Multi-Unit Developments Bill 2009 [Seanad Bill amended by the Dáil]: Report and Final Stages

I welcome the Minister for Justice and Law Reform, Deputy Dermot Ahern. This is a Seanad Bill which has been amended by the Dáil. In accordance with Standing Order 113, 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 purpose of the amendments made by the Dáil. This is looked upon as the report of the Dáil amendments to the Seanad. For Senators' convenience, I have arranged for the printing and circulation of the amendments. The Minister will deal separately with the subject matter of each related group of amendments. I also have circulated the proposed groupings to Members. Senators may speak only once on Report Stage. I remind Members that the only matters that may be discussed are the amendments made by the Dáil.

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

I invite the Minister to discuss the amendments contained in the first group.

The list circulated to Members contains various amendments made to the Bill in the Dáil. While it is a long list, the majority are drafting amendments or otherwise designed to clarify the text of the Bill and improve presentation. The remainder are substantive amendments mainly designed to strengthen safeguards for apartment owners and improve the operation of the Bill's provisions. Many of them respond to issues first raised during the constructive discussions on the Bill in this House.

The first group of substantive amendments deals with the important topic of completion as it affects multi-unit developments. This issue was raised by a number of Senators in the course of earlier discussions. Members will recall that on Report Stage in this House I tabled an amendment to require a developer to enter into a contract with an owner management company prior to the transfer of the common areas of the development. This provision has been strengthened in the meantime with a view to providing additional safeguards for purchasers of units in a development. Amendment No. 17 specifies significant additional requirements for inclusion in this contract between the developer and the owner management company. The contract must now contain arrangements for confirmation of compliance with the applicable statutory requirements such as, for example, compliance with planning permission conditions imposed by the local authority, as well as compliance with the relevant building control standards. It also must contain arrangements for the completion of works in common areas such as painting indoor common areas or planting in outdoor areas. It must contain arrangements for the release of retention money which may have been provided for in the contract between the developer and the owner management company. Importantly, it must contain details of the process to be followed in the event of a dispute between the parties concerning completion of the development. Amendment No. 23 contains an additional safeguard for the owner management company by providing that, for the purposes of negotiating or entering into a contract with a developer, the owner management company must have separate legal representation at the expense of the developer.

Fire safety in a multi-unit development is of the utmost importance. With a view to ensuring adequate fire safety standards in such a development, I have provided in amendment No. 16 that, prior to the transfer of common areas to the owner management company, the developer must provide the owner management company with a certificate from a suitably qualified person that the building has been constructed in accordance with the fire safety certificate issued by the relevant fire authority prior to construction. This represents an important advance on the current position. The certificate of compliance must be supplied by a suitably qualified person. It is my intention to make regulations referred to in amendment No. 25 which will specify the classes of persons deemed to be suitably qualified to provide certificates of compliance as soon as practicable after the enactment of the Bill. Amendments Nos. 1 and 4 contain consequential changes to the definitions of "development stage" and "relevant parts".

Amendments Nos. 93, 103 and 104 are concerned with the documentation to be provided by the developer for an owner management company The documents specified and outlined in Schedule 3 must be handed over to the owner management company at the end of the development stage. Amendment No. 103 amends clause 12 in Schedule 3 to provide that relevant information on fire protection systems must be provided, while amendment No. 104 amends clause 13 in Schedule 3 to make it clear that the documentation outlined in the clause must be given to the owner management company, except in cases where that documentation has already been furnished by the developer to the company. These amendments strengthen the Bill and will provide substantial additional safeguards for both owner management companies and individual apartment owners.

I welcome the Minister and acknowledge that Senators had an extensive debate on issues pertaining to completion. The Labour Party welcomes the fact that the Minister has moved towards meeting it on the issue of the retention of moneys and the bond. Although this is not quite what we had sought, the Minister has moved towards meeting us on the issue, particularly in amendment No. 17, which is welcome. The Labour Party also welcomes the Minister's statement that he intends to make regulations on foot of amendment No. 25, which is important.

I also welcome the extensive range of amendments tabled and agreed to in the Dáil. In the extensive debate held in this House many issues were raised which I note are reflected in the Bill. I also consider it is important to get this Bill right, as it deals with an important issue, namely, a change in ownership structures, the need to regulate management companies and provide for their proper regulation and a system of dispute resolution. It is probably the last Bill Members will deal with in the Oireachtas, which gives it particular importance. Perhaps the Minister knows more about that matter than do I.

The Senator appears to be well informed in that regard.

However, I agree with the amendments.

I thank the Senators for their comments and reiterate the ones I often make when I come to the Seanad and which are genuine. Although I do not make this point in a political way, it would be a sad day for the country if the Seanad was to be done away with. In common with the Dáil, it is, of course, in need of reform, but strong checks and balances have been built into the Constitution, one of which is an active Upper House. As someone who, it is estimated, puts two thirds of all legislation through the Oireachtas, my experience has been that, with due deference to the other House, the level of debate and examination of Bills produced by my Department is second to none in this House. Much of that is reflected in the amendments that have been made in the Dáil and Seanad.

One of the big problems I found with this Bill was that a lot of it relates to other Departments and to legislation they have sponsored. We endeavoured to change other fairly complex legislation in the areas of planning, completion, building controls and fire safety certificates, all of which are within the remit and competencies of other Departments and agencies. Ultimately, the Bill is good and it is to be hoped it will assist people living in existing and future multi-unit developments.

The second group comprises a large drafting amendment and other minor adjustments or technical changes intended to clarify the content of the Bill or presentation. Senators will recall that the scope of the Bill was extended during earlier Seanad Stages to include traditional housing estates which have an OMC structure and to cover residential units in a mixed unit multi-unit development. Neither of these categories was included within the scope of the original Law Reform Commission proposals.

These changes necessitated the introduction of the definition of "commercial unit" which now appears in section 1. Section 1 contains a definition of "unit" as meaning a residential unit. The result of these changes will mean that while the Bill as passed by this House makes numerous references to "units", it is not always clear whether such a reference is intended to refer to residential units, commercial units or both. In the interests of clarity the definition of "unit" is deleted in amendment No. 5 and the word "residential" is inserted before "unit" where appropriate in many other amendments.

The same problem arises whenever the word "development" is used. It is no longer clear whether the reference is to a multi-unit development, a mixed use multi-unit development or both. A number of amendments have been made to clarify exactly what is intended. The opportunity has also been taken to improve the text of the Bill in other respects to improve clarity and presentation.

The third group deals with the vexed question of voting rights in OMCs. Senators will recall that the general rule contained in section 14 is that one vote shall attach to each residential unit. Amendment No. 50 clarifies that the section concerned relates to OMCs of developments in respect of which no contract for the sale of residential units has been entered into prior to the enactment of legislation. What about the existing developments with unfair voting structures? I have introduced two completely new sections to deal with problems which had arisen regarding voting rights in existing OMCs.

The first new section, amendment No. 51, deals specifically with voting arrangements in existing multi-unit developments. Subsection (2) provides that the voting rights shall, in line with the general rule in section 14, be one vote per unit and that no other person shall have a vote. However, we know that there are OMCs in which some members have multiple votes or golden shares to which additional votes are attached. To address this situation, subsection (3) provides that any person wishing to exercise more than one vote in respect of a unit cannot do so unless he or she applies for and obtains authorisation from the Circuit Court. In arriving at any decision to authorise multiple voting, the Circuit Court must be satisfied that the applicant has the essential economic interest in the voting right concerned which is required to protect that interest adequately. This amendment addresses, as far as is legally possible, the issue of multiple vote arrangements.

Amendment No. 52 deals with a different situation. It appears that in some OMCs the directors originally appointed by the developer may be entitled to remain directors for life. This is undesirable and the amendment prohibits the practice. Furthermore, in future a director shall not be permitted to have a term exceeding three years in the first instance and in existing cases such a director must relinquish the position within three years of the coming into operation of the section.

In the course of our previous discussions in the House the scope of the Bill was extended to cover mixed-use multi-unit developments. As a result of the nature of these developments, the general rule of one vote per unit does not apply. However, provision is made in section 2 to ensure voting rights in such developments are distributed in a fair and equitable manner. To strengthen this provision, amendment No. 86 provides that under the dispute resolution mechanism in section 21, the Circuit Court may consider an application relating to such a development and, where it considers it necessary in the interests of justice to do so, make an order altering the voting rights in the development concerned.

Section 8 provides for the automatic transfer of membership of an OMC on the sale of a residential unit. For this purpose, amendment No. 36 provides that a unit owner must always provide up-to-date contact details to the OMC. Amendment No. 49 clarifies an aspect of section 14(1) and entitlement to vote.

The fourth group deals with Circuit Court jurisdiction in regard to dispute resolution mechanisms. Amendment No. 7 was tabled to avoid possible confusion concerning the impact of the Bill on multi-unit developments which may have different OMCs for different parts of the development. It makes clear that the Bill does not require that only one OMC be established for the development and the provision in the Bill may be complied with if there is more than one such OMC.

Amendment No. 79 broadens the court's jurisdiction by providing that an application may be made in regard to any matter to which reference to making an application under this section is made in this Act. This will ensure applications in respect of voting rights are also covered in section 21. This change gives rise to two consequential amendments. Amendment No. 81 is a technical amendment to section 21(3). Amendment No. 82 inserts a new subsection which provides that where an application comes under the new subsection (1)(b), the court may make an order it considers just and equitable with a view to ensuring the effective operation of the OMC and the quiet and peaceful occupation of residential units in the development.

Amendment No. 80 makes it clear that the applicant under section 21 must indicate in his or her application to the Circuit Court whether mediation or any other form of dispute resolution process has been attempted. I am conscious that disagreements may arise between the developer and the OMC about the extent of common areas to be transferred to the OMC. Naturally, I would hope that such disputes could be settled without recourse to the courts but it cannot be ruled out. In some cases the matter cannot be resolved in any other way. Amendment No. 83 provides that in such a case the Circuit Court will have jurisdiction to make an order to determine the extent of the relevant part of the common areas to be transferred to the OMC.

The fifth group relates to the scope of the Bill. During the earlier debates in the House the scope of the Bill was extended to cover traditional housing estates which have an OMC and residential units in mixed use developments. The Bill included provisions relating to small multi-unit developments containing two, three or four residential units. Amendment No. 8 contains a small technical change in regard to developments comprising two, three or four units.

Schedule 1 specifies the sections of the Bill applicable to such small developments. Amendments Nos. 96 to 98, inclusive, extend the list of sections in Schedule 1 to include sections 18 and 19 and 26 to 29, inclusive. In addition, the three new sections contained in amendments Nos. 51, 52 and 69 will also apply to such developments. Amendment No. 29 clarifies the scope of section 2(2) which applies those provisions of the Bill specified in Schedule 2 to traditional housing units and estates with OMCs. The new wording is intended to make it clear that the sections included in Schedule 2 will apply to such housing estate developments whether they contain detached, semi-detached and terraced houses or a combination of any such units.

Amendments Nos. 99 to 102, inclusive, amend Schedule 2 to apply sections 4, 6, 9, 11, 12, 18 and 19 and the new section contained in amendment No. 69.

The four amendments in the sixth group deal generally with the issue of service charges and sinking funds. Amendment No. 53 provides that, where a sinking fund is established, the owner management company must outline the amount of money in the fund and give details of how contributions to the fund are calculated in its annual report to members. The purpose of amendment No. 58 is to permit an owner management company to set an initial service charge before any residential units are sold. It also provides that in setting the initial service charge the company must have regard to the methodology and items of expenditure listed in section 16(3). Amendment No. 62 is essentially a drafting amendment to clarify exactly what is meant by expenditure of a non-recurring nature. It is the type of expenditure funded from the sinking fund. It appears logical to me that the provisions of section 17 should apply to traditional housing estates that already have sinking funds in place. Amendment No. 69 inserts a new section into the Bill to achieve this objective.

The seventh group of amendments concerns the issue of house rules. Concern was expressed that such rules could be introduced for the benefit of some apartment owners but would have an adverse impact on other residents. Amendment No. 74 amends section 20(3) by providing that house rules must be consistent with "the objective of the fair and equitable balancing of the rights and obligations of the occupiers and the unit owners" of the development. Amendments Nos. 75 and 78 are designed to ensure owner management companies in new developments will be allowed to make house rules governing the operation of such developments prior to the sale of units. This will allow potential purchasers to have sight of any such rules before they conclude contracts to buy apartments in such complexes.

We welcome this amendment. There was a substantial debate on the impact of house rules on residents during the debate on the Bill in the Seanad. These provisions will go some way towards meeting the concerns we raised.

I appreciate the sentiments expressed by the Senator. We tried to take many of the amendments tabled by Senators into account. Some of the amendments relating to house rules were probably a little impractical. As I said, we have tried to amend them as much as possible and I think we have achieved a good balance.

The amendments in the eighth group deal with the mediation provisions contained in the Bill. Section 24(5) currently provides that the notes of the chairperson of the mediation conference are confidential. Section 25 allows the courts to take account of the actions of the parties in determining costs. This could give rise to a difficulty, as the mediator would not be in a position under section 24(5) to inform the courts of any difficulties arising from the behaviour of a party at a mediation conference. In order to address this issue, I tabled amendments Nos. 87 to 89, inclusive. Amendment No. 87 makes the confidentiality provision in section 24 subject to the provision in section 25. Amendment No. 88 provides that the report of the chairperson of the mediation conference may state whether the failure to reach a settlement at the conference was substantially due to the conduct of a particular party or parties. Amendment No. 89 provides that the court can take this matter into account when determining the costs of an application. The underlying objective is to ensure disputes can be resolved by the use of means of mediation. Any lack of serious engagement in the process by one of the parties can be taken into account by the Circuit Court when determining costs. My hope is this provision will be an incentive to make a full and bona fide commitment to the mediation option, thereby reducing the costs involved for all parties.

Question put and agreed to.
Question proposed: "That the Bill do now pass."

This is a good piece of work. We started out in this House with a different Bill. The multitude of amendments made is an indication of the extraordinary amount of work done by departmental officials and the Minister. This is an important Bill. It is good to participate in the passing of what may be the last Bill to be passed by the Oireachtas in the term of office of the Government.

The last time we discussed a Bill in the presence of the Minister, he had announced his retirement from politics, but I did not get an opportunity to wish him well in his retirement. I take this opportunity to do so. He has shown great respect for this House and debate in it. One could not accuse him of not knowing the detail of his brief. He is able to parry questions on every aspect of a Bill when challenged to do so. I may have had the impression he was impervious to representations from this side of the House, but in certain cases such as this Bill he was ultimately very open to ideas. He has given a long commitment to politics. He has worked hard on the important legislation debated in this House in the last three and a half years and I have enjoyed working with him. I wish him the very best in his retirement.

I echo the welcome Senator Regan has given to the Bill which represents an important step in providing practical support for those living in apartment complexes. All of us are aware of the serious issues such persons have faced for many years, for example, with regard to completion standards, maintenance of communal areas and service charges. We support this legislation which will give practical effect to measures to help those living in apartment complexes. I am grateful to the Minister's officials for their work on the Bill. I also thank the groups which have had an input into the legislative process at both Government and Opposition levels. I refer, in particular, to the Apartment Owners Network and the Royal Institute of the Architects of Ireland. We welcome the Bill and the amendments will strengthen it. I am grateful to the Minister for taking on board in his amendments many of the comments made during the various debates in the Seanad.

I wish the Minister well in his retirement. While I did not often agree with him on certain issues, I always appreciated his engagement with this House. That was important because it strengthened many of the Bills considered by the Seanad. I appreciated his engagement and mastery of his brief, as mentioned by Senator Regan.

I concur with the remarks made by my colleagues. I thank the Minister for completing this legislation which is another notch on his belt. I also thank his officials for their efforts and the work they put into the Bill. Its complexity has been evidenced by the lengthy debates in this and the other House on amendments, etc.

On a personal note, I thank the Minister for co-operating with me in my work as my party's spokesman on justice in this House. I wish him the best in his retirement which I am sure will be productive. I envy him, in one sense, as we are in the same age category. We did our legal training during the same period. I am starting my political career, subject to conventions and surmounting other difficult obstacles and hurdles. I hope the Minister is moving into the sunset of his political career. I mean that in a positive way and hope he will have a happy retirement. I do not doubt that he will enjoy the benefits of his wife and family in the future. When push comes to shove, other matters are as important as politics. If I made one mistake in life, it is that I sometimes neglected those who were near and dear to me. One's family, in particular, can suffer. I wish the Minister the very best.

I thank the Senators for their kind remarks. I assure Senator O'Donovan that I am always conscious of those Senators and Deputies who live as far from Dublin as he does. Although I live 50 miles from Leinster House, door to door, I have been lucky enough to get home after virtually every Dáil sitting throughout my 24 years in the Oireachtas. I did this as part of my commitment to my family. I am not sure I would have stayed in politics for as long as I have if, like the Senator, I had been unable to get home as regularly as I have been able to. One often hears about the work-life balance. Throughout my political career we have spoken about the work-life balance in the general population. It applies equally to Members of the Oireachtas. That is probably one of the reasons we do not have as many female Members of the Oireachtas as we would like. I do not mean this in a sexist way. Political life is very tough on families, particularly for those based long distances from Leinster House. There is a difference between the Senator and me.

As reported in a local newspaper, I fell into politics through my participation in sport rather than by a family route. I was bitten by the bug of politics during my early 20s. Perhaps that is the difference between us. I am not aware of the year Senator O'Donovan entered politics but I did so in 1979.

This Bill has been one of the most difficult in the area of civil law with which I have had to deal during my time as Minister for Justice and Law Reform. It is a Bill that did not sit easily within the Departments of Justice and Law Reform, Enterprise, Trade and Innovation — in terms of company law — and the Environment, Heritage and Local Government. The Government decided that the Department of Justice and Law Reform should be the sponsoring Department. There is no other legislation in the civil law area, apart perhaps from the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010, on which I, with my officials, spent so much time. I thank my officials for their work. I have stated before and do so again that despite some of the bad press the public service receives, during my political career I have been in awe of the people in the public sector who work for us in terms of their commitment, in particular in all the Departments in which I have served. I do not believe they are given enough credit for the fact that they work way above the call of duty on behalf of Ministers and the Oireachtas. From my experience, public servants in the Departments dealing with the political process do not work 9 a.m. to 5 p.m., five days a week. They are available night and day to Ministers. I thank the officials accompanying me today for their work on this extremely complex Bill. I also thank the Oireachtas staff for their work throughout my career and on this Bill which I know caused great difficulty in terms of the substantial number of amendments tabled. The original proposal from the Law Reform Commission, while clearly good, needed amendment.

I thank in particular Senators Regan and Bacik for their work on this Bill. I am not sure I was that unamenable to a good argument. Whoever takes up my position in the future will understand that Ministers are bound, in terms of their attitude in this Chamber and the other House, to take on board the advice of the Attorney General and Parliamentary Counsel.

I am delighted the Bill has completed its passage through the Dáil and Seanad prior to the forthcoming general election. While I do not know when the election will be held, I wish Senators who participate in it and the subsequent Seanad election all the best for the future.

I join Senators in wishing the Minister well in his retirement.

Question put and agreed to.

When is it proposed to sit again?

At 2.30 p.m. next Tuesday, 18 January 2011.