I apologise to the committee for the unavoidable absence of the Minister, Deputy Taylor. His intention was to attend the meeting this afternoon but I am sure he will agree to whatever new arrangements have been made.
SECTION 4.
Members will note that there are two lists of amendments.
I move amendment No. 16:
In page 5, subsection (1), lines 11 to 14, to delete all words from and including "or licensee" in line 11 down to the end of the subsection and substitute "or the interest of a tenant under a letting made for the period of the continuance in any office, appointment or employment or for a landlord's temporary convenience or to meet a temporary necessity of either of them provided that all these exclusions are bona fide and not designed to circumvent the operation of this Act.".
Amendment, by leave, withdrawn.
Amendment No. 17 has been discussed with amendment No. 13.
I move amendment No. 17:
In page 5, subsection (1), line 12, to delete "his" and substitute "the tenant's".
Amendment agreed to.
Amendment No. 18 has been discussed with amendment No. 13.
I move amendment No. 18:
In page 5, subsection (1), line 13, to delete "his" and substitute "the tenant's".
Amendment agreed to.
Amendment No. 18a is related to other amendments. The suggested grouping is amendments Nos. 21a, a26a, 61a and 61b. Amendments Nos. 18a, 21a, a26a, 61a and 61b will be taken together by agreement.
On a point of order, most of the latter amendments are additional amendments.
That is correct.
Unfortunately, we only received those this morning. They are quite substantial and some are in response to many of the issues raised at the last meeting. Glancing at them, as I only had a chance to do, they appear to deal with some of the major definitions. I ask the Chairman, and the Minister, to be sympathetic and move cautiously as we are trying to deal with amendments we have only read this morning. There should be some leeway in regard to the discussion which may be necessary. It would be helpful in future if amendments were circulated at least 24 hours in advance.
The Deputy will understand that amendments are published as quickly as possible after being tabled. The fault, therefore, if there is fault, does not rest with the Bills Office.
My first opportunity to see these amendments was thirty minutes ago. My first look at them suggests that they meet a number of problems with the Bill but it is unsatisfactory, after a five week break, that we did not at least receive these amendments by last weekend. It is not the fault of the Chairman or the Bills Office. I presume it is the fault of the Department to some extent and I ask the Minister to bring that message back to the Department.
It is a technical and difficult Bill and we are trying to be helpful. It is very difficult to digest this number of new amendments at this stage. If there is a difficulty we can come back again on Report Stage but it is not satisfactory. I say that despite the fact that I tabled two amendments late yesterday but the Minister has a large number of amendments.
I move amendment No. 18 (a):
In page 5, lines 15 to 19, to delete subsection (2) and substitute the following:
"Where, upon the commencement of this section, either or both of the spouses concerned is or are entitled to an interest to which this section applies in a matrimonial home, thereupon, the interest shall, subject to the provisions of this Act, vest in them as joint tenants.".
These amendments are mainly consequential on the acceptance, earlier in the debate, of the amendment to section 1 bringing section 2 into operation on the passing of the Bill. The effect of that amendment is that a matrimonial home is constituted once a couple are living in it when the Bill is passed. This means that the joint ownership provided for in section 4 will apply to the home when that section comes into operation three months later and the joint ownership will apply irrespective of whether the spouses are still living together in the home at that stage.
As a consequence a number of drafting changes become necessary in section 4 which deals with joint ownership of matrimonial homes and in section 11 which makes a corresponding provision in relation to mobile homes. An amendment to section 5 is also necessary and I shall deal with that amendment now.
Joint ownership will now benefit a spouse who is living with the other spouse when the Act is passed but who is living apart from him or her when the joint ownership provisions of section 4 come into operation three months later. During that period the couple may have entered into a separation agreement or agreed to separate on a basis which provides that the ownership of the matrimonial home be vested in one or other of the spouses or in both of them, other than by way of a joint tenancy or a tenancy in common in equal shares. It is desirable, therefore, that any such arrangement should not be disturbed especially when they will have been made in the knowledge that, under the Bill, both spouses have an entitlement to joint ownership on the commencement of the relevant section, section 4.
The amendment to section 5, accordingly, provides that the application of section 4 will be subject to the provisions of any such agreements. If the couple have commenced proceedings under the Judicial Separation and Family Law Reform Act, 1989, their joint ownership is already subject to the jurisdiction of the court under that Act to make, for example, a property adjustment order in relation to the matrimonial home. That is provided for in subsection (3) of section 5.
The amendment to subsection (1) of section 11 contains an addition, an amendment relating to rights or privileges of a couple occupying a mobile home over other land that is necessary for the reasonable beneficial use, occupation and enjoyment of the home. These rights and privileges have, of course, been preserved when both spouses become joint owners. As the subsection stands such rights and privileges are confined to those over land that is not owned by either or both of the spouses, that is any existing rights, for example rights of access over a stranger's land. However, it is possible that the field on which the mobile home has been placed is wholly or partly owned by one or other of the spouses. In that case there is not going to be a problem about access because these rights are exercised by virtue of ownership. Nevertheless, the possibility cannot be entirely excluded that the rights could become an issue so far as the benefiting spouse is concerned in the event of marital disharmony or a change in the ownership of the other land. For that reason the amendment includes provision for extending those necessary rights and privileges to cover any other land whether or not it is owned by either one or other of the spouses. As I have said, these amendments are consequential amendments, apart from the one I have just mentioned, and I trust they will be acceptable to the committee.
In the context of our taking these amendments, it may be helpful also to take my amendment No. 26. I ask the Minister to explain to the Committee the difference between his amendment No. a26a and my amendment No. 26 in the context of its application to spouses, even if we are not taking them together. I also ask the Minister to elaborate on its application with regard, for example, to a home that may be held by one spouse.
We are taking amendment No. a26a.
That is correct. What I am saying is that I have amendment No. 26 and the Minister has amendment No. a26a. I believe there is an interrelationship between them; they both seek to address the problems that arise when a couple conclude a separation agreement.
It would seem to be logical to take amendment No. 26 the amendment applies to section 4 and states:
This section should not apply to an interest in a home or dwelling vested in a spouse and one or more other persons as joint tenants where an agreement is concluded in writing by both spouses and such other person or persons that this section should not apply to the matrimonial home.
This gives rise to a number of situations. As an example there may be a separation agreement concluded stating that it will not apply to the matrimonial home. Alternatively, a mother might agree to put a house that she owns and in which a married couple are residing into the joint names of herself and her daughter, on condition that the husband does not get a joint interest. This would allow for that case.
It is a situation which does not relate to the Minister's amendment No. a26a; however, the separation agreement aspect of it does. Perhaps the Minister could tease out the difference between what he is proposing and what we are proposing and explain why he will not incorporate amendment No. 26. I believe if we discuss them all at this stage it might avoid duplication.
Is it agreed that we discuss amendment No. 26 with the other amendments that have been called out?
I have no objection in this regard. However, my view is that amendment No. 26 in the name of Deputy Shatter envisages a situation far beyond what my amendment provides for.
Additional situations.
Yes. My amendment deals with the situation were a separation agreement is concluded between the passing of the Act and the coming into operation of section 4 three months later. Deputy Shatter's amendment seems to take into account a position whereby somebody other than either of the spouses had an interest in the family home vested in them. I believe subsection (8) of section 4 deals precisely with the situation whereby somebody other than the two spouses has an interest in the family home on the coming into operation of the Act. Subsection (8) provides that the joint tenancy is severed in such a situation and both spouses take their share of the severed joint tenancy. They hold it as joint tenants but they hold it as tenants in common vis-�-vis the other person who was previously a joint tenant with them.
Perhaps the Minister is correct. We will deal with that separately. I accept the Minister's point.
I notice that in amendment No. 61a the Minister is changing "immediately before", which is the definition we spent so much time talking about in the early stages, to: "a married couple ordinarily resided at any time during the period of three months". Does that indicate what the Minister is contemplating for the definition when we come to Report Stage? It answers some of the issues, being clearer than "immediately before". If the Minister is proposing this, it would be fair to indicate the line of thinking which has led to three months rather than any other period of time. It would still leave people who were deserted for four or five months without the protection of the Act. Is this indicative of a broad line of thinking which we might see in the overall definition of "immediately before" at Report Stage and, if so, why three months? It is critical in the context of the protection being afforded to spouses by the Bill.
I am not excluding the possibility that we will further amend the definition of matrimonial home on Report Stage. The background is that the Minister introduced an amendment providing that section 2 is to come into operation on the passing of the Act. In other words this new concept of a matrimonial home will be created on the passing of the Act. By contrast, section 4, which is the vesting section, will come into operation three months after the passing of the Act. That is the reason for the change. Section 11 deals with mobile homes and we had to extend what relates to an ordinary home in the ordinary accepted sense of the word to a mobile home because mobile home is contained in the definition of matrimonial home, even though normally what we would envisage there is rights over land and so on.
I understand that the Minister is only dealing with this in a technical context to which he has referred and it is not indicative of the final thinking of the Minister in relation to the definition on all the issues raised. We will hear more on that.
Yes, it is a technical measure to accommodate the situation I have mentioned and I cannot anticipate what the final thinking of the Minister will be.
Amendment agreed to.
I move amendment No. 19:
In page 5, subsection (3), lines 20 and 21, to delete ", but for this subsection.".
Amendment agreed to.
I move amendment No. 20:
In page 5, subsection (3), line 21, to delete "would" and substitute "becomes or".
Amendment agreed to.
I move amendment No. 21:
In page 5, subsection (4), line 25, to delete "vesting" and substitute "which vests".
This is a matter of semantics. When I was going through the Bill a conveyancer mentioned to me that the expression "which vests" would sound better in terms of the reading of the Bill. However, it is not a substantial matter. It is a matter of whether the Minister will accept it or if it is important enough to be changed.
I shall talk to the Minister who no doubt, will consult the parliamentary draftsman in relation to this. It would not do any violence to the language of the legislation but I have to enter the caveat that we will talk to the parliamentary draftsman. I would be sympathetic towards it because it does improve the language.
We will discuss it on Report Stage.
Amendment, by leave, withdrawn.
Amendment No. 21a has been discussed with amendment No. 18a.
I move amendment No. 21a:
In page5, subsection (4), line 27, to delete "immediately before" and substitute "upon".
Amendment agreed to
Amendments Nos. 21b, 23a, 74a and 74b, may be taken together, by agreement.
I move amendment No. 21b:
In page 5, lines 30 to 48, and in page 6, lines 1 and 2, to delete subsections (5) and (6) and substitute the following subsection:
"(5) Where, by virtue of subsection (2) or (3), an interest to which this section applies in a matrimonial home vests in the spouses concerned, then—
(a) in addition to any easements already attached or annexed to the home, such (if any) easements exercisable over any other land that is occupied by either or both of the spouses, or either or both of them and another person, as are necessary for the reasonable, beneficial use, occupation and enjoyment of the home shall, subject to the provisions of this Act and to any rights of other persons having an estate or interest in that land, be deemed to be attached or annexed to the home, and
(b) in addition to any easements already attached or annexed to any other land and exercisable over the home, such (if any) easements exercisable over the home as are necessary for the reasonable, beneficial use, occupation and enjoyment of any other land that is occupied by either or both of the spouses, or either or both of them and another person, shall, subject to the provisions of this Act and to any rights of other persons having an estate or interest in the home, by deemed to be attached or annexed to such other land.".
I agree with this amendment. For those who may want to understand the reasons some of these minor amendments are being made, perhaps the Minister will explain the purpose.
These amendments, and indeed these subsections, indicate how a concept that looks simple can give rise to technicalities and difficulties. These amendments propose to amend subsections (5) and (6) of section 4 and to make consequential amendments in section 18 (2). Subsections (5) and (6) are expressed in technical language and, before I deal with the changes I am proposing, I should like to say a word about the present text of those provisions.
Subsection (5) is necessary because the interest in a matrimonial home that vests jointly by virtue of section 4 would otherwise include only easements that are attached or annexed to the home and exercisable over any other land. Easements are rights over other lands, such as the right of access, a right to water, right of way, etc. They are attached to the land in whose favour they operate and continue to exist irrespective of changes in the ownership of that land or of the land over which the easement is exercised.
If there are easements over land attached to a matrimonial home, they continue after the joint ownership is created. As Members will be aware, the definition of matrimonial home in section 2 extends to cover easements, profits, etc., attached to the matrimonial home. That follows in the definition of "matrimonial home" but, for example, in a situation where one has a farmhouse and where the farm is owned by one of the spouses, the right of access to the matrimonial home portion of the farm would not be carried over to the joint ownership because that right of access — and other such rights over the farm proper — are not technically easements. They are rights that the spouse has by virtue of his or her ownership of the farm. They are personal to the spouse and they are not attached to the land. Subsection (5) provides for that situation and also for a case where the farm property is partly owned by either or both of the spouses and another person. A similar situation could arise in relation to non-farm property, such as a combined residential and business premises. Subsection (5) attaches to the matrimonial home any such rights that either or both of the spouses exercise over such land by virtue of full or partial ownership of that land. The rights are those necessary for the reasonable, beneficial use, occupation and enjoyment of the home, but there is a limitation on those rights in the text as it stands. These rights must not materially prejudice the use, development or amenity of the other land where it is held together by one or both of the spouses with another person.
On reconsideration, it seems to the Minister that that limitation is excessive and could in some situations — although these would, I imagine, be rare — result in development work depriving the spouse or the surviving spouse of the use and enjoyment of the home. At the same time, it is necessary to have due regard to the rights of the other persons who have an interest in the land in question.
The amendment proposes to drop the outright limitation on the use and enjoyment of the home that could arise by development work. It substitutes a provision that continues to ensure that spouses will have rights over other land that is owned by either or both of them and another person and makes those rights subject only to any rights of other persons who may have an interest in the land.
I do not envisage that any problem is likely to arise in this area except, perhaps, where the other land is held under a lease or tenancy agreement and the land reverts to the landlord on the expiry of the lease or agreement. In those cases the interest of the landlord could be diminished by reason of the existence of the rights in question. In that event, the landlord would be entitled to compensation. If there was a dispute, the matter could be settled by the court under section 18 (2) (b) and (c) of the Bill. The court could either award compensation for any diminution in value of the interest caused by the easement or restrict or alter the rights and reduce the amount of compensation accordingly. The court has fairly wide discretion in this matter.
The revised text achieves a reasonable balance between the need to ensure, on the one hand, that the use and enjoyment of the matrimonial home continues to be safeguarded in cases where the adjoining land is owned wholly or partly by either or both of the spouses and, on the other, the need to respect any rights of any other person who have an estate or interest in the land.
The changes in subsection (5) give rise to consequential changes in subsections (6) and (10) and also in section 18 (2) of the Bill dealt with in amendments Nos. 23a, 74a and 74b.
Subsection (6) makes corresponding provision in relation to the continuance of rights over the matrimonial home enjoyed by other land that is wholly or partly owned by the spouses and another person. It is a mirror image of subsection (5) and is now being incorporated into it.
Amendment agreed to.
I move amendment No. 22:
In page 6, subsection (7), line 6, to delete "his or their interest" and substitute "the interest of that spouse or both spouses".
Amendment agreed to.
I move amendment No. 23:
In page 6, subsection (8) (a) (iii), lines 20 and 21, to delete "him and the other spouse" and substitute "both spouses".
Amendment agreed to.
I move amendment No. 23a:
In page 6, subsection (10), line 35, to delete "subsections (5) and (6) (b)" and substitute "subsection (5)".
Amendment agreed to.
I move amendment No. 24:
In page 6, subsection (11), line 42, to delete "shall cease to" and substitute "(other than this subsection) shall not".
This is a drafting amendment. It is inappropriate for section 4 to cease to apply to a resulting, that is, a future interest as the section never applied to it in the first place. The terminology "shall not apply" is a more elegant form of language than in the original text.
Amendment agreed to.
I move amendment No. 24a:
In page 6, between lines 43 and 44, to insert the following subsection:
"(12) (a) Where—
(i) (I) on or after the 25th day of June, 1993, and before the commencement of this section, a company (‘the relevant company') became entitled to an interest, being an interest to which this section applies in a matrimonial home or an interest in a dwelling which subsequently became a matrimonial home, and, immediately before such commencement—
(A) the company was entitled to that interest, and
(B) either or both of the spouses owned shares in the relevant company or in a company that held shares in the relevant company,
or
(II) on or at any time after such commencement—
(A) a company (‘the relevant company') is entitled to such an interest, and
(B) either or both of the spouses owns or own shares in the relevant company or in a company that holds shares in the relevant company.
and
(ii) the interest referred to in clause (I) or (II) of subparagraph (i) was transferred to the relevant company for the purpose of avoiding the application of this section to any interest in the home.
the High Court, on application to it in that behalf in a summary manner by either of the spouses, may order that an amount, determined in accordance with paragraph (b), shall be charged in favour of each spouse on the interest of the relevant company in the home or, if the home has been sold or otherwise disposed of, on the assets of the relevant company.
During the debate on amendment No. 15 in the name of Deputy Shatter the Minister undertook to have an amendment drafted to prevent or deter a spouse from avoiding the application of joint ownership by transferring his or her ownership of the matrimonial home to a company.
This amendment proposes to achieve that objective by giving the High Court jurisdiction to decide whether an interest in the matrimonial home has been transferred to a company for the purpose of avoiding the application of section 4 to the home. It empowers the court to order that a sum be charged in favour of each spouse on the interest of the company in the home or, if the home has been disposed of, on the assets of the company. The amount charged would vary according to the circumstances of the particular case and the amendment proposes that the amount be left to the court to decide. Paragraph (b) of the new subsection proposes that the charge is to be of such amount as the court considers just and appropriate having regard to the provisions and the spirit of the Act, the circumstances of the case and the rights of any persons including shareholders and creditors in the company.
This is a straightforward anti-avoidance amendment. The court will be able to look at the circumstances surrounding the transaction and decide whether the purpose of transferring the home to the company was the avoidance of the application of section 4 to any interest in it.
This provision may be invoked by one of the spouses only where there is evidence to establish that that was the purpose of the transfer, so it will not affect the numerous transactions where homes are transferred to a lending institution to finance their purchase. The amendment proposes to cover any transfer to a company made on or after 25 June 1993, the date of publication of the Bill. Therefore, the amendment will effectively prevent any avoidance of joint ownership by the device of transferring a home to a company. I commend this amendment to the committee for acceptance.
That is an important amendment.
The Fine Gael group on the committee made the case that if a spouse, either a husband or a wife, wanted to evade the provisions of this Act, or wished to ensure that their marital partner did not acquire interest in a future acquisition, all they would have to do is acquire the property through a company. The family home vested in the name of a company in which one spouse had the overwhelming majority of shares would not be jointly owned under the legislation. I recall another absent friend, Deputy Davern, criticising us for teasing out this issue. Will the Minister recognise that there is a real problem in this area? It would not affect the majority of couples but it could effect a considerable number and it could be to the detriment of many women who could believe they had a joint interest, when in fact they did not.
I welcome the Minister's amendment seeking to address this issue. I first saw these amendments about half an hour before this committee met this morning. I welcome the common intention to address this problem. This type of instant analysis designed not to be destructive but to be constructive.
The original amendment which I tabled is more simple than that the Minister is proposing. It deals with problems which the Minister's amendment may not address. The Minister may wish to come back on that. Amendment No. 15, which I withdrew after lengthy discussions, stated:
Reference in this Act to an interest in a matrimonial home shall include a legal or beneficial interest in shares held in a company where the legal or beneficial interest in a property in which a married couple ordinarily reside is vested in such company.
That amendment provided that if either a husband or a wife had any interest in shares in a company which owned the family home, the home would automatically be regarded as jointly owned under the Act.
There are different ways in which people can hold shares. I could form a company tomorrow morning and put 99 out of 100 shares in my name. I might put one share in the name of some other relation and I might purchase a family home. By virtue of that my wife would have no automatic joint ownership rights of it. I might be a little more devious than that. I might have a friend in England or somewhere else in Ireland who might be named as the holder of 99 of the shares in the company and some other person might hold one share. The family home might be purchased by that company and I might live in it with my wife and have no visible ownership rights. There may be an agreement between my friend and I that he holds his shares in the compnay in trust for me.
The amendment I tabled would have dealt with all those issues. It had the merit that without people going to court the simple position would have been that if a husband and wife lived in a family home, the ownership of which was vested in a company, and if either of them had the ownership rights of that company or controlled that company, whether the shares were nominally in their name or not, the other spouse would automatically have a joint interest. They would know their position. In effect, if someone wanted to use company law to evade the application of this legislation in the future, it would be a futile exercise.
The Minister's amendment does not deal with the position of spouses who might have already arranged their affairs. If, for example, there is a husband or wife — in my experience it is more often a husband who does this — who currently controls a small private company which ostensibly owns the matrimonial home, under the Minister's amendment it would not be a jointly owned matrimonial home following the enactment of this Bill, even if immediately prior to 25 June 1993 the couple were living in the property. The Minister's amendment states:
"on or after 25 day of June, 1993, and before the commencement of this section, a company (‘the relevant company') became entitled to an interest, being an interest to which this section applies in a matrimonial home or an interest in a dwelling which subsequently became a matrimonial home,"
Without making this unduly complicated, I would like to put a number of questions to the Minister. I may not be correct in this. If a company was formed in January 1993 which acquired a property in which a husband and wife are currently residing and the husband controls the company, will the wife, following the enactment of this legislation, be regarded as having a joint interest? It seems to me that she will not automatically have a joint interest. If she is to acquire any sort of interest she will have to bring court proceedings, which is an unnecessarily expensive way of dealing with the issue. If she does bring court proceedings there is no certainty of the outcome. It will not give her a joint interest. It will not result in a court saying that she and the company jointly own the property. She will be entitled to put a charge against the company. In effect, a court will put a value on her interest in the home and lodge it as a charge against the company. Therefore, if the property is sold this is the amount of money she will get. A court may say a house that is currently worth £100,000 should have a charge of £50,000. The couple may live in the house for the next 20 years, by which time the house may be worth £300,000 and then they sell it. Therefore, what was originally envisaged as a half interest is only £50,000 out of £300,000. It seems the Minister has recognised the problem and I welcome that. However, he has produced a complicated formula for dealing with it.
I want the Minister to clarify the position of the couple given the existence of the company in January 1993. This is clearly designed to ensure that where somebody forms a company subsequent to the enactment of this legislation they would be able to apply for the charge. I do not know why the Minister is doing this in such a complicated way and why it should be necessary to bring court proceedings. I do not know why it should be left to a judge's discretion to determine or why we should get into the complex area of company law and the lodging of a charge against the company. It would be more simple to say that if a husband and wife are living in a property as a married couple and it is owned by a company that the husband controls, then the property should be regarded as jointly owned by husband and wife or jointly owned by wife plus the company, so that the wife still gets her 50 per cent share. Why should people have to go to court? Why should lawyers become involved? Why should expenses be incurred? How is a judge to exercise discretion here?
I will not say any more about this because I may have missed something. I have just seen this amendment and it is very complicated. It seems to me that what we originally proposed in amendment No. 15 is more simple and straightforward. In fact, it provides an incentive not to purchase family homes by using companies to hold the ownership of the home. This section does not seem to provide any incentive. Someone who wishes to evade giving his wife her share in the home may be told that if he forms a company she may challenge it in a court case, but if she does not she has no joint interest.
There is much misinformation about the legislation. In the area of marriage breakdown, this Bill is not as important as it is being depicted primarily because of the Fine Gael Private Members' Bill that is now part of our law. The Judicial Separation and Family Law Reform Act, 1989 allows the courts to make property adjustment orders and recognises the contribution a wife makes in the family home. Under that legislation when marriages break down and where the family home is held in the name of one spouse, usually the husband, courts are making orders to automatically put homes in joint names. This also occurs if the homes are of particularly large value, involving perhaps in some circumstances the sale of homes and equal division of proceeds of sale, even where the wife initially has no ownership rights.
Where this legislation is of great importance and provides additional protection is in setting down a marker that all wives should be automatically entitled to joint ownership by virtue of marriage being a partnership, whether the marriage breaks down or not. That only becomes of importance where a husband predeceases his wife. As I understand it, if a husband dies and the family home is nominally in his sole name, it will be regarded as jointly owned following the enactment of this legislation. Upon his death the wife will acquire full ownership. If the family home is the only asset in the family, under current law if the husband does not leave the wife or the family home, she may find herself only having a one third or one half interest in it.
This legislation is particularly helpful to protect the position of widows, and in some instances widowers. It provides additional protection in relation to the matrimonial or family home that the Succession Act does not provide. However, that additional protection will not be there where there is a company. In my amendment No. 50, that protection would or could be there in the context of joint ownership, although there are difficulties. Here, if the husband dies what the wife will have is a charge against the company for a portion of the value of the family home. It may be that if the husband owns the shares she will get the other portion through inheritance rights. However, I do not think there is any need to make it quite as complicated as this. The Minister might explain why a preference has been shown for this approach as opposed to the approach that we proposed. Perhaps he would comment also on some of the problems I see with the proposed amendment.
Before the Minister deals with this, perhaps he would say something in relation to the reality of this stratagem to avoid the Act. It seems to me that the capital gains tax legislation would make it very unwise for people to vest their family home in a company. We may be chasing a Will-o'-the-wisp to some extent here because anybody who puts their family home in a company may find that the exemptions from capital gains tax on its disposal are such that they are lost in that process. As a result, what they would win on the roundabouts they would lose twice over on the swings.
I was not privy to the debate on Deputy Shatter's amendment; I have just seen a copy of the Deputy's amendment now. On the surface it looks simpler than the approach being taken. I would imagine the departmental thinking was that this is an anti-avoidance measure to prevent somebody getting round the provisions of legislation. I imagine they also thought it is only appropriate to have anti-avoidance measures to get round legislation after it has come into existence. You do not have anti-avoidance measures to get round legislation which has not yet been produced. That is why 25 June appears in the Government amendment. That is the date on which the new concept of a matrimonial home is created, in effect, the date from which the Act begins to run.
It is an anti-avoidance measure. We have no desire to allow people to find devices to get round this legislation because it is our intention that every matrimonial home in the country will be transferred into joint names. I take the point Deputy McDowell made about capital gains tax. He is perfectly correct; that is another disincentive . If Deputy Shatter has concrete proposals to improve the anti-avoidance measure or to make it more simple, I will welcome them and pass them on to the Minister.
In relation to the question of going to court, I am informed that the Department produced several drafts of this amendment and we were advised in relation to each draft that there would be constitutional difficulties if we had an anti-avoidance provision that did not involve the affected spouse going to court; in other words, the spouse would otherwise benefit when the legislation comes into place. We have to take the advice of the Attorney General on that. Looking at it now, it seems to be quite complex and if anything can be done to simplify it without causing constitutional difficulties I will be happy to pass any constructive suggestions to the Minister.
I can tell Deputy McDowell from my own experience, capital gains tax or not, there are people who purchase family homes through companies, perhaps in the hope of ensuring that their wives do not get their entitlements. With regard to the date of 25 June, my teasing out of this was right in the sense that it does not provide any protection for the wife living in a home vested in a company prior to 25 June.
I know the Minister is going to tell me that his Government deserves praise for producing the legislation, but successive Governments in the past ten years have promised this legislation. It was not exactly a national secret that this sort of legislation was going to be enacted. As the Minister well knows, people who seek to avoid or evade laws, and deprive other people of their entitlements, keep their ear to the ground. They will often enter into arrangements in advance of legislation being published in this House, trying to predict the best way to evade laws. I think the date of 25 June is not necessary. The Minister asked me if I have a better alternative. I do; it is amendment No. 15 which we proposed and withdrew. That is a better and more simple alternative.
I do not understand why the Attorney General's office believes there is a constitutional difficulty here. We are talking about a company owned or controlled by a spouse. If there is no constitutional difficulty in regarding a family home as being jointly owned where it is currently owned visibly by one spouse, I do not see where there is a constitutional problem in it being regarded as jointly owned where it is owned by one spouse who seeks to conceal the ownership position through a company to evade legislation. I will say no more about it. I want more time to look at this and I am sure we can come back to it at Report Stage. I say to the Minister — not for party political competitive reasons which are not relevant to this Bill at all — that the original amendment we tabled is a better way of dealing with this. It could perhaps be rephrased or reformed in some respects but the Government amendment is unduly complicted and it will leave gaps.
I will pass Deputy Shatter's comments to the Minister. Looking at his amendment I see difficulties in it but I do not see any point in going over those now.
I want to record my thanks to the Minister for having moved to the degree he has in relation to this amendment. It was raised by Deputy Shatter and got broad support from all the Opposition parties. I hope we will have further movement between this and Report Stage to come forward with an amendment that we can all be happy with because there was a substantial gap. Most of my constituents would have very little concern about family homes owned by companies, but I know there are sections of the city where many minds might work in this way and it is important that spouses of both sexes be protected as far as possible under this legislation. It proves the value of giving time and the few weeks we took to think about it.
Amendment agreed to.
I move amendment No. 25:
In page 6, between lines 43 and 44, to insert the following subsection:
"(12) Where the application of section 4 of this Act would conflict with the constitutional rights of any person, the Act shall not apply to that extent only but will otherwise be of full force and effect.".
The purpose of tabling this amendment is not in any way to pour cold water over the objective of this legislation. It is excellent legislation; indeed, given the potential difficulties with this measure it is a very well drafted Bill. Apart from the issue of constitutionality, it is good to have a debate, to give the Minister and other Deputies an opportunity to contemplate even for a short while the possible challenges that might have been made to this legislation.
I tabled this amendment so that the issue of constitutionality could be raised. I think it is useful to do that because the right we are bestowing here, the statutory right to a joint tenancy in the matrimonial home, is far-reaching. The reason it has taken so long to prepare was to allow the Oireachtas to give this right based on the equal status of women in marriage because of the constitutional fears that might have existed and because we were waiting for the Judiciary to develop the law.
As has been said on Second Stage, the matter was passed to the Oireachtas by the Judiciary when they refused to extend the concept of an equitable right to joint ownership in the family home where there is no pecuniary contribution by the woman in the case. This legislation is very far-reaching and the reason we are passing it is clear and justifiable. There may well be objections, or hypothetical objections, on the grounds that bestowing this joint tenancy might interfere with the constitutional rights to private property of individual owning spouses. However, no constitutional right is absolute, and the provisions of Article 43 which relates to private property, are made subject to the interests of social justice. Social justice is in the hands of the Oireachtas and that is what we are considering here today. Even if bestowing this joint tenancy might interfere with the constitutional right to private property of the owning spouse, the Oireachtas has deemed that it is in the interest of public policy and the common good to bestow this joint tenancy in recognition of the work which women do by virtue of being a mother and a wife working within the home. Women deserve this recognition of their equal status in marriage.
The main cases taken in relation to the constitutional right of private property challenged legislation which, it was claimed, interfered with the right of land-owners, for example when electricity pylons were built on their land or where Bord na Móna compulsorily purchased land which had a potential impact on private property rights. In all of those cases the demands of the common good and social policy were held to absolve the alleged offending legislation. This legislation is of monumental importance, it is timely and it has been welcomed on Second Stage by all parties in this House. I do not feel that any constitutional challenge could be mounted successfully on the grounds of private property rights.
The objective of this legislation bestowing joint tenancy to the spouse in the family home is clear; a joint tenancy in the house is to be bestowed regardless of a contribution made by a woman to the matrimonial home. That is fundamental because on marriage this will now happen. It fundamentally changes the nature of the marriage contract and that is good but it must be made clear to everybody involved. Perhaps people will now take their marriage commitments much more seriously. Perhaps people will now go to their solicitors before they get married rather than to their religious advisers.
It also means that people who might not up to now have become part of that worthy category, such as women working in the home, will benefit from the right of the joint tenancy which we are now bestowing. For example, newly married men and women will automatically get a joint statutory tenancy in the matrimonial home. It may well be that some people will be unjustly enriched but, fortunately, the legislation has seen around that corner and it includes the facility to apply to the court where there might be unjust enrichment. That is as it should be. The opt-out clause is another important facility which will protect against any possible injustice.
Having looked at the legislation and at some of the judicial decisions in cases surrounding the equitable right to joint ownership in the family home, I feel sure it can stand strong against a possible constitutional challenge. There is no doubt it will be heavily litigated but I believe it will be on marginal issues and not on the substantial concept of law and social policy we are espousing in this legislation.
Of course marriage breakdown inevitably causes financial hardship and it is quite ironic that it is only now that this legislation in being introduced giving a joint ownership in the matrimonial home in the light of possible divorce legislation. It has taken a long time for us to get this far and it is a very important aspect prior to the divorce legislation. Now, at last, a woman by virtue of her work in the home and in recognition of her equal status in a marriage relationship can be sure that this relationship and her work in the home is endorsed by legislation and is recognised by a statutory right to joint ownership of the matrimonial home.
I am interested to hear the Minister's views on the constitutionality problem. I tabled this amendment to allow us to debate the constitutionality of this legislation. If the Act is unconstitutional that is the way it will be but it is important to put on the record that we have contemplated possible objections and that we have in our own way over-ruled those possible objections to this right and have come down firmly in favour of recognising the equality of women in marriage.
I am sure it will come as a great relief to the Supreme Court to know that we have over-ruled the possibility of the Bill being unconstitutional. I do not really understand the purpose of this amendment. It seems to me there is widespread support for this legislation in this House. I have been compaigning for many years to have such legislation enacted. The provisions of the Constitution are such that it would be extremely odd to put this provision in the legislation, although I recall a similar odd provision inserted in legislation some years ago.
I do not think this constitutional difficulty is with this legislation. The Supreme Court signalled that in a case called L. v. L. a couple of years ago in which it was indicated that wives under the Constitution did not automatically have a joint interest in the family home, but that there was nothing to prevent the Legislature providing for it. The one thing I would be concerned about is that if we air this view to any great extent, it might encourage someone to litigate unnecessarily through the High Court or Supreme Court to challenge the validity of this legislation. That is not in the public interest. No one can be prevented from doing that and no doubt at some stage it may appeal to a husband or a wife to seek to set aside the legislation.
The only relevance it would seem to have to raising this issue at this stage, is the broad one of trying to ensure that before the legislation becomes operative everyone is certain that there are no constitutional difficulties. There is a mechanism for that. The President can refer legislation to the Supreme Court for determination under Article 26 of the Constitution as to its constitutionality. I could see a public interest in that procedure simply to ensure it is not an issue that could be canvassed in Circuit, High or Supreme Court cases in the future and give rise to difficulties and a great deal of extra expense to a husband or a wife in legal costs. That should be avoided.
I do not see any purpose in the amendment. It is not the Government who decides whether this Bill should be referred to the Supreme Court. The President may want to consider this matter before she signs the Bill. In the early 1970s when this legislation was proposed, people raised questions about its constitutionality. When I was for many years campaigning for legislation to allow the adoption of what were then described as "abandoned legitimate children", I was constantly told it would be unconstitutional. The Government worried about its constitutionality when we produced a Private Members' Bill. It was of great use that when that legislation was finally passed in 1988, the President referred it to he Supreme Court which pronounced it constitutional. It has allowed for a number of adoptions to be effected since then without legal difficulties arising as to the constitutional correctness of the legislation.
The procedure also has merit because it sets down a limited timescale for the consideration of this issue. Unlike general litigation, if a single litigant raised the constitutionality of this Bill in a High Court case, it could take one to two years before the issue was resolved. It could throw conveyancing law, family law, and womens' rights and spouses' rights generally in relation to the family home into some confusion.
I could see some public interest in the President giving serious consideration to referring the legislation to the Supreme Court under Article 26 but the amendment proposed by the Deputy does not add anything of value to the Bill. Perhaps the Minister has a different view.
I have no objection to Deputy O'Donnell putting down the amendment. I can appreciate the reason for it. The Deputy wants to tease out the constitutional position. She will be aware that various pieces of legislation in the history of the State, for example the Succession Act of 1965 and others on family law, were judged to be possibly unconstitutional at the time. That argument was made against them when they were introduced but it can fairly be said that they have all stood the test of time.
I do not think the Deputy seriously wants me to accept the amendment because it represents the current situation. The Constitution is superior to all other law. If any legislation is contrary to the Constitution it can be challenged and if the High Court or, on appeal the Supreme Court, finds that it is, it will automatically fall. That is the position with every piece of legislation and, therefore, we do not put in any specific provision to that effect.
Another reason it should not go in is that we have somebody to advise us on constitutional matters, namely the Attorney General. These matters are carefully analysed and discussed with the Attorney General's office during the preparation of the legislation. Because of that there is a presumption that legislation passed by both Houses of the Oireachtas is constitutional. On a number of occasions that was found not to be the case but the presumption exists. It is always possible some part of the legislation might be unconstitutional but by putting something like this piece of legislation we more or less elevate a slight possibility into an indication that something may be wrong. For that reason I could not accept it, and also because it represents the law as it stands.
I assure Deputy O'Donnell and the other members of the committee that we have carefully teased out possible constitutional difficulties in relation to this Bill with the Attorney General. I fully agree with the Deputy that matters have to be discussed. For example, we are taking away part of a beneficial interest somebody has in property and arbitrarily transferring it to somebody else. Under section 4 (5), which we have dealt with, we are creating new easements over land and attaching them to the family home in certain cases where these easements are necessary for the beneficial use and occupational enjoyment of the home.
These are serious matters and we have been in detailed and constant discussion with the Attorney General. I think we have got it right. Nobody can guarantee that but in my opinion, and that of the person charged under the Constitution to advise us on these matters we have done it properly. Given the necessity of the legislation I certainly hope we have.
I accept what the Minister has said. At the same time it is worthwhile that this amendment was put down in order to discuss the constitutional aspect of this legislation. Inevitably we have ended up with legislation which is cautious and quite limited in its recognition of the role and rights of women in the home. This may be all women in the home can get but I do not see it as being the full extent of their rights. Neither does the Council for the Status of Women who have argued for a much wider interpretation of the rights of women in the home and the whole question of community property. The constitutional aspect has limited this legislation, which is a stepping stone towards recognising the full equality of women and their rights to property. Women in general own little property in comparison to men, both nationally and worldwide.
I have already mentioned my concern that, presumably because of tension in relation to the Constitution, this legislation may not fully reflect the way people live in modern Ireland. For example, the matrimonial home may actually be in two places and people could live in two different places for part of the year. That cannot be reflected in this legislation, presumably because it then runs the risk of being challenged under the Constitution.
I also argue that we should recognise the way modern families live in the way we define household chattels. I have no doubt this amendment will fall also and I presume it is because of the fear that anything that sets a new precedent or creates problems should be avoided. That is all right if we want to get legislation passed. However, if we want legislation that reflects the way people live and the complexities of modern life and also assures women of their proper rights, that has to be faced also.
I am glad this issue has been raised although I accept that the amendment itself probably is not relevant or necessary to put into the legislation.
Is the amendment being pressed?
I would like to hear what the Minister has to say in response to that.
Deputy McManus wants more radical proposals. We are dealing here with legislation giving a joint interest in the family home. I cannot see how we can be more radical unless we want to transfer the family home exclusively to the non-benefiting spouse, the wife, or giving her a greater interest. I cannot see how we can be constitutionally or morally more radical than giving each a half share as joint tenants, which is exactly what we are doing.
We will deal with the other amendment when we come to it. The Deputy should not anticipate our response in that regard.
I thank the Minister for his response. As I said earlier, I put down the amendment to raise the issue of constitutionality and I have no problem in withdrawing it.
Amendment, by leave, withdrawn.
I move amendment No. 26:
In page 6, between lines 43 and 44, to insert the following subsection:
"(12) This section shall not apply to an interest in a home or dwelling vested in a spouse and one or more other persons as joint tenants where an agreement is concluded in writing by both spouses and such other person or persons that this section shall not apply to the matrimonial home.".
A married couple may, for example, be residing with the elderly parent of one or other. They may be living in the home which is owned by the parent who may wish to give an ownership right to her son or daughter. For various reasons— of which, perhaps, some of us might not always approve— it might be the parent's judgment that they do not wish the spouses to have joint ownership.
Let us take the example of a mother living with her daughter and son-in-law where there are obviously some marriage difficulties between her daughter and her son-in-law. The mother has been living for many years with her daughter who has been taking care of her. There are other children in the family and the mother is anxious to ensure that her other children, who already live in homes with their husbands, do not acquire an interest in her family home and that her daughter who has been caring for her and has not had the financial means to acquire her own home will own what was the original family home.
Situations arise where an elderly mother or father might transfer a home from their sole name into the joint names of themselves and a child who resides with them. This can happen for a variety of reasons. If that happens when the legislation is passed, both spouses will automatically acquire an interest in the property regardless of what the other spouse does. I would generally, as a matter of principle, be of the view that where a husband and wife are living together— as marriage is a partnership — a family home should be jointly owned. However, situations may arise, for example, where a relation or a parent wishes to give the house to their daughter and her husband may be agreeable to that and agree not to take an interest in it. This section is designed to ensure that no difficulty can arise and it will allow one spouse in those rather special circumstances to acquire a lone interest where the other spouse is agreeable that they do so.
The Minister may say that, in the light of other provisions in the Bill, this amendment is unnecessary but it is an important issue that arises in some families in different age groups and different financial situations. If a parent expresses such a preference and there is not a dispute between a husband and wife, there should be a clear mechanism which allows them to exclude joint ownership in such circumstances. The Minister may say this is already dealt with adequately in the legislation but I tabled this amendment to tease out this issue.
My view is that it is dealt with adequately in the legislation if I fully understand Deputy Shatter's motivation in proposing the amendment. He refers to the situation of a mother and daughter living in a house where they are joint tenants. The situation under the Bill is if the daughter gets married in that case, the joint tenancy is severed and becomes a tenancy in common. The mother will hold 50 per cent of the interest in the family home as a tenant in common and the husband and wife will hold the other 50 per cent in common with the mother but between themselves as joint tenants. Deputy Shatter wants to exclude that if all the parties, including the husband, agree in writing but there is provision in section 4 whereby a benefiting spouse can opt out. If somebody is prepared to sign an agreement such as the agreement proposed in the Deputy's amendment, it would be equally easy to get them to sign a declaration to opt out.
Amendment, by leave, withdrawn.
Question proposed: "That section 4, as amended, stand part of the Bill."
There are a number of issues that arise generally on the section which I would like the Minister to clarify. The legislation has, in effect, provided that a spouse will get a joint equitable interest in the family home or in a matrimonial home. I would like the Minister to explain why it is simply a joint equitable interest and not a joint legal and equitable interest. The reply may be that the legal interest is the position, as reflected, in the title documents and what is important is the equitable joint interest. We should again put on the record the position in that regard.
I would also like the Minister to explain the position in relation to judgment mortgages. If, at the time of the coming into force of this section, there is a judgment mortgage lodged against a matrimonial home in respect of a debt incurred by the home-owning spouse, how will that affect the half interest that will now vest in the other spouse who was not originally the home-owning spouse? Will this joint ownership reduce the value of the asset in so far as someone seeks to recover moneys on foot of a judgment which had given rise to a judgment mortgage? How will judgment mortgages apply in the future with regard to the interests the wife acquires?
The Minister might also clarify the position with regard to loans on the house and the rights of mortgagees. He should put the position on the record of this House. For example, if a house is worth £70,000 and there is a mnortgage of £50,000 — and, presumably, the mortgage would not be valid without the wife signing a family home protection act of consent — by virtue of the passage of the legislation half of the equity in the house will vest in the wife. The wife will not be the original mortgagor; she may have consented to the mortgage but she will not have been in effect a mortgagor. How will that affect the equity interest vis-�-visthe building society? I do not want to go into a long legal treatise. If a wife has consented to the mortgage, she should be estopped, under existing caselaw, from asserting that she has any prior interest over and above the building society or the bank.
I am raising this issue because this is something that should not be left to legal caselaw. It is an issue that should be addressed more explicitly in the Bill on Report Stage and the Minister might have a further look at it. They are the only issues, at this moment, which I want to raise with the Minister. There are some other queries that can arise under this section but perhaps the Minister would respond to those.
I raise the same issue Deputy Shatter raised in a slightly different context. If a wife, at the moment, owns a family home and on the coming into effect of this legislation, her husband gets a half share in her interest as a matter of equity, it could have an adverse effect on the family. Situations will arise where a husband, who has no assets at present and, therefore, is not a good mark for his judgment creditors, is suddenly conferred with a valuable asset by this legislation and suddenly the bank is going to have something where it had nothing. It may be argued that the husband and wife could opt out or attempt to opt out. However, an opt out after the coming into effect of the legislation may well be subject to examination under existing law as a conveyance to avoid creditors as the husband will have had something of value conferred on him and he will be surrendering it in order to avoid his creditors. That is an area which should be examined between now and Report Stage.
Is it to be the case that a husband or wife — a wife would be a more typical situation — who own the family home and who is safe at the moment is suddenly going to find their financial situation considerably and involuntarily worsened as half her assets are available to her husband's creditors. It is a slightly worrying situation. There is always a downside to legislation and this looks like one of those downsides.
We discussed earlier challenges to the constitutionality of the statute. One can well imagine a spouse in those circumstances, who has been battling for years with a profligate husband who has been losing money, suddenly finding herself considerably worse off on realising that her husband's creditors have a grasp on her property in a way that they never had before. There is this downside to the Bill, of which we should be conscious. Perhaps the Minister will take account of that possible adverse affect on innocent people and see if there is any measure which could safeguard people from unwanted side effects such as that of this statute. The statute, as proposed, has great simplicity, but one of the simple effects is the one I have just outlined.
The Minister's amendment No. 24a, provides that, in order for it to apply, the interest is an interest in which this section applies in a matrimonial home. Paragraph (i) (I) excludes tenancies during the holding by a spouse of any employment or office and there is no qualification that that has to be bona fide. It occurs to me that there is a loophole there, in that in order to get around the Minister's amendment all one would have to do is provide that the company which one owns gives one a life tenancy or a tenancy for as long as one holds an office as managing director of the company. It is an aspect that the Minister should examine.
Deputy O'Donnell and Deputy Harney were dealing with that matter in the amendment which they withdrew. That amendment could perhaps be phrased differently but it would attack that potential abuse. If Deputy Shatter is right in saying that companies are used to avoid the operation of this section, it is a very simple trick for the company to grant the husband a tenancy, say, during the period of his tenure of office as managing director of the company. In that case the whole Act would not apply to the house.
I ask the Minister to consider the involuntary effect that women in particular may find where property which they now own 100 per cent is suddenly being made amenable to their husband's creditors and to take into account that loophole in respect of companies.
It is always fascinating to listen to lawyers. Their occupation has obviously taught them to understand the sides of human nature that even politicians have not come across. There may on occasion be a profligate wife. Section 4 is the heart of the Bill. It is awarding the joint ownership of the matrimonial home and defines the terms in which that is done. For dependent spouses, who are mostly women, it is a very crucial section.
Deputy Shatter referred to the fact that in section 4 (4), where the nature of the interest being given is defined, the definition is very specific. It is an equitable joint interest. There is some need to justify the narrowly defined nature of this interest. Even from a conveyancing point of view we should know exactly the implications of the narrowness.
I ask the Minister why he did not decide to give a full legal interest. This question was asked by Deputy Shatter. It is the ordinary husband and wife who may not have made a will or who may not have put their home in their joint names to whom the benefit of this legislation will apply. In many cases of dispute the provisions of this Bill will be overtaken by the provisions of the Separation Act and therefore it will be in areas of non-conflict that the value of this Bill will be felt. One of the main values could be in the area of intestacy. The significance of this definition is related to the later section 7 (9) which deals with the death of a spouse. If this were defined differently and as a consequence the Bill was drafted diferently, it would be preferable. It would be of great value to women, and occasionally to men, if the interest of the deceased spouse automatically became transferred to the surviving spouse on the death without an assent being executed. However, because it is only an equitable interest there is this other legal interest, which took me by surprise when I read the section, that one would have to wait therefore under the Succession Acts. One would have to go through the full process of probate. Could it be possible to make it full legal interest?
Deputy Shatter referred to the question of the title deeds. There are many situations in which people do not resolve their title for quite a long time. It would certainly make the benefit of the Bill more significant for the many people who find that they have not engaged in the proper legal procedures. Many ordinary couples are not aware of it and find themselves involved in a protracted process at the stage of a spouse's death. If we could move on this it would make the benefits of the Bill far more substantial for the many spouses who may benefit from it.
I refer to the local authority situation, and particularly to the tenant purchase schemes where houses have been applied for to the local authority by, say, the mother and the daughter or the father and son or father and daughter and then when the elderly person dies the house automatically transfers to the other signatory to the application under tenant purchase. Can I take it that under this section where the house was originally purchased from the local authority, and the order was given by the county manager in the same legal procedure as for a private dwelling, it will automatically be shared equally by the spouse whether the spouse is a woman or a man? At present if the elderly person dies, the house automatically transfers to the second signatory which can be the daughter or the son and no provisions of a will can overrule that. Can I take it, therefore, that under the provisions of this Bill this situation will be corrected?
Will this have retrospective effect? Where a transfer order has been issued by a county manager, before the enactment of this Bill, to one or other of the parties who is now in ownership under tenant purchase, will that position change following the enactment of the Bill?
Deputy Shatter raised the question of banks and building societies. If one partner has a mortgage and there is a contract with one spouse only, the legal owner of the property, how would that be enforced? There could be a situation, for example, where the individual and spouse become joint tenants under the proposed legislation. The man dies and the bank or building society would be in a position of seeking to enforce a contract against the surviving spouse who was not a party to the original agreement. What would happen in that case? Could you have cases being taken against wives in that situation who have not entered an agreement in the first place? Where would the liability be?
A number of points have been raised. In relation to Deputy Shatter's original query, it does not require great imagination to know the sort of conveyancing difficulties we would run into in attempting to transfer the legal interest. Take for example the case of registered land, where the Land Registry shows one spouse as the legal owner. If, in effect, the legal interest was transferred that would have to be reflected in the Land Registry. If that is not done, anybody could buy from one spouse and get a valid title without regard to the interest of the other spouse. That may not happen in all cases because there would be a question of notice and the sort of inquiry one would have to make but it would certainly create difficulties. Deputy Shatter is right in his assumption that the legal interest is reflected in the title documents. We are, in effect, transferring the beneficial interest but, in addition, section 8 allows the parties to register the effect of the legislation which will mean that both parties will appear in the Land Registry documentation, meaning that the legal interest is transferred.
In reply to Deputy Flaherty, we are bringing in an amendment to provide that when one joint tenant, who has been created a joint tenant by the operation of the legislation, dies, the legal interest, not just the equitable interest, will automatically transfer.
Deputy Shatter asked a number of questions about judgment mortgages, etc. If a judgment mortgage is granted against one of the spouses in a joint tenancy the joint tenancy is severed and the judgment mortgage is specifically attached to the person against whom the judgment mortgage was obtained. Deputy Shatter also asked about the effect on parties taking out a mortgage or taking out an extra mortgage on property.
I would like to clarify this. The query related to a situation where there is a judgment mortgage in existence. If the house is in the sole name of the husband the Act triggers a joint interest; there would not have been severing when the judgment mortgage was registered because there was no joint interest at that stage. How is it envisaged that that will operate? Will it provide additional protection for the wife or will it reduce the security available to the person who has registered the judgment mortgage?
My understanding is that they take over the net interest in the property, exclusive of the amount owing on foot of the judgment mortgage as joint tenants.
Deputy McDowell referred to a situation where a wife could have accumulated sufficient money, income or capital to purchase the family home and that the effect of this legislation would be to give the husband's judgment creditors rights which they did not have previously. I accept that is a downside. One cannot bring in legislation or improvements without having some sort of downside and we have tried to provide for it in a number of ways. The wife in that particular case should ask the husband to opt out before marriage. If this situation arises in future, section 6 allows the non-benefiting spouse to make application to the court to have the effect of the Act disapplied.
In relation to that, section 6 (5) (a), (b) and (c) do not seem to cover the situation where it is simply being opposed on the grounds that it will end up losing the family a lot of money.
I take the Deputy's point. Paragraph (a) refers to any conduct on the part of the spouse and is subject to the overriding consideration that it must be unjust not to grant the application. Paragraphs (a), (b) and (c) are particular instances and they are not exclusive. They do not cover all the grounds on which this application order can be made.
Will the Minister of State consider putting in a paragraph (d) to give the court guidance saying that one of the grounds it can take into account is that it will impoverish the family significantly due to the death of the spouse?
Yes, I will discuss that with the Minister. Will Deputy Bell repeat his question as I did not hear it?
Many thousands of people bought houses under tenant purchase, perhaps they were originally bought in joint signatories of say the father and the son, or the mother and the daughter who subsequently got married. In those circumstances, as I understand the law relating to local authorities, the house automatically transfers to the second signatory on the original application for tenant purchase. Will section 4 alter the situation in future and will it have any effect where houses automatically transferred from a deceased parent to a son or a daughter who now are in full ownership under existing law? Will it have a retrospective effect?
If a son and daughter are in joint ownership, section 4 will come into operation only if one of them marries and the home is created a matrimonial home for the purposes of the Act. In that situation the joint tenancy will be divided or severed. For example, if the daughter marries, the son will have the right to half the family home and the other half will be held by the daughter and her new husband as joint tenants. I do not think retrospection matters because I cannot see its relevance.
If they are all alive at the date of the application of the Act, the position in future between the husband and the wife, that is the daughter and her husband, will be that if one of them dies the other will automatically succeed but they will not have any rights to the other person's share which is severed. It is a tenancy in common, between the brother on the one side and the sister and her husband on the other.
The relevance of retrospection, in so far as the question is concerned, is that I dealt personally with quite a number of cases where a will was made by a parent leaving the house to another member of the family. As I understood it, under existing law a will cannot overrule the automatic transfer of the parent's share of the house to the other signatory under tenant purchase. I wanted to establish that that would change under the provision of the Bill. Will the Minister of State take a note of it and look at it again?
A will cannot overrule the right of succession over a joint tenancy. That was and is the position in law. In the example I have given, if the son and daughter are joint tenants, and the daughter gets married she takes half as tenant in common with the son. Her half will be held by her and her new husband as joint tenants. The right to succession will apply between the husband and wife, the daughter and her husband. They will have no right to the son's share when he dies; that will go to his own family and vice versa.
There is a practice in local authorities not to allow people to own two local authority houses or houses that have been purchased from the local authority at any one time. If the co-signatory to the original tenancy or the beneficiary of the original tenancy bought a council house under a tenancy agreement he or she would then own two council houses. Would that not be against the wishes of the local authority in regard to sales of those houses?
We are dealing with the matrimonial home. That is defined in the legislation. I will leave the problems of local authorities to somebody else.
Will the Minister reply to my query in relation to mortgages and building societies? An example was given that if one partner, who entered into a contract with a building society or bank — the only person with the mortgage — died, the joint ownership would come into play and the money would be owed. What is the position in this case?
If one party enters into a mortgage he or she will get a loan only against the share of the joint tenancy. As I understand it, that would sever the joint tenancy.
I also raised this query. For example, before the Bill was enacted there could have been a mortgage of £50,000 on a property of £70,000. When the Bill is enacted it will trigger the joint interest. The theory is that each spouse has a half share interest. I know joint interest is more complex than that but the equity vested in them would be half and half if it were sold. If the husband was the sole mortgager, would the building society's equity be reduced to a sum equal to half the value of the house? I made the point that under existing case law the wife would be stopped from making that case under the Family Home Protection Act. I also made the point that it was unsatisfactory for the matter to be left to case law and that it should be included in the Bill.
I wish to refer to a point raised by Deputy McDowell. I am not sure it is sufficient to say that there are always downsides to legislation which seeks to improve the position. To deal with the issue, let us take an example of the profligate husband who is, perhaps, an alcoholic, whose business is in serious difficulties and who has incurred debts throughout the country. The one thing that is currently safe is the family home because it is in the wife's name. Under this legislation we have said that this would trigger a situation where the house which the wife owned and which she had secured against being liable for the husband's debts is put into joint names without her having any say, by virtue of a decree from the Oireachtas.
There is a provision to include a section in the Bill to the effect that if, on the date which the legislation is due to come into force, there are debts which attach individually to the non-owning spouse and because those debts exist prior to the coming into force of the legislation any interest that spouse might acquire in the family home cannot be taken in part satisfaction of existing debts. This would mean it would not deprive creditors of any entitlement they originally had because initially when they gave loans or allowed a person to trade with them, without their obtaining full security they did not envisage moving against a family home. They had no right to move.
Wives, in particular, who may be affected — I know of people in that position — should not find themselves in a situation where they may have defended the family home and the security of their family and then suddenly discover that creditors can now pursue them because the husband has had an interest triggered in the family home. There is no reason there cannot be a section stating that any existing debts for which a spouse, who does not at the time of the legislation have an interest in the family home is responsible, should not be debts which can be litigated by a judgment mortgage being registered against the home.
In the context of debts which may come into existence after the legislation is in place, the Government has an obligation to ensure that the legislation and its effects are understood by the public. In the context of future debts, a wife who is concerned that her husband's behaviour might, for example, result in the loss of the family home under section 5 of the Family Home Protection Act, 1976, where the home is currently in the sole name of the husband, can seek an order to have it transferred to her sole name. Decisions have been made in this regard. If, after the legislation has been enacted, a wife is aware that her husband is behaving in a way which could put the family home at risk, mechanisms under this legislation should allow and ensure that she can, in those circumstances, make a court application similar to that which arose under section 5 of the Family Home Protection Act. This legislation provides in certain circumstances for applications. The Minister should look at the exact wording of section 5 of the Family Home Protection Act and the way it works. Although a minor amendment is required to the 1976 legislation in one area, it has worked well.
I have been aware over the years of many cases in both the Circuit Court and the High Court where wives have gone to court because their husbands have been drinking excessively, incurring debts, running their businesses in circumstances where they would fail and behaving in such a way that it was obvious the family could be rendered bankrupt and the family home lost. There have been many instances of homes placed in the sole names of wives in that situation.
This legislation needs an updated, similar provision to that contained in section 5 of the Family Home Protection Act. If this is being looked at in the interests of simplifying the legal area, then there is no reason identical provisions should not apply to both this Bill and the Family Home Protection Act in the area of the non-owning spouse who acquires an interest under the legislation and whose behaviour could result in the loss of the family home. It is an important issue. We should not throw our hands up in the air and say there is a downside about which we can do nothing. There is something specific we can do and it is within the powers of the Minister to do it.
In the area of judgment mortgages, it appears that more should be done. Legislation is allowing the general law to apply current law in relation to judgment mortgages to fit into this Bill. The Minister can correct me if I am wrong, but there is no reference to judgment mortgages in this Bill. Let us assume that a family home worth £90,000 is in the husband's sole name and that following this legislation the wife gets an automatic joint interest. For the sake of simplicity let us presume there is no mortgage. In a year's time the husband incurs a debt, he owes money to the Revenue Commissioners and the Revenue Commissioners get a decree for £10,000. He still does not pay them and the Revenue Commissioners to lodge a judgment mortgage against the family home. The Minister is saying that this, in effect, would sever the joint tenancy. Therefore, the wife would be entitled to her interest in common and the husband would have his equity of £45,000, minus the £10,000 owing to the Revenue Commissioners. The Revenue Commissioners may do nothing about it and may allow interest to accumulate for some time. Let us presume the husband is knocked down by bus. What happens? As the equity or tenancy is severed the Revenue Commissioners get their £10,000 and instead of the wife, as she would if it were a joint interest, getting the entire house outside the husband's legal estate, the remaining £35,000 with a value in the house falls into his estate and it becomes part of her one third or one half share of the inheritance.
There is no reason the legislation should not expressly provide that if a judgment mortgage is obtained, following the enactment of this legislation, against one spouse, any moneys owing pursuant to that judgment can only attach to a sum equal to one half of the value of the house. However, in so far as it falls short of that sum, the wife should continue to retain, or the husband in reverse circumstances, a joint interest in the remainder. In other words, the judgment mortgage should be treated for the purpose of the joint beneficial interest and for inheritance to protect wives and children in particular, in the same way as an ordinary building society mortgage would be treated. There is no reason one should have this. Severance is important to protect the half share when the debt exceeds the husband's interest in the property, but it is detrimental and prejudicial to a wife where the debt is a small and does not exhaust the husband's equity in the property.
He can make a will.
He can, but he may not. He may leave his property to his girlfriend and his wife's one third interest, if there are children, may fall short of giving her full ownership of the family home. This is not a theoretical area because, whether one lives in a house of modest or substantial value, if a judgment is obtained against an individual, it is lodged against the family home. It may happen because one is responsible for an accident. As this is not addressed in the legislation, it will be teased out in the courts and some wives will lose out. Cases in the courts in relation to judgment mortgages under the Family Home Protection Act have shown that this Act does not provide adequate protection in that area. We know this is a problem and we should not ignore it in this Bill, we should provide whatever protection we can.
I want to make a point about the term "joint tenant". Obviously to the lawyers here and to many people it may be clear and comprehensible in the legal system, but from the point of view of the public the term "joint tenant" conjures up notions of landlord and tenant as opposed to joint ownership, which is what we are talking about. It is important in relation to this legislation that the Department produces a booklet or tries, at a later stage, to make it comprehensible to the public because, as we have seen, this legislation will produce unexpected effects. For example, we spoke about a woman who saved up to buy a family home because her husband had a lot of debts. There will be critical influences on the family and the family home as a result of this Bill. The 1989 Bill dealt with many of the issues, as Deputy Shatter said, about which women were worried. We have seen how complicated this legislation is and it is vital that at the end of the day the Department makes every effort to clearly inform the public about the changes this legislation will lead to.
I agree with the commonsense remark made by Deputy Fitzgerald, a non-lawyer. It is easy when lawyers debate these issues to forget that the public have not been made aware of the implications of this legislation. When talking to people over the summer vacation it became clear that many women in particular felt they already had right of joint ownership of the family home. They believed the 1976 Act in relation to the veto on the sale of the family home gave them joint ownership. This is important and radical legislation. People, married or contemplating marriage, should be aware of the changes which we are bringing into the law regarding the family home and relating to the marriage contract. It is an important and simple point, but well made and I concur with it.
I will briefly respond to the points made. I understand what Deputy Shatter said. He was right when he said there is no specific reference to a judgment mortgage in the legislation and we will look at that. It strikes me that joint tenancies are not created by this legislation, one can also voluntarily create a joint tenancy. A situation may arise whereby one can made a statutory joint tenancy in some way more beneficial vis-�-vis debts that might be owed on either person’s interest. A joint tenancy is then voluntarily created. That is something we will have to consider when looking at the Deputy’s suggestion.
Deputy Fitzgerald suggested the production of a booklet and I have passed that on to the Minister for consideration. I accept Deputy O'Donnell's point regarding those who who are under the impression that this legislation is in operation. I hope that with the co-operation of all sides of the House it will be in operation quickly.
I raise an issue of concern and I would like to hear the Minister's view on it. With regard to the inheritance of a family farm and inheritance tax, if the family home is in joint ownership and the farm is in the ownership of the man, will the fact that they are in different ownership mean that the family home will increase in value, thereby causing a problem for the son inheriting the home plus the farm? At present the value of the family farm automatically includes the home. That point has been put to me and I would like to know if there will be implications in that regard.
If the farm and the home are separated?
If the home is in joint ownership and the land is in the name of the man and they are both being transferred to the son——
I do not believe that a change of ownership would make any difference to the value. When an asset is transferred by way of inheritance one completes one's inland revenue affidavit, values it and may consult an auctioneer, etc. If the Revenue Commissioners do not agree with one's valuation they put their valuation on it and there is an appeals procedure. I do not believe a change of ownership will materially affect the value, particularly of a farm house.
It was put to me by a solicitor that it would affect the value.
Question put and agreed to.