Coiste Airgeadais. - Landlord and Tenant (Reversionary Leases) Bill, 1957: Report and Final Stages.

On behalf of Deputy McGilligan, I move amendment No. 1:

In page 2, line 22, after "lease" to add "and includes a person for the time being entitled to the interest of the lessee in the whole or part of the land comprised in the building lease."

I rather think the point Deputy McGilligan had in mind here is the point, under another guise, that I have in the amendment I have down to the Minister's amendment. Though it is not quite exactly the same, the point may be met by the Minister bringing in a definition of lessees to include executors, administrators and assigns. By the Minister's definition and my amendment everybody would be covered. Perhaps it would be better if we discussed the matter during the debate on my amendment.

I think the point is covered by my amendment.

Amendment, by leave, withdrawn.

I move amendment No. 2:—

In page 2, between lines 30 and 31, to insert the following definitions:—

"lease" means an instrument in writing, whether under or not under seal, containing a contract of tenancy in respect of any land in consideration of a rent or return and shall include a fee farm grant;

"lessee" shall, where the context so admits, be construed as including the executors, administrators and assigns of the lessee;

"lessor" shall, where the context so admits, be construed as including the heirs, executors, administrators and assigns of the lessor.

I move the following amendment to amendment No. 2:—

In the definition of "lessee", to add after "lessee" where it secondly occurs "and a person who has acquired by mortgage by sub demise the term created by the lease save a nominal reversion therein and the executors, administrators and assigns of such person".

Amendment No. 2, which the Minister has brought in, is merely bringing out of the parent Act of 1931 the definition there included and putting it into this Bill for the purpose of making it a more coherent whole. I think it is a wise course. I should say at this stage that, during the Committee Stage of the Bill, the Minister gave an undertaking across the House that he would submit the various points raised then and let me have his observations on them before we came to discuss the Bill on the Report Stage. The memorandum he sent me was most helpful indeed and I am grateful for it.

The point in my amendment is to cover the situation which is highly technical and yet arises fairly frequently. A person who has received a building lease, a building lessee, borrows money on the security of the property demised to him by the building lease, borrows it on mortgage. The normal way for a mortgage to be drawn is that the building lessee as mortgagor would demise to the mortgagee a sub-term of years, being the equivalent of the term of years demised by the building lease, save the last day or last three days thereof; the last day or the last three days, as the case may be in its circumstances, is known as the nominal reversion. If the mortgagor does not then repay the loan he has borrowed, the mortgagee, to recover the moneys he has lent, sells the property. If he does not assign the property, he has only the sub-term created by the mortgage to sell, and in certain circumstances he might not have the means of conveying the nominal reversion.

If he had not the means of conveying the nominal reversion, then it is pretty clear, as the Bill is drawn, the person who draws his title from that mortgagee sale, years and years after the mortgagee sale, would not be in a position to claim a reversionary lease. I think it is quite clear to everybody concerned, the commission, the Minister, and all of us, if a person had paid his money for the property comprised in a building lease, he should be able to get a renewal on the terms of that lease.

I would not suggest for a minute that the wording I have included in my amendment is a very eloquent wording to achieve exactly what I had in my mind. What I want to do is to protect a person who is a successor in title by purchase following mortgage in those circumstances and who has the whole term created by the reversionary lease, except the nominal reversion. I think it is desirable in such a case. I have in mind cases which I have come across in the course of my business from time to time, cases of old reversionary leases, and in particular those under the Conveyancing Act of 1881, where the root of title starts in that year. Many of them are 99 years leases and are now coming to an end. If there is no sound method put into this Bill to protect those people, whose predecessors in title have been in factual possession of the reversionary lease, whole term during all these years, then they will not be the lessees within the meaning of the Minister's amendment and will not, therefore, be entitled to the benefit.

It is nice to be able to pass compliments across the floor of the House and, on this occasion, it is my turn to say how grateful I was to the Deputy for sending along the letter of explanation. The position is that we have had the amendment examined at very short notice and it would not be possible for me to say now that I would accept it. I would say that between now and taking the Bill into the Seanad, I will have it thoroughly examined. It is quite possible we will be able to meet the Deputy's viewpoint, to some extent, if not entirely.

I am quite satisfied with that. Perhaps the Minister would give me the further courtesy of letting me know the result of that inquiry, so that I could discuss it with a colleague of mine in the Seanad.

Amendment to amendment, by leave, withdrawn.
Amendment No. 2 agreed to.

With regard to amendment No. 3, I think it would be covered by the Minister's amendment in the first place. Possibly it also becomes within the ambit of the discussions we have just been having on my amendment.

Amendment No. 3 not moved.

I move amendment No. 4:—

In page 2, between lines 31 and 32, to insert the following definition:

"urban area" means an area which is either a county or other borough, an urban district, a town or a village.

Amendment agreed to.

I move amendment No. 5:—

In page 3, line 35, before "evidence" to insert "prima facie”.

That is where we are meeting the Deputy.

You are meeting me completely on that.

Amendment agreed to.

I move amendment No. 6:—

In page 3, line 60, before "that" to insert ", until the contrary is proved,"

Amendment agreed to.

I move amendment No. 7:—

In page 4, to delete lines 6 to 10, inclusive, and substitute:—

(5) Permanent buildings erected by a lessee in pursuance of a covenant in his lease to reinstate the buildings comprised in the lease in the event of their destruction by fire or otherwise shall be deemed to have been erected by the person who erected the original buildings.

Amendment agreed to.

Amendment No. 8 is covered by Amendment No. 7 so that it does not actually arise.

I think so.

Amendment No. 8 not moved.

I move amendment No. 9 on behalf of Deputy McGilligan:—

In page 4, line 7, before "to" to insert "or sublease".

I move this amendment for the purpose of having the point considered.

This was also covered by No. 2, the definition of the lessee.

That brings in a sub-lease as well?

It is fully covered.

Amendment, by leave, withdrawn.

I move amendment No. 10:—

In page 4, to delete lines 18 to 29, inclusive, and substitute:—

(a) a lease granted by a lessor to the nominee of a person (in this paragraph referred to as the builder) to whom land was demised for the purpose of erecting buildings thereon in pursuance of an agreement between the lessor and the builder that the builder, having contracted to sell the buildings, would surrender his lease in consideration of the lessor granting new leases to the builder's nominees; and (b) a lease granted by a lessor to the nominee of a person (in this paragraph referred to as the builder) in pursuance of an agreement between the lessor, and the builder that the lessor, upon the erection of the buildings by the builder, would grant leases to the builder's nominees.

That is meeting the Deputy again.

It is a re-draft of the one I said was too cumbersome.

Amendment agreed to.

I move amendment No. 11:—

In page 5, delete lines 1 to 10, inclusive, and substitute:—

(ii) for the purposes of such division of the partly-built lease, such portion of the rent reserved by that lease as is fairly attributable to the land comprised in the built-on lease shall be deemed to be apportioned to the built-on lease and the remainder of the said rent shall be deemed to be apportioned to the vacant lease, and the covenants on the lessee's part and the conditions contained in the partly-built lease shall be deemed to be apportioned likewise so as to relate separately to the land comprised in the built-on lease and to the land comprised in the vacant lease.

That is meeting me again. I think it is more than a re-draft. It accepts the new principle which I suggested for the apportionment in the last case.

Amendment agreed to.

I move amendment No. 12:—

In page 5, line 61, before "shall" to insert "or for the residue of the term created by the lease whichever shall be the shorter".

This arises in relation to the proviso in the section of the Bill that deals with a penal or a special rent, sub-section (3) of Section 7. I have no quarrel at all with the wording of the Bill as it affects a penal rent, but there are frequently cases where a lease provides that one rent will be payable if the premises are used as a private dwelling house, and another rent will be payable if the premises are used as business premises—a shop or something of that nature.

I can visualise a position in which a lessee holding under such a lease opts four years before the end of the term to change the user of the premises into shop premises. It may be termed an exceptional rent as the Bill stands because at the time the lessee, of his own volition, decided to change the user of the premises, there were not five years more to run of the term. Even though he had of his own volition changed the user, the established rent could not be taken into account in considering the rent to be fixed under the reversionary lease. I think that is undesirable.

I can appreciate the Minister's point of view that a rent not to be considered exceptional should run for five years, but I would suggest that, where the lessee makes the move less than five years before the end of the term of the lease under which he holds, that exercise of a change of user by the lessee should not enable him to plead the provisions of this section. Therefore, I have suggested that one should take five years or the residue of the term created at the particular period, whichever shall be the shorter. I think that will obviate the difficulty I visualise.

I have consulted the draftsman on this amendment. It is admitted that there is some ambiguity about it and between now and Committee Stage in the Seanad, we will have this re-examined, with a view to seeing how far it is possible to meet the Deputy's viewpoint.

Amendment, by leave, withdrawn.

I move amendment No. 13 on behalf of Deputy McGilligan:—

In page 6, line 22, before "who" to insert "under him".

Is there any case? I do not think it is necessary.

I am afraid I am at the disadvantage that Deputy McGilligan became unwell only in the late afternoon. I understood he was going to be here. I had not the opportunity of discussing it with him and, frankly, I do not know exactly what he had in mind.

I hardly think it is necessary.

Amendment, by leave, withdrawn.

I move amendment No. 14:—

In page 6, line 23, to add after "lease" where it secondly occurs "of the land held by him under such building lease".

Is the Minister satisfied that this is already covered?

I think we can accept this amendment.

Amendment agreed to.

I move amendment No. 15:—

In page 8, line 12, before "shall" to insert "and his executors, administrators or assigns".

May I point out that amendments Nos. 15, 16 and 17 could be discussed together and separate decisions taken, if necessary?

Yes. This amendment to Section 14 (2) of the Bill, together with amendment No. 17, gives effect to suggestions made by Deputy Briscoe in Committee. They provide specifically for the eventuality that the interest of the applicant for a reversionary lease and of the person who successfully objects to the grant of the lease may have devolved on other persons before the applicant's lease expired. In regard to Deputy McGilligan's amendment, we can accept that also.

I should like to make a point, if I may, on these amendments. I will be quite frank and say that I am not terribly clear whether I am strictly in order or not, but I do not think, if you bear with me, Sir, the Minister will object. In the light of the Committee Stage and in the light of the amendments that have been sent to me from the Minister, a point struck me which I think is worthy of consideration.

I wonder could we take the amendments first and then the Deputy could raise that on the fifth stage?

I think it arises on these amendments. The amendments may have to be slightly redrafted, although they cannot be redrafted at this stage.

In relation to the operation of Sections 11 and 12, which give the lessee the right to wait to file his application until the last day of the term under which he holds, there is then the overriding provision in Section 14 which we are suggesting should be made to cover the successors in title. There is nothing, however, in the situation to permit a lessor going to the court and asking for a declaration that the lease in question is a lease to which Section 14 will apply. We all appreciate that in relation to any reversionary lease a lessor who successfully objects to granting a renewal under Section 14 because of site development must get out architects' plans, must consider whether town planning permission will be available or not and must also very often consider whether not merely the one single lease in question would come within the ambit of Section 14 but whether, in addition, another lease or perhaps more than that would also come within it.

A person who is the lessor of, shall we say, three building leases side by side may very well have the idea that the three can be developed as one entity, as one whole, and may decide to pull down and rebuild or to reconstruct the whole of the premises demised by the three leases but he cannot take any decision until the last of the three leases to which the reversion arises has come to an end. Consequently it would be much better and much cheaper for everybody that there would be a method by virtue of which one court decision would be obtained on the whole lot rather than that there should have to be three separate court actions.

I suggest that between now and the time this section comes up for consideration in the Seanad, the Minister should consider, in addition to the amendments he has put in here, whether it would not be an improvement to add a new sub-section to this section to permit a lessor to go to the court and ask for a declaration in just the same way as a lessee can at present go to the court under this section.

The suggestion I am making does not in any way impinge on the getting of, or make it more difficult for a lessee to get a reversionary lease. It does not in any way affect any of the terms in which a lessee can get a reversionary lease or change the basis of compensation which is to be paid to him, if he does not get a reversionary lease. It does what this section is intended to do, that is, to modernise. At the same time, it provides a method by which if a person is the lessor in more than one reversionary lease, there can be one court of decision to cover all the reversionary leases in question and the costs therefore will be apportioned between several premises, rather than that there should be the additional costs on each premises of a separate applicant to the court. Clearly, this is not a matter which I would expect the Minister to deal with now, but I should be grateful if he would consider the matter between now and the time it goes to the other House.

As the Deputy knows, these things have been tossed on to us within the past couple of days. It is very difficult to give the type of considered examination to amendments of this kind that is so necessary before we turn the Bill into law. I discussed this myself to-day with the people whom I regard as experts in this matter and I am satisfied that the Deputy is probably on the right lines, but there again I cannot say at short notice that it is the sort of amendment that could be accepted right off.

I did not expect the Minister to say that. I would be perfectly happy if he would consider it between now and the Committee Stage in the Seanad.

I was going to say that I would have the draftsmen get after it again between now and the Committee Stage in the Seanad.

Amendment agreed to.
Amendment No. 16 not moved.

I move amendment No. 17:—

In page 8, line 16, before "becomes" to insert "or his successor in title".

Amendment agreed to.

I move amendment No. 18:—

In page 9, line 18, to delete "person by whom the compensation was payable" and substitute "successful objector".

Amendment agreed to.

I move amendment No. 19:—

In page 9, to delete lines 23 to 27, inclusive, and substitute:—

(7) In this section "applicant" and "successful objector" shall, where the context so admits, be construed as including their respective executors, administrators and assigns.

This is also a drafting amendment.

Amendment agreed to.

I move amendment No. 20:—

In page 11, lines 24 and 25, to delete "under Part V of the Act of 1931 or this Act", and substitute "on or after the 31st day of March, 1931, to a building lessee or a proprietary lessee".

Amendment agreed to.

I move amendment No. 21 on behalf of Deputy McGilligan:—

In page 11, line 25, before "by" to insert "on terms settled".

I think the trouble the Deputy had in mind was the system which obtains when the court in fact deals with a dispute between a person claiming to be entitled and the lessor. I think he had in mind that in fact it is not correct that the court grants a lease but that in fact the terms of the lease are settled by the court in default of agreement between the parties. In practice, the terms would be settled in court, but the Order would be that the lessor must grant the lease and the grant comes from the lessor, not from the court. I think it is a matter that might be considered by the Minister.

I think we can accept that.

Amendment agreed to.

I move amendment No. 22:—

In page 11, to delete lines 33 to 51, inclusive, and substitute:—

19.—Where a lease is terminated (before the expiration thereof by effluxion of time) by ejectment for non-payment of rent, breach of covenant or otherwise or by the exercise by the lessor of a power of re-entry for breach of a covenant or a condition contained in such lease, the following provisions shall have effect:

(a) no sublease of the land or any part of the land comprised in the terminated lease which is a building lease or a proprietary lease shall be terminated by such termination;

(b) the person who would but for this section become entitled by virtue of the termination of the terminated lease to the possession of the land comprised in such sublease shall become entitled to the reversion on such sublease and, subject to section 20 of this Act, to the benefit of the rent reserved by and the covenants and conditions contained in such sublease;

(c) such sublease, if not already a building lease, shall be deemed to be a building lease.

Section 19 of the Bill is a re-enactment of Section 51 of the 1931 Act and provides protection against ejectment for any immediate sublessee of the building lessee who is a proprietary lessee, in the event of the building lessee being ejected before his lease normally expires. It has been represented that the section, as it stands, is defective in three respects. Firstly, it gives no protection to a sublessee who is a building lessee, although it would be reasonable that his interests should be protected, whether or not there is a proprietary lease in existence; secondly, the section gives no protection to a sublease which is a building lease or a proprietary lease, unless it is an immediate sublease under a terminated building lease, and thirdly, there is no protection given, unless the superior lease which is terminated is a building lease or partly built lease.

Amendment agreed to.

I move amendment No. 23:—

In page 11, to delete lines 52 to 57, inclusive, and in page 12, to delete lines 1 to 12, inclusive, and substitute:—

20.—The lessee under a sublease to which paragraph (a) of Section 19 of this Act applies shall, from the date of the termination of the terminated lease, hold the land demised to him at whichever of the following rents is the greater—

(a) the rent reserved by the sublease, or

(b) such portion of the rent reserved by the terminated lease as is fairly attributable to the land comprised in the sublease.

Amendment agreed to.

I move amendment No. 24 on behalf of Deputy McGilligan.

In page 13, line 18, to delete "such person" and substitute "the person so incapable".

In sub-section (3) of Section 23, line 18, there are the words "the court may, on the application of any person concerned, by order empower such person to grant or join in granting (as the case may be) such reversionary lease". "Such person" there is normally taken as referring to any person who is making the application. Of course, it is not the person who is making the application who has got to join; it is the person on the other side.

That is the person so incapable.

I think that is not a good word.

I would not quarrel with the Minister over the word. I am anxious to ensure that the two persons are distinguishable.

I would be prepared to accept that if for "incapable" were substituted the words, say, "person so bound".

Very good.

We accept it with that alteration.

Amendment, as altered, agreed to.

I move amendment No. 25:—

In page 13, line 19, after "lease", to add, "and a reversionary lease which a person so empowered shall grant or join in granting shall be as valid and effectual in law as if such person had been capable of granting or joining in granting such lease".

There can be an argument that if there is not something to direct that a reversionary lease is to be valid in this way, it might be possible to offset it at a later stage as not having being granted in the ordinary way. This amendment would prevent that eventuality arising.

This is one of the suggestions that Deputy Briscoe made that I had to turn down on that occasion. It proposes that sub-section (3) of Section 23 shall specifically provide, as sub-section (4) does, that a lease which a person is empowered to grant under the section is effectual in law. The parliamentary draftsman has considered this point carefully. He points out that there is an important distinction between sub-section (3) and sub-section (4). In sub-section (3), the person who is empowered by the court to grant a reversionary lease is the person who has power to grant it, who has already the title to the property and who would have full power to grant the lease, but for some legal incapacity such as infancy.

The sub-section provides that the court may by order empower such a person to grant a reversionary lease (in effect removing his legal capacity) and it is considered that further specific provision about the validity of the lease is unnecessary.

In sub-section (4), on the other hand, the person being appointed to execute a lease is an officer of the court who is a complete stranger to the title. For this reason the sub-section makes specific provision for the validity of the execution of the lease by such a person. I am not accepting the amendment.

Is this the matter upon which Deputy Sweetman was in complete disagreement with me last week?

No, it is not. The Deputy should go back and read the debate. It was on an earlier section that we were in disagreement.

There may be this point in it: both sub-sections do not specifically deal with a person who is unknown or unascertained. Taking sub-section (4), where a person is an infant, that can clearly be ascertained; where a person is of unsound mind, the disability is known. Do I understand from the Minister that "cannot be found" is enough to cover "unknown" or "unascertained"? If that is his view, I think we would accept it.

I am not accepting the amendment.

If Deputy Briscoe looks at columns 582 and 584 of the Official Report last week he will see that the section upon which I expressed myself as in complete disagreement with him was Section 17. We are at Section 23 now.

The Deputy will try to show a little bit of sportsmanship about it and not be crowing over an outside transaction.

I am not referring to an outside transaction.

Deputies will come to the amendment now.

The Deputy always honours his outside transactions.

I do, and I would like the Deputy to honour his undertaking to the House last week.

Amendment, by leave, withdrawn.

I move amendment No. 26 on behalf of Deputy McGilligan:—

In page 13, to delete lines 29 to 37, inclusive, and substitute:—

(5) Where any person who is bound by this section to grant or join in granting a reversionary lease is unknown or unascertained the court may, on the application of a lessee entitled under this Act to obtain a reversionary lease, by order appoint any person who is receiving the rent in respect of the applicant's interest in the premises, or such other person as the court may think fit, to represent such unknown or unascertained person in all proceedings in connection with the grant of a reversionary lease, and may by the same or a subsequent order appoint an officer of the court to execute such lease for and on behalf of the person so bound and unknown or unascertained, and thereupon the execution of such reversionary lease by such officer for and on behalf of such person shall for all purposes be as effectual as the execution thereof by such unknown or unascertained person.

(6) Where under sub-section (4) or sub-section (5) of this section the court appoints an officer of the court to execute a reversionary lease for and in the name of, or for and on behalf of, any person, the court may order the rent payable under the reversionary lease to be paid into court to such account as it shall fix, or may make such order and give such directions in regard to the payment of such rent as it may deem proper.

This amendment, let me say for the benefit of Deputy Briscoe, refers to Section 23 and not Section 17.

Tell us about Section 17. What did the Deputy learn over the week-end?

Section 17 is not relevant.

On a point of order. The Deputy promised that he would read something over the week-end.

That is not a point of order. I do not mind what the Deputy promised.

All the trouble about this arises from the fact that Deputy Briscoe did not come into the House in time for the discussion on Section 17 last week. We are now on Section 23.

I did not have to come in. The Deputy agreed I was right.

Amendment No. 26.

I am glad the Deputy has complete faith in my good judgment. The amendment now before the House tightens up somewhat the method of coping with a case where the lessor to an existing reversionary lease cannot be found, is unknown or unascertained. The purpose of the amendment is to amplify the powers given and to make it quite clear that in the event of a person being unknown or unascertainable, that will not constitute a bar to the lessee in obtaining his lease.

I am prepared to accept sub-section (5). With regard to sub-section (6), it would be necessary for us to consult the court officers— for example, the accountant and so on —to get their point of view. If their point of view coincides with the form of Deputy McGilligan's amendment, that would be all right and we would accept it. We could deal with the matter then when the Bill comes before the Seanad.

I am prepared to withdraw sub-section (6), leaving sub-section (5) stand. The Minister is prepared to accept sub-section (5).

I am prepared to accept sub-section (5) and to have sub-section (6) examined with a view, perhaps, to inserting it at a later stage in the Seanad.

Amendment, as altered, agreed to.
Question—"That the Bill, as amended, be received for final consideration"—put and agreed to.
Question—"That the Bill do now pass"—put and agreed to.