As I said, that is the first time I have ever felt it necessary to draw attention to the very poor attendance in the House. I have very real sympathy for Senators, who have a lot on their minds including their own electoral prospects, and indeed I hesitated before drawing attention to this. But I want to emphasise, as indeed was already emphasised by Senator O'Leary, that this is probably one of the most important pieces of legislation this House has had to deal with for a very long time and that it is the fifth Bill that has come before the Seanad in an attempt to resolve the grave crisis for a number of people which has arisen since the judgment of the Supreme Court in the Blake and Madigan case last June. I feel that, because there is serious concern about the Bill itself and because of the gravity of the social problem and the hardship, anxiety and worry caused to a very vulnerable sector of our community, many of whom are elderly, many of whom are exposed to very serious threat to their home and the security of the little flat they have lived in for perhaps 30 or 40 years, it behoves us, even when we are understandably preoccupied with other matters, to ensure that this Bill gets the attention and consideration which it certainly deserves to have.
When we were considering the other Bill this afternoon, the Rent Restrictions (Temporary Provisions) (Continuance) Bill, 1982, I referred at some length to the reason we had the problem and in particular to the approach and judgment of the Supreme Court in the Blake and Madigan case, because that is an essential background to understanding what the problem is and understanding the way in which we are constrained as a Legislature in seeking to approach the problem. I do not propose to put again on the record of the House the extracts from the judgments of the Supreme Court or my own views, such as they are, on the approach adopted and the constraints which it imposes on us.
But we have to take stock of the situation and to realise that we face a very difficult problem. Although it is in many ways a technical, constitutional and legal problem, it is one which we have to address ourselves to and therefore which we must discuss in sufficient detail to do that.
If I were a member of the Judiciary, which I am not and not likely to be, I would say in relation to a great deal of what Senator O'Leary has already said that I concur to a considerable extent with his approach and with his analysis both of the judgment of the Supreme Court in the case referred under Article 26 and also in his approach and attitude towards this present Bill. But in the best judicial tradition, having concurred, I then shall go on to give my own approach to the Bill.
It is important to understand what the problems were with the predecessor to this Bill, the predecessor being the Bill introduced before Christmas, to deal in a longer term way with the problem caused by the finding by the Supreme Court that the previous legislation on the control of rents, and indeed in relation to the restriction on recovery of possession by landlords, was unconstitutional. It is sufficient to refer to the approach adopted by the Supreme Court and the criteria set out there. I may, to a very small extent, overlap with Senator O'Leary in this, but I think it is probably worth repeating, because what we are doing is clarifying the framework, the limits we have to operate within, and the pitfalls which we must avoid if we are to ensure that we do not pass through these Houses legislation which is ultimately, either by reference or by a challenge in the courts, ruled to be unconstitutional, with the further anxiety and fears that that would impose on so many people affected.
I would like to turn to the portion of the judgment of the Supreme Court delivered on 19 February in relation to the Bill referred to it on 24 December by the President for an opinion as to its constitutionality. The first point I would make is that the court have analysed the broad scheme of that Bill. We had an opportunity of discussing it in this House and it is not necessary to go into it again. Most Senators recall the approach that was adopted in that Bill. At the bottom of page 13 of the Supreme Court judgment the Chief Justice says:
This being the broad scheme of the Bill, it is clear that it varies pre-existing rights (where such exist) of both the tenant and the landlord in respect of controlled dwellings. It has been urged on the Court that in some respects this interference, under the guise of control, amounts to an unjust attack on the property rights of both tenants and landlords. However, the Court notes that the major criticism of the Bill's provisions is directed at those which determine the rent that is to be paid by the particular tenant and accepted by the landlord in respect of each dwelling.
The Court now proposes to examine those particular provisions in the Bill.
I draw attention to that passage because the Supreme Court left open a number of the issues that Senator O'Leary had identified. We are still talking about a particular class of landlord and a particular class of tenant. We are making provision in relation to a particular class of landlord on two fronts, firstly in relation to the rent and, second, in relation to the recovery of possession. The Supreme Court, in a very unusual way, left their view open on some of these issues. The section allowing for phased raising of the rent to the fair market rent over potentially a period of five years, on which the debate focused when the Bill was going through the Dáil and the Seanad, was the section that the Supreme Court in their judgment examined and subsequently ruled was unconstitutional. We must bear in mind that there is a possibility in relation to the provision for recovery of possession, for example, that the measure is not entirely free from potential constitutional defect.
This brings me back to the deeper issues which I raised and which some other Senators, notably Senator Murphy, raised in relation to the first Bill. We still have not pondered sufficiently on the overall problem of the constraints placed on us as a legislature by the interpretation of the Constitution. It is a legislative and tactical mistake by the Government to seek to deal with the problem in the narrow context of this class of landlords and class of tenants because that has very substantially narrowed the possibilities. It has exacerbated the potential legal problems and the problems of constitutional infirmity. It opens up the whole dimension of invidious discrimination against a particular class of landlords or invidious treatment of a particular class of tenants. It would have been much better from a legislative point of view and from the point of view of the approach to the adopted by the Oireachtas, to have broadened the scope of this legislation and made it a general basis for rent control. As legislators we are not only in favour of but would see the necessity for proper controls over the rent and conditions of private rented accommodation.
I have already submitted some amendments as to the proper forum to decide on rent controls. I believe this is better regulated by a tribunal establised for that purpose which would be a forum to which both landlords and tenants could go in a much more relaxed, confident and equal way. It would not have the intimidating attributes which many people find a court has, even a District Court. It would not have the problem of potential delay or overloading which the District Court has even with the provision the Minister has indicated of appointing new district justices and having them sit somewhere — it is not quite clear where — to hear claims under this Bill.
My first general comment on this legislation is that we must be acutely aware of the constitutional and legal constraints. This is the fifth measure which has come before this House trying to resolve the problem. Having analysed those constraints, they would be less of a problem and less inhibiting if this measure had dealt with a broader range, in other words, had dealt with rents in the private sector and had not sought to identify what Senator O'Leary has clearly analysed as a totally arbirtary and artificial class, a class deriving from the date of construction of buildings and other dates when rent was fixed, arbirtary and implacable dates and not related to broader and social conditions. To some extent, an opportunity has been lost for the Legislature, even within the constitutional and legal constraints, to put forward proposals which take into account our perceptions of social justice and our concern to strike a balance and have equity in this situation. Not only have we been inhibited from the point of view of the Legislature carrying through a policy in an important area, but because of the approach adopted by the Government, this Bill is left much more open to the possibility of constitutional challenge or to the possibility that if it is referred to the Supreme Court it will be found to be unconstitutional.
In order to explain my concern that the Bill may suffer from constitutional infirmity, it is necessary to refer to another passage of the court's judgment on the referral to it of the predecessor to this Bill, the judgment given on 19 February last. In the judgment the court referred to the way which was devised for basically fixing rents at a fair market rent taking into account the improvements and so in that assessment and then allowing the five-year phase period, where warranted, in which the tenant would gradually have to pay increasing amounts up to the fair market rent as determined. On the question of the way in which the rents were fixed, and this is really the nub of the Supreme Court's judgment, the Chief Justice stated on behalf of the court:
Having carefully considered the submissions of counsel on both sides of the case, the court is of opinion that the intent of the Bill is that the gross rent to be determined by the District Court under section 6, in accordance with the criteria therein set out, is to be regarded as the just and proper rent. The effect of the rebates permitted by section 9 is that for a period of five years after the passing of the Bill, landlords are to receive an amount which will be substantially less than the just and proper rent payable in respect of their property. In the absence of any constitutionally permitted justification, this clearly constitutes an unjust attack upon their property rights. The Bill offers no such justification for depriving the landlord of part of his or part of her just rent for the period specified in the Bill. This court has already held that the pre-existing rent control constituted an unjust attack upon property rights. In such circumstances, to impose different but no less unjust deprivations upon landlords cannot but be unjust having regard to the provisions of the Constitution. The court has, accordingly, come to the conclusion that the provisions of section 9 in the referred Bill would constitute an unjust attack on the property rights of landlords of controlled dwellings and would accordingly be in contravention of the provision of Article 40.3.2 of the Constitution.
That was in a situation where the model was that the first step would be to fix the fair market rent. The second step would be to allow a phasing in under section 9 of that Bill where the tenant could not be expected to pay the full market rent. When that Bill was debated in the House, some of us were unhappy with that very limited protection to tenants. We would like to have gone further. However, that was the model and we call it model A — fix your fair market rent and allow a period for it to be phased in — declared unconstitutional because it is an unjust attack on the property rights of landlords. It is an unjust attack in the context that it is only a special identified class of landlords who do not get their fair market rent. This is essential to an understanding of the Supreme Court's approach and was an aspect of it properly highlighted by Senator O'Leary.
Now we turn to model B which is the model before us in this Bill. Model B fudges the issue but does not fudge it sufficiently to make it comfortably constitutional. It fudges the issue because it proposes to allow the District Court to determine what the rent will be. Section 13 provides that the District Court will fix the rent. Section 13 (2) says that for the purpose of subsection (1) the gross rent shall be the rent which, in the opinion of the court, would be a just and proper rent having regard to the nature, character and location of the dwelling, the other terms of the tenancy, the means of the landlord and the tenant, the date of purchase of the dwelling by the landlord and the amount paid by the landlord therefor, the length of the tenant's occupancy of the dwelling and the number and ages of the tenant's family residing in the dwelling.
These appear to be very reasonable criteria for any court to take into account in fixing rent, but they are not general criteria, nor are they very clear. They apply only to this identified, specific class of landlords. These are the only landlords whose means are taken into account in fixing the rent. These are the only landlords whose rents will be fixed by the District Court not in accordance with fair market rent. It is not clear how the district justices will approach this problem. I have great admiration for the ingenuity of district justices but I do not envy them when they have a particular problem. As Senator O'Leary said, how will they assess the means of a landlord when the landlord is a limited liability company or is an absentee landlord in some other country? What will be the basis of it? When they do it, what will be the basis for the rent that they fix? Whatever one may say of it, it would appear to be a rent open to exactly the same conclusion if brought before the Supreme Court as the Supreme Court have already reached on model A where a fair market rent was fixed but the landlord did not get it over a phased period because the rebate system was provided under section 9 of the previous Bill. Here the landlord does not get the fair market rent either, because a district justice is fixing a fair rent in accordance with other criteria.
If we were talking about an overall social measure reflecting a legislative approach to the return a landlord should get for his private property we would be on surer ground and more secure because we would, as a Legislature, be taking a decision on the overall approach. We still would need to be much more precise and specific on the guidelines and how they were to be assessed, but the approach would be more secure. However, we are still carrying over this arbitrary classification, this identifiable number of both landlords and tenants who are involved. We are talking about former rent controlled tenants and the landlords of the properties concerned and we are saying in relation to them that a new and different mechanism for fixing the rents will apply, but it will not be a fair market rent.
To refer to an important aspect mentioned by Senator O'Leary, it will not, apparently, be as beneficial to the landlord as was the legislation of the Coalition Government which has been declared to be unconstitutional. The Minister when introducing this Bill made it clear that the money allocated would be £6 million. I will quote what he said:
A provision of £6 million was provided in the recent budget. This was the same amount as in the January budget and questions as to its adequacy were raised in the Dáil. The change in the formula for fixing rent, compared with the earlier Bill will reduce the subsidy demand and any saving can be set off against the extra cost arising from the omission of the earlier arrangements to phase in rent increases. In any event, I would like to assure Senators that the Government will provide whatever funds are needed to finance the allowances schemes.
The Government have given a commitment that they will be prepared to provide further moneys if these are needed.
Nevertheless, the assessment — which presumably has been costed with considerable expertise, both in the Minister's Department and the Department of Finance who are in position to view and assess and conclude on these figures — is that less Government subsidy will be applied to the rent which tenants will have to pay under this Bill than the Coaliton Government committed themselves to through the phased-in mechanism. How reassuring is that to the very vulnerable tenants who have been at such an unjustifiable risk and who are still not secure in their tenancies? How are they to view the situation that the mechanism for fixing rent is much less favourable to them in the sense that less payment will be required from the Government to the landlord? If that is the case, who is to bear it? Will it be the tenants? Is part of the job of the district justice in fixing the rent that, in so far as he can have regard to the means of the landlord and the means of the tenant, that will not be very significant? Basically what he is fixing must approximate to or be somewhere near a fair market rent. What is the situation? I accept that we will tease this out, and we will have to do that at some length on Committee Stage when we come to section 13, but I repeat my questions on it and perhaps the Minister will give some indication when he replies on Second Stage. What exactly would be meant by a just and proper rent, having regard to the issues set out, in particular the means of the landlord and the tenant? Can the Minister give some specific examples when replying on this point? Perhaps he can take examples of fictional tenants in different kinds of former rent-controlled dwellings who have being paying rents.
I find it very difficult to know whether we are talking about the district justice looking at a rent which at the moment is £2 and on the basis of all these criteria putting it up to £4 but the landlord saying, "That is not good enough because if that was under the old system, that of establishing a fair market rent, I would be getting £40." If this system results in a rent being fixed at £4 because of my inability to pay any more than that, if I can pay only £1 extra and the Government come in and pay a subsidy of £1 under the section as a social welfare allowance, a topping-up so to speak, then the landlord could say that that is unconstitutional and there is no doubt about it because he is not getting anything like the increase he should get.
On the other hand, take the case of the tenant paying £2 but the District Court says that in the light of all these criteria the proper rent would be £10. The landlord may say "If I am going on the fair market rent in the sense of demand for this property, I can produce evidence to the District Court that I have at least a couple of other tenants, people working in banking and insurance who can be grouped together and who are anxious to have a centre-city flat like this and they are offering me £60". In such a case will the Government bridge the difference between £10 and £60? If so, and if this is done in relation to 30,000 or 40,000 rent-controlled tenants, surely we are talking about a good deal more than the allocation that is being made. In other words, it is very hard to envisage how this system will work. It is very hard to envisage how the Minister had concluded that a smaller allocation of money is needed to subsidise it than was needed in relation to the Coalition provision.
On Committee Stage we must have an opportunity to get examples from the Minister to illustrate what he envisages the District Court will do. It will not be enough to say that that is a matter for the District Court. It is not a matter for the District Court. It is a matter on which we must be very clear. We must be clear about the job we are asking the district justices to do and we must be clear about the guidelines that we will propose for the district justices in doing their job.
We come back to the problem that a limited class of landlords are still having their rents fixed by a system that does not apply to other landlords and they are not getting their full rent, and a limited class of landlords are still having their right of recovery limited substantially in comparison to other landlords in the private rented sector. We are not doing what very badly needs to be done, which is providing an overall regulation and control of rented accommodation in the private sector, including the proper establishment of a fair rents tribunal to carry out the necessary balancing in that area. We seem to be making the legislation much more prone to attack by continuing to legislate on the basis of a limited class.
It is possible that the Minister may refer to the problem of time and the difficulty of having more far-reaching and broadly based legislation within the time constraints. As I said in relation to the other measure earlier this afternoon, that really is not an acceptable answer. I am not making party political points on that. The issue has been known to us as politicians and to the experts in the Attorney General's office and in the relevant Departments since June 1981. The serious responsibility has been ours since then and we have not measured up to it very well. The kindest word I can apply to the manner of fixing rents in this Bill is that it fudges but does not get over the constitutional and legal difficulty. That is something we will obviously have to come back to.
The predecessor to this Bill when it was being debated in this House also received a good deal of criticism from both sides of the House, particularly because it did not provide for a fair rents tribunal. I recall vividly that the then Leader of the Opposition in the House, Senator Eoin Ryan, called a vote specifically on that issue of the need for a fair rents tribunal. That was in December and now here we are in April of 1982 with this Bill. No doubt the Minister will say, as he did in his Second Stage speech, that there was not time to do it. I would submit that we have a Bill before us and now is the time to do it. We all too often are appeased by and accept ministerial promises, but the record does not justify this, because ministerial promises tend to go very rapidly on the never-never. They do not tend to be promises that are delivered. Senator Eoin Ryan obviously thought so when he called a vote seeking to have a fair rents tribunal introduced into the predecessor. Now we have a new Bill and a new opportunity before this House to introduce the proper method to adjudicate on and balance the interests as between landlords and tenants.
A tribunal develops a kind of expertise and learning experience when it is dealing with a specific problem in a specific area and a specific issue. An extremely important aspect is that it is a body which is much more accessible and much less intimidating to the tenants concerned, who are the vulnerable sector that we must, even at this late stage, seek to contrive to protect.
These are the major points that I feel it necessary to make on this Bill on Second Stage. It is quite a detailed Bill and I would ask that we have an opportunity for a separate Committee Stage. I am aware of time pressures and other constraints, but the text of this Bill as passed by the Dáil has only very recently been available to us. I know there are a number of amendments down and it would be appropriate to have a separate Committee Stage. I have no particular view on the date. I am aware that Senators, particularly in these few days, have on their minds a number of other crucial issues relating to their election and it might be that next week would be appropriate. If we are going to do the job properly on Committee Stage then it will take at least half a day — meaning the normal sitting time of the Seanad. To try to do it in less time would mean that we would not fulfil our responsibility. It is a responsibility which must lie heavily on us since this is our fifth attempt and since we make this attempt in the knowledge that the Bill passed this afternoon is, to say the least, of doubtful constitutionality. We must get this one right if we can and we must spend enough time on it to make sure that we do. We must have time, therefore, to debate in detail the issues which arise. I hope that provision will be made for a separate Committee Stage.