gross rent, less any further allowance for improvements carried out by the tenant that would qualify for compensation for improvements under Part IV of the Bill.

The amendments now proposed are designed to give effect to the findings of the Commission. They also meet the criticism of the 1931 Act provisions that was made in the Supreme Court judgment in so far as that criticism is relevant to the provisions of the Bill.

In reply to Senator Cooney's comments on section 13 (2) and the word "unforeseen", before this amendment section 13 (2) proposed that the requirement of three years business user in section 13 (1) (a) should be taken to be satisfied, even where there had been an unforeseen temporary break in the user for business if it would be reasonable to disregard the break. The qualification that the temporary break should be "unforeseen" was added to take account of the fact that foreseen temporary breaks may be arranged under the law as it stands so as to ensure that a particular letting arrangement does not come within the scope of the landlord and tenant legislation. The Landlord and Tenant Commission in their comments on the Bill as introduced, pointed out that a break in business use to carry out improvements might not be "unforeseen" inasmuch as it might be provided for in the contract of tenancy. Similarly, that contract might include provisions dealing with such matters as repairs, the occurrence of a fire and so on. Any breaks in use associated with these could consequently be held to have been foreseen temporary breaks.

The amendment of section 13 (1) (a) that is proposed permits the deletion of the reference to an "unforeseen" temporary break in section 13 (2). This is because section 13 (1) (a), as proposed to be amended, imposes requirements both as to occupation and as to business use on a tenant for the purposes of acquiring rights under the Bill. Accordingly, a prearranged break in occupation or tenancy for the purpose of ensuring that a particular letting remains outside the Bill will still be possible. At the same time any break in business use, provided occupation is continuous, may be disregarded by the court if it considers it reasonable to disregard it.

In relation to the concern expressed by Senator McGuinness I would like to assure her that the High Court decision has no bearing on the provisions of this Bill.

In connection with the position of the State under landlord and tenant law, up until quite recently it was generally held in legal circles that the Landlord and Tenant Acts did not bind the State as lessor. This view was based on a more general belief that the State would not be bound by a statute unless provision to the contrary were made in the statute either expressly or by necessary implication. In the light of that view section 4 of the Bill, as amended in the Dáil, can only be regarded as being in easement of tenants. Up until now, tenants had no rights as against the State as landlord. As and from the coming into operation of this Bill, certain tenants of the State will be given certain rights as against the State.

It is important to recall that, up until the present, leases have been made by the State on the basis that the State is not bound by the Landlord and Tenant Acts. It may, indeed, be assumed that some at least of these leased would never have been made had the question of rights under the Landlord and Tenant Acts arisen. There could be no question of altering the position of the State under the legislation without first examining each of the leases that have been made by the State in order to assess the scope of such an alteration in the status of the State vis-a-vis its tenants. No such examination has been undertaken to date.

Could the Minister answer one question? He may have the information at his hand. He made the point that up until recently it was generally believed in legal circles to be the case that the State was not bound by the provisions of the landlord and tenant law and that the provisions in this section therefore only came to ease the position of tenants. I believe that legal opinion changed before this Bill came before the House at all and that that was the reason for the insertion of the provisions of this section. If that is the case I think what he is saying is slightly misleading.

I intend to deal with that . With regard to the break in occupation referred to by Senator Molony earlier, it was always the intention that a planned break in occupation should exclude rights, and section 13 (2) deals only with a break in business use but not in occupation.

Could I ask the Minister what the difference is?

It is quite obvious. I am sure the Senator will interpret what I have said.

Is it open to me to ask a question? It is very unsatisfactory.

When the Minister has finished.

I regret that the procedure, for which I have no responsibility, does not allow the opportunity that the Senator seeks. For that reason I think we will have to make do with it this evening as the procedure stands.

If a landlord—and this is in relation to Senator Molony also—does not redevelop he is liable for punitive damages. This is in connection with the Planning Act, section 17 (4). This would make it less expensive for him to let the tenant break in and compensate that tenant for disturbance. We had also the case of the Byrne v. Loftus decision. That can have no bearing since section 24 of the Bill does not allow for rent reviews. That decision could imply inflated rent only where rent reviews are not possible. The rent review clause does not need to be in the lease; it is in the law. This point was made to the Parliamentary draftsmen and they were satisfied about the position as is now proposed.

In connection with Senator Governey's comments, the three-year continuous occupation as a business tenant of a tenement does not give the right to a 35-year tenancy with five-year rent reviews. This is under section 13 of the Bill. The question of the 35-year term, as against 21 years, does not arise on the amendments that are before the House. The change in the view about the position of the State is a matter of a change in legal opinion. It has not been tested in the courts, and section 4 is simply a safeguard, not a change, in the light of the changed opinion.

May I ask a question. I understood that at the end of the Minister's speech I could ask a question.

You may ask a brief question. The rules are made by the House and the Chair has to keep to the rules.

I accept that completely. The point I want to make arises out of section 13. I want to clarify the position. If I understood the Minister's reply correctly he said that there was a very great difference between somebody who was continuously in occupation of premises and somebody who was using them. He said that a temporary break would be disregarded by the court if it considered it reasonable to disregard it. The only point I want clarified is this: suppose that a landlord and tenant enter into an agreement for a period less than three years and they then organise it, or the landlord says to the tenant "So that you do not get or acquire the rights to a business, to a 35-year lease, I am asking you to vacate that property for one week following which I will give you a new lease for two years and ten months"—a period less than three years. I want to know whether by agreement the landlord and tenant can break for a week between two leases, each of less than a period of three years, and ensure that the tenant does not acquire a business equity. I would ask your assurance on that and particularly for your assurance that under subsection (2) the court could not decide that that temporary break was unreasonable and could be disregarded.

They can, by agreement, make that arrangement.

Subsection (2) has no effect on such agreement. The court cannot disregard it.

The temporary break is a break in business and is not used in the tenancy.

My only fear is this: all I want to see come out of this Bill is certainty, that people will know their position. Am I to understand the Minister to say that no one could point after such a planned break to subsection (2) and say to the court: "Disregard this break because it is unreasonable"?

The court cannot disregard that break. It is a break in tenancy, not a break in business use.

Subsection (2) does not arise, therefore, in such circumstances?

It does not arise.

I was not quite clear actually that the Minister in his reply to me was really covering the question that I asked. Briefly what I was trying to get to was that if a person qualifies, has been in business for a period of three years, is the landlord then bound to give a 35-year lease to that tenant?

If it is to the tenant, yes. I would like to say that I have given my reply and I am precluded by the procedures of the House here from entering into what I am at at the moment. I am trying to be helpful, but I do not think I can continue to engage myself.

May I ask——

A brief question only. The Chair did allow two brief questions.

On a point of order, what opportunity have we of clarifying a position like that? I know it is not the Minister's fault, perhaps, as regards the rules. It is not very hard for anybody—as I said I am not a member of the legal profession——

May I interrupt the Senator to say that there is a further Stage to this Bill?

And we will be able to raise matters?

On a point of order, I appreciate the Minister's position and I know it is our fault that there are Standing Orders, but where the Chair gives permission to Senator Governey, as it has done, to ask a question, then it is only reasonable that the Minister should not say he is precluded by procedure from answering it. It is a question for ourselves to decide.

I simply reiterated.

I accept that. The Chair permitted Senator Governey to ask a question. I think the Minister should answer it.

I simply reiterated what the Senator said earlier.

With respect, on a point of order, the Minister refers to our procedural difficulties. We all regret those; I accept that is our fault, but the Chair did give Senator Governey permission to ask a question. In those circumstances the Minister who is coming into the House to present a Bill should answer the question.

I answered the question and then I said that I was going to be precluded by procedure from answering further questions.

The Minister answered my question but he did not answer Senator Governey's question. The Minister did not reply to it, saying that he was not entitled to do so because of our rules of procedure. I would suggest, through the Chair, to the Minister that he should reply to the question where the Chair has given leave that the question be asked. I believe then the question should be answered.

I replied to two questions posed by Senator Governey, one in my formal reply and the other a moment ago, and then I proceeded to state that procedure as it obtained presently precluded me from engaging myself further.

With respect to the Minister, I do not think it is up to the Minister to determine what his rights are with regard to the procedure in this House.

The Chair must now put the question, but before doing so I want to explain to Senator Governey or anybody else who wants to ask a question that there is a further stage to this Bill.

Question put and agreed to.

I would ask that it be postponed for at least a week. We deserve an opportunity to look at this Bill more thoroughly than we have had the opportunity to do today. I would ask that the matter be adjourned for two or three weeks to enable Senators to look at the Bill and the amendments so that we can make reasonable contributions on Fifth Stage.

We do not wish to have the next Stage of the Bill immediately; we are quite happy that this should be postponed.

To what date? The date must be fixed according to Standing Orders.

In three weeks' time.

Fifth Stage ordered for Wednesday, 28 May 1980.