Dáil Éireann díospóireacht -
Thursday, 27 Apr 1961

Vol. 188 No. 9

Committee on Finance. - Agricultural Credit Bill, 1960— Committee Stage.

Section 1 agreed to.

SECTION 2

Question proposed: "That Section 2 stand part of the Bill."

Mr. Sweetman

The Minister is seeking power in this section to enable the Corporation to divide its ordinary stock into different classes. There are two ways in which that can be done. One is to divide it into ordinary preference stock and the other into deferred stock. In relation to the Agricultural Credit Corporation, deferred stock will have no meaning at all and therefore I think it is not visualised. The attraction that used to exist in relation to preference stocks is one that has gone completely by the board unless, perhaps, one exempts from that statement the type of redeemable preference stock that can be made under the last Companies Act.

I think it more likely that this phrase is intended to cover voting and non-voting shares. I do not think that in relation to a company set up by this House and that will be financed by public moneys, whether they are direct or by way of guarantee, it is proper in any circumstances that there should be a division between voting and non-voting shares unless the State holds the voting shares. As far as I understand the situation, this is giving the Corporation itself power to deal with this matter. The decision of the Corporation in relation thereto is not subject to the consent of the Minister in the same way as the consent of the Minister is necessary to increase the capital. I am not happy that I have read the Section properly and I should like some guidance from the Minister with regard to it. It says that it shall be lawful for the Corporation, subject to the consent of the Minister, to increase its capital and it goes on to say: "and, if it so thinks fit, to divide ..." If the consent of the Minister is to cover both acts that are intended, it seems to me that the consent of the Minister should be expressed in a much clearer way.

I know from my own experience that there is always consultation about these things but it is far better, when one can, to avoid, in the initial stage, any possible misunderstanding at a later stage. It seems that the division of stock into different classes at the option of the Corporation would, in this particular case, be at the option of the directors. I suggest that there might be some better clarification of this phrase although I accept that, in the case of the ordinary commercial company, it is a normal phrase.

Dr. Ryan

I do not know the legal position in this matter, as to whether they can do it at an ordinary meeting or not. I imagine that it might have to come before some other meeting for confirmation. I shall have that matter looked into. I should like to agree with the Deputy that no big change such as that should be made without the Minister's consent, so long as the Minister has the majority of the shares. We are bringing in the idea of stock as well as shares here. That is a matter of convenience because most big companies who have transactions on the Stock Exchange find that stock is more convenient than shares in the way of transfer.

Mr. Sweetman

Perhaps the Minister would explain why.

Dr. Ryan

The idea I had was to cover certain contingencies. We are anxious to get farmers to invest in this company. At the same time I have been telling the company that they must take some chances and some risks but I do not want them to put up the interest rate to cover that risk. What I really mean by that is that when they have made up their accounts and discovered their profit and loss, we shall then consider what interest we will take. We may be prepared to take less than the four and a half per cent. if circumstances force us to do so.

It might be too much to expect farmers to invest their money in that sort of an undertaking that might pay a very small dividend, perhaps for some years or perhaps for a long time. I thought the best way to get over that was to have ordinary shares, ordinary shares A and ordinary shares B. The ordinary shares A provide a guaranteed dividend. I do not want to say to the farmers: "Put your money in preference shares," because then they would have no control. The A shares would have a guaranteed dividend and farmers would be quite safe in investing in them. For the B shares, being held by the Minister for Finance, the circumstances would determine the dividend. In regard to whatever change might be made, I shall look into the suggestion made by the Deputy that the Minister for Finance should be in a position to take part in the discussions.

Mr. Sweetman

I do not think the Minister is correct in what he says if he is anxious only to provide that farmers will have a guaranteed dividend and that he will have control. You can give preference shareholders control the same as ordinary shareholders. You can give them power to vote and elect directors. The power to provide for the division of the capital into stock, as apart from the units, exists in all modern companies now. The only purpose and reason for it is that it cuts out a lot of very unnecessary administrative clerical work. If you keep your ordinary capital in shares, every time you transfer a share you have to keep and express on the transfer and on all the books of the company the number of the share so transferred. If you do them in stock, you can run them on consecutively. You can merely write it down as £1 10s. worth of stock. I think that is what is being done here.

Dr. Ryan

I have been reminded that under Section 14 subsection (2) of this Bill, the company cannot make any change in the articles of association or memorandum without the consent of the Minister.

Question put and agreed to.

Sections 3 and 4 agreed to.

SECTION 5

Question proposed: "That Section 5 stand part of the Bill."

Dr. Ryan

I do not know whether the Guarantees Act would cover our problem here. It is to give the Minister power to give the Corporation guarantees on its borrowings. It makes every possible provision for any form of borrowing the Corporation might require and gives the Minister more power to guarantee such borrowings. I am not quite sure whether this would be sufficient in this case.

Mr. Sweetman

It is perhaps tidier to have all Agricultural Credit Corporation activities in the one Bill.

Question put and agreed to.

Sections 6 to 8, inclusive, agreed to.

SECTION 9

Question proposed "That Section 9 stand part of the Bill."

Mr. Sweetman

Some difficulty has been raised in certain places as to the definition of a person in occupation of land. It arises in subsection 12 (b) of this section. What exactly is visualised there as between the rated occupier and the person in actual occupation of the land? I am not very clear, if a person is described as being in occupation of the land, whether that means the person to whom the land is let in conacre can be included as a person who may ask the Agricultural Credit Corporation to operate a charging order. That does not seem to me at all the situation that would normally work. The charging order is intended to cover the case of the ordinary person who is in occupation of the land but whose title may not perhaps have been brought up to date.

The person to whom land is let under a conacre agreement is an entirely different person. The person to whom the licence is granted in the case of a letting is the person whom I thought we intended to cover. The paragraph is a bit complicated. I think it covers all right the point that is raised, but I want to be absolutely certain. There are three ways in which land can be utilised by persons other than the owner. One is by leasing it. Under a lease, the occupation in law and for the purposes of Schedule B Income Tax, passes to the lessee. There is also a letting in conacre for tillage purposes and there is still another letting under a grazing agreement for pasturage purposes.

What I want to know clearly is whether, in those three cases, it is the person who pays the rent who is the only person who can consent to the charging order or whether it is the person who receives the rent who is the only person who can consent to the charging order. I think the intention is that it should be only the person who is receiving the lease rent, the conacre rent or the grazing agreement rent, but it is not clear because the last line refers to the person by whom the land is so let. It does not mention at any stage the question of the lease by letting. Up to this, that has not mattered very much because the restrictions on sub-letting and subdivision imposed by the Land Acts have previously been in respect of 95 per cent. of our agricultural land, but in the earlier Land Acts, there is prohibition against letting merely so long as the annuity remains.

Many of these Ashbourne Act annuities are coming to the point now at which they will be paid off and the statutory prohibition against sub-letting will be gone. There are not many cases but there are a few where it is desirable to make a temporary letting of land. It applies particularly in a case where a man dies and leaves a widow and children, of whom the eldest may be 10 or 12 years of age. The widow may want to keep the farm but is not able to manage it until the young lads grow up. I want to be sure beyond question that if she makes a letting to someone for a period of two or three years until the eldest boy comes to an age at which he will be able to take an active part in the management of the farm, she does not give the lessee the right to put on a charging order. I think under the Act she is clearly not giving the conacre tenant, or the grazing agreement tenant, the right, but I want to have the other case covered, too, and to be certain beyond question in relation to the grazing and conacre tenant.

Donnchadh Ó Briain

In connection with Section 9, does it cover the case of an applicant for a loan who is in occupation of a farm of land but has not yet got the title up to date? The title might be in the name of his father or his grandfather who might have been dead for years. I have seen a number of such cases, involving applicants for loans where the title was not in order. Would this section cover that?

Mr. Sweetman

That is my understanding of the purpose of this section.

Dr. Ryan

Yes, that is right. As to the case raised by Deputy Sweetman, a good deal of thought was given to this subsection with regard to the occupier. If you take the rated occupier or the person who is paying the annuity, it was pointed out, that man might have gone to England, America, or somewhere else, and left his brother in possession. His name might still be down for paying the annuity or the rates. In two cases already, I understand, in the case of the Gaeltacht Housing Act and the Land Project legislation, the question of occupier was left open and it has worked very well so far. I believe it is almost impossible to find who the occupier is and the Agricultural Credit Corporation will have to exercise care and discretion in dealing with an occupier, but that is all one can say.

There are certain exceptions like agistment or conacre where the land is land for crops or grazing. I am not sure whether the Deputy would be satisfied that in the case of a widow, which he mentioned, where the land is let for three years, she would be covered by these exceptions as laid down but I think it might be taken that if there is any care exercised at all, she would be protected. How to protect her in words is a very difficult matter. The drafting would be extremely difficult if you depart from the word "occupier" at all, except to put in certain specified exceptions as are put in here, if land is land for tillage or grazing. That is all you can do.

Mr. Davern

I should like to ask the Minister if a person who is in possession of lands through intestacy, perhaps because he cannot take out administration because one of the beneficiaries is in a mental home, does that section apply and would he be in a position to apply for a loan?

Dr. Ryan

For a permanent loan, but I am not so sure for a current loan. There is a difference in regard to the power of the Corporation under this Act to give a current loan, where it would have to be the owner in that case, and a permanent loan which they can give to the occupier. In the case mentioned by Deputy Davern, I am afraid the person could be regarded only as the occupier and only get a permanent loan until steps were taken to become the owner of the land.

Mr. Sweetman

It is quite proper that the Minister should restrict this pretty far-fetching power to something that was going to be of use to the holding in the future. Otherwise, if a person were in occupation and got a loan allegedly, shall we say, for buying stock and did not use it for that purpose, the man who really owned the holding when he came back would have a "blister" on his holding and nothing to show for it, but in this case there will be a permanent improvement on the holding when he comes back. I am talking now of the case mentioned by Deputy Davern.

I agree with the Minister that it is frightfully difficult to draft something which covers every case. You could not produce a form of words in relation to occupation which would cover everything. I do not think it would be much hardship on the Corporation to have a provision like this, that before they issue a charging order, they would give notice to anybody who, they were aware, had an interest in the land, not anybody who had an interest in the land because that would be just as bad as providing for the title to be properly modernised and brought up to date, but that they would give notice to anybody who, they were aware, had an interest in the land. It would enable, for example, a person not covered by the existing form of words to cover themselves by giving notice to the Corporation that they were making this unusual arrangement and that they had an interest. The Corporation in the course of their inquiries will become aware of people who have an interest in the land and are not actually occupiers at the moment. If they had to give notice of some sort like that, then the people who are going to be prejudicially affected could come along and make their case by some form of procedure. It would add a little but I do not think it would add very much and I can see it preventing injustices in one or two cases. It is not the sort of thing I would expect the Minister to answer offhand.

Dr. Ryan

I am quite prepared to consider it but naturally I would have to consult the Corporation who might see very big objections.

Mr. Sweetman

What is going to happen in relation to a chargeable order where a loan is already in existence? Is the Corporation restricted here to giving a charging order where they would obviously be first mortgagees on the title? Are they entitled to make a charging order subsequent to a bank mortgage? If the land certificate is already extracted from the Land Registry, must the land certificate be handed back to the Land Registry before the charging order is made? If not, I can see that this power is going to create complete chaos.

I am not averse, when discussing political matters, from taking advantage of the Minister, but this is not a political matter and I do not want to take advantage of the Minister because I have some legal experience of it. The land certificate in respect of a holding is the only document of title that matters. If anybody takes out a land certificate for a holding, subject to a land purchase annuity, that is his Government-guaranteed document of title according to what is written in that land certificate. Farmer "A," shall we say, takes out that land certificate. He then proceeds to take that land certificate to somebody else and, with that as security, borrows from a bank, or from a business—it does not matter.

He goes on paying the interest on that loan for a number of years. Then he dies and a brother, or perhaps his son, goes on in occupation and does not bother to extract the necessary administration to put the title in proper order. The brother goes to the Agricultural Credit Corporation and offers himself as a guarantor. The Corporation say: "All right. You are a good guarantor. This is a good holding of which you are in occupation and we will secure ourselves by means of a charging order." There is already in existence a perfectly valid legal equitable deposit of the land certificate. It would be most unfair that that valid mortgage already in existence would be jumped, so to speak, by this charging order.

I should like the Minister to assure me that there is provision by which that cannot happen because, unless there is clear provision that that cannot happen, the remedy will be far worse than the disease because no one will give any loan on the equitable deposits of land certificates. The same thing would happen in relation to freehold land. I have taken the land certificate because that is a simpler case.

In relation to certain freehold lands there may be some difficulty in that there may not be deeds at all available, perhaps because it may have originated as a squatter's title years and years ago, but these cases are few and far between. But, in relation to registered land, the numbers of loans that are made on the security of a deposit of the land certificate alone are legion and unless those loans are protected, then this power, which is a good power otherwise, will make complete chaos of the existing system. That is the first point I want to raise.

I am not quite clear whether I should have raised this second point earlier but, while not strictly relevant, it might be convenient to take it here. Are the Agricultural Credit Corporation themselves going to be entitled in future to take security by way of an equitable deposit as apart from a charging order or a written legal mortgage? The Minister, I imagine, knows what an equitable deposit is, or does he want me to explain it to him?

Dr. Ryan

I do.

Mr. Sweetman

Is it clear that the Corporation can in future adopt that method? Up to this I have certainly never seen a case in which they did. They may have had the power but I have never seen a case in which they did and it would be highly desirable that they should have that power, particularly in relation to temporary loans for stock purposes which are going to be paid off within a matter of two or three years.

The third question that perhaps arises here in another way is related to my first question, that is, that the existence of a charge on the land certificate should not prevent the Corporation securing their guarantee by way of charging order but it should provide that when the Corporation do guarantee by charging order it will operate exactly the same as any ordinary second mortgage operates. If that is not the case, then it is going to mean that there will be an unnecessary clog in the machine because all the first mortgages would have to be paid off first.

I think at the present time there is a restriction on the Agricultural Credit Corporation making a mortgage in certain circumstances, certainly in respect to a revised land purchase annuity. It is not quite as stringent as the restriction that exists in the Small Dwellings Acts but it is there and it should be clear that they can make a charging order operating, not to defeat the first mortgage, but just as a second mortgage would operate under the more costly and cumbersome procedure.

Dr. Ryan

First of all, as far as this power is concerned, it is giving the Corporation additional powers to charge and it does not take from the power they already have to look for a mortgage or to look for what the Deputy refers to as an equitable deposit of the deeds. They are already open to them. I have never known the Corporation to ask for a deposit of the deeds. I have known them, of course, to ask for a mortgage.

Mr. Sweetman

Have they power to lend on deposit of deeds at the moment?

Dr. Ryan

Not at the moment anyway, no, they have not. Whatever powers they have at the moment are not taken from them. This is additional.

Mr. Sweetman

I appreciate that.

Dr. Ryan

I am glad the Deputy mentioned that he did not expect that I would know as much about the legal part of this as he does which, indeed, I do not but, as far as I understand it, if the Corporation want to register a charge they will have to get the land certificate and, if the charge is already there, it is open to them to take a second charge if they like or to ask the applicant to discharge the charge already there and give them a first charge. As Deputies know, the Agricultural Credit Corporation very often give enough of a loan to a person to pay off a small debt to a bank and to give them the whole charge on the place or whatever it may be, and I am sure they will operate like that in future also. There is no question of their jumping in before a charge already made. They cannot do that. They must take second place or ask for the charge already there to be removed and for them to be given a first charge.

Mr. Sweetman

I misunderstood the position, then. I thought the charging order for the Agricultural Credit Corporation would operate in the same way as a charging order for the Board of Works. A charging order for the Board of Works affects registered land without registration because of the exception that is provided in Section 47 of the Local Registration of Title (Ireland) Act, 1891. I understood on Second Reading of the Bill that it was indicated that this was going to work in the same way as a Board of Works charging order. If the situation is merely going to be that the charging order is the positive act by the Corporation in substitution for the positive act signed by the owner in the shape of a mortgage in the ordinary way, then, of course, the Minister is perfectly correct when he refers to the question of registration in the Land Registry and that the land certificate would be required. It depends entirely on whether this is going to be in fact the land reclamation procedure or whether it is going to be the Board of Works procedure.

I think that under the Land Reclamation Act the procedure is that before the Minister's loan is secured, the land certificate has to be brought into the Land Registry and marked. That is not, of course, the situation in relation to the Board of Works at all.

The Minister, when replying a second ago, confirmed my belief that the Corporation have no power at present to make a loan on equitable deposit of deeds. At least, I have not ever examined whether they have the power or not but I have never known it to happen. I am trying to help the Minister but I think he feels they have no power.

Dr. Ryan

I do not think so.

Mr. Sweetman

I want to urge very strongly on the Minister—I do not know whether this is the right section on which to do it—that they should have that power. I cannot see why if a person is registered as the owner of land with all the appropriate documents to prove title, including his land certificate which he gets from the Land Registry for a fee of £1 or 30/-, he cannot go into the Corporation and that the Corporation cannot accept that deposit from him for a short loan the same as the bank accepts it. I suppose in relation to the commercial banks, at least 50 per cent. of the advances to farmers on the security of their land are carried through by way of equitable deposit.

Dr. Ryan

That is right.

Mr. Sweetman

Probably I am putting it too low but for the sake of argument let us say 50 per cent. It is much handier and much cheaper. It means, particularly in relation to a short-term loan, that when he has borrowed money for stock and paid it off at the end of three years, he gets back his land certificate and there are not further liabilities and no costs involved.

If we want the Agricultural Credit Corporation to be of assistance in developing agricultural production by providing useful agricultural credit why can we not let the Agricultural Credit Corporation adopt the cheapest method possible? I believe that in a very great number of cases where a charging order would be made there would be no necessity for a charging order at all if the power of equitable deposit were available.

I agree with the Minister that there are perhaps three methods of pledging land. There is the written mortgage. Deputy de Valera would immediately criticise me for so calling it; we could call it the mortgage in writing covering the legal estate but for the sake of simplicity let us call it the written mortgage. That is the most expensive method.

It is also the most secure method because certain extra powers can be put in it and, when the loan is going to be for a very long time, very often the lender insists on that written mortgage. When that written mortgage is paid off, not merely has the owner of the land incurred pretty substantial costs in having the mortgage attached to his loan but when it comes to be paid off he has to bear the cost of paying it off and the cost of discharging it. The cost of discharging it is not very heavy but it is something.

The second form is the charging order. The charging order is going to be made by the Corporation itself and at considerably less cost to the registered owner than the written mortgage in the initial instance, but when it is paid off again there is the cost of discharging it.

The third type of security available to a lender is the equitable deposit of the deeds. There is no expense involved on the owner, if his title is in order, in giving his land certificate to the Corporation and saying: "I am depositing this as security for my obligation to the Corporation." When he has paid it off, there is no expense involved because all the Corporation has to do is to send him the land certificate by registered post or write him a letter asking him to come and collect it.

Why should we impose on borrowers unnecessary costs particularly in relation to short-term loans? I am not making the case to the Minister that the Corporation must lend in every case on equitable deposit. That would not be right either, but there are cases where equitable deposits are good enough for the banks. If there are cases where equitable deposits are good enough for the banks, why can they not be good enough for the Corporation?

I do not understand why the system of equitable deposit was omitted from the 1927 Act except perhaps at that time there was a certain amount of jealousy between the Corporation and the banks for reasons of which the Minister is aware. I know a little bit about what happened in relation to the Corporation in 1927. I do not know why this system has not been used. It is a simple method of borrowing money on the security of land. It is inexpensive both in relation to borrowing and in relation to the redemption at the end of the repayment of borrowing. I would therefore urge the Minister very strongly to introduce it here.

Major de Valera

I did not intend to intervene in this discussion but I do think the point made by Deputy Sweetman might perhaps be usefully pursued by the Minister. What he said in relation to what he called written mortgages had not occurred to me in that way. There will be cases where that procedure is desirable, whether it be for a private lender, a bank or a State Corporation such as this. In regard to the charging order, my memory is very vague. Perhaps Deputy Sweetman could help me. Am I right in thinking the charging order originated in attempts to simplify mortgage proceedings in regard to registered land?

Mr. Sweetman

Not necessarily registered land; in regard to procedure started before the Land Acts.

Major de Valera

I forget how it originated but it was a procedure that tended to be applied under the Land Acts.

Mr. Sweetman

Prior to the Land Acts.

Major de Valera

In any event it is a statutory procedure.

Mr. Sweetman

It is.

Major de Valera

It would be natural that all State bodies and State-sponsored bodies would tend towards that and that the charging order would be preferred to the old mortgage procedures which were found cumbrous. Side by side with this, the procedure in regard to the equitable deposit grew up and has been found to be a very convenient method for raising loans. The question I would like to ask—perhaps Deputy Sweetman could answer it—is whether there is any objection to such a procedure in regard to State companies, because if there is not I would recommend to the Minister that all approved legal methods should be available to the Corporation. I see no reason why machinery under the very heads Deputy Sweetman has mentioned should not be made available to the Corporation in this case unless there is some specific reason why any of them should be excluded. That is how I should like to recommend it to the Minister's consideration.

There is the other point which Deputy Sweetman raised about priorities of mortgages. I am sure that matter cannot have been overlooked by the Minister or his advisers. It is fairly obvious that if priorities are not observed, the effect will be to restrict procedure to the procedure which has a priority. I should imagine that unless there is some specific enabling power giving specific priority on any procedure in relation to this Act, the normal rules in regard to the priorities of mortgages should hold. The Minister might consider those points if he has not already dealt with them.

Dr. Ryan

There is no doubt about the priorities. They are perfectly safeguarded.

Mr. Sweetman

I assume there is no doubt about them, but I would be obliged if the Minister would refer me to the reference which protects them.

Dr. Ryan

Subsection (3), I think.

Mr. Sweetman

No. I do not want to interrupt the Minister——

Dr. Ryan

It does not give power to take priorities.

Mr. Sweetman

It is done in a negative way?

Dr. Ryan

You have to be given power to take a priority. However, I shall have it examined again.

Mr. Sweetman

I think the Minister may have the answer there.

Dr. Ryan

It is one question I asked. The Deputy made a very good case for the convenience and so on of the equitable deposit of deeds. There is no cost on charging. That is specifically provided for. The Corporation will not charge the applicant anything by way of costs to register his charge and the Registry of Deeds also makes no charge.

Mr. Sweetman

When it is paid off, the Corporation un-charge it, so to speak, without cost?

Dr. Ryan

That is right—there is no cost. I am told there is a peculiar legal point which I find hard to understand. If you have correspondence in the case of an equitable deposit, it is illegal. It must be handed in without correspondence, so that if a person starts off by making an application in writing to the Corporation for a loan, it would appear that it would be illegal to make the deposit. It is a legal point which I cannot understand.

Major de Valera

Certain decisions on the benefits that accrue from equitable deposits of deeds arose from the fact that when the deeds are deposited there is no memorandum in writing. If there is a memorandum in writing you are caught up in legal consequences which have, from a practical point of view, certain objections. It is perfectly true that if there is a memorandum in writing accompanying or related to——

Mr. Sweetman

I think "accompanying" is the operative word.

Major de Valera

It is a nice point whether preliminary negotiating correspondence can be related to a deposit of deeds. I think that would be pressing it too far. Supposing I want to borrow some money from a commercial bank and I have some property. It is perfectly obvious that I might have some correspondence with the bank manager in advance, if I approached him for a loan or an overdraft without security and he might write back to me and say I could not have the advance. There would be that correspondence between us, and then I would call to see him and we would have a conversation about the deposit. Would there then have been correspondence between us in relation to the deposit? Would there be a memorandum "accompanying" it, to use Deputy Sweetman's word? I do not know what the deposit law would be on that point. It is obviously a matter for the lawyers. There could be objection to it without doubt.

Dr. Ryan

We will look into it.

Mr. Sweetman

The Minister did not answer the other point. Perhaps it was overlooked in the general discussion. Is there power for the Corporation to make advances secured by means of a second charge, if the Corporation so desire?

Dr. Ryan

Yes.

Mr. Sweetman

Did we make the amendment on page 9 dealing with the misprint? The Chair gave notice the last day this Bill was before the House that there was a misprint in subsection (10). I am not quite clear whether it was amended or whether we are to amend it now.

Dr. Ryan

It was done.

Mr. Sweetman

It was dealt with as a misprint?

Dr. Ryan

Yes.

Question put and agreed to.

Section 10 agreed to.

SECTION 11.

Question proposed: "That Section 11 stand part of the Bill."

Mr. Sweetman

I am not quite clear what exactly is the purpose of the change in this section from the original Section 13 of the 1947 Act. I made an effort to understand the comparison between the two, and really I do not see that the Minister is making such a difference in his actual powers. He has set out, as I understand it, the powers in the original subsection of Section 13 of the 1947 Act, and he has taken them out of one paragraph and sub-divided them into two paragraphs. That does not seem to me to be a very epoch-making reason for this section. There must be some other reason. I should like the Minister to give me some explanation as to why it has been done in this way at this stage.

Dr. Ryan

The material difference is that under Section 13 of the 1947 Act, the Minister could make advances only out of voted moneys. This change brings it into line with other State bodies.

Mr. Sweetman

Below-the-line issues?

Dr. Ryan

He will make advances in any way that is open to him.

Mr. Sweetman

The Minister said "voted moneys." Does that mean that, in future, they will all be below-the-line issues? I thought the Agricultural Credit Corporation was below-the-line.

Dr. Ryan

That would be voted money, would it not?

Mr. Sweetman

Surely not. Surely a below-the-line issue is not voted money? Surely only above-the-line is voted money. I am always willing to be instructed.

Dr. Ryan

My opinion is that they are all voted, anyway. The Table on the first page of the Estimates is for the convenience of Deputies.

Mr. Sweetman

I am not talking about capital services.

Dr. Ryan

They are all voted, are they not?

Mr. Sweetman

All capital services, yes, but this is not a capital service surely?

Dr. Ryan

The advances will be made from the Central Fund. They may be made up to the limit of £10, as fixed by Section 3 of the Bill. They will bear interest in the ordinary way and so on. It will not be necessary to put any money into the Book of Estimates and make it voted money in future.

Mr. Sweetman

The Book of Estimates covers only services classified as capital services in that Book. Apart from that, moneys have been issued to the Agricultural Credit Corporation over the years that were never included in the Book of Estimates at all. They are below-the-line issues. That is what a below-the-line issue is, surely—an issue made directly out of the Central Fund on the direction of the Minister for Finance without the necessity of coming to this House, a standing direction included in a particular Act? In this case, I think the parent Act is the Agricultural Credit Act, 1931, although I am not positive of that. I do not see where voted money comes into this at all. I thought this was a provision—I was not sure and I wanted the Minister to clarify it—to enable moneys to be issued from the Central Fund to the Agricultural Credit Corporation either for stock or for loans—

Dr. Ryan

It covers that.

Mr. Sweetman

—and that in fact what it is doing is repeating again exactly the same procedure as was there previously, but for a new total advance figure. If that is the reason, I do not understand why it was broken down into three paragraphs here, whereas it always has worked perfectly adequately before in subsection (1) of Section 13 of the Agricultural Act, 1947. When something like that has worked perfectly adequately over the years in a particular form and one wants to extend the limit, one brings in an amendment extending the limit. We have done something else here. I have a suspicious mind, and when I see a particular section of a Bill brought in in a form other than the normal way, I start to scratch my head and wonder what is the purpose of it. I am afraid, therefore, I must ask the Minister to explain the purpose of the section. I do not think the explanation the Minister gave off the cuff a few minutes ago was the correct explanation. It has nothing to do with voted moneys; it never had anything to do with them. It was always a below-the-line issue.

Dr. Ryan

The only difference I can see is that in the 1947 Act the expression is used "moneys provided by the Oireachtas." That is not in the Bill. I take it that means voted moneys.

Mr. Sweetman

Can the Minister say if there was any money——

Dr. Ryan

The power was never used.

Mr. Sweetman

There never was any voted capital for the Agricultural Credit Corporation.

Dr. Ryan

It has never been given by way of capital so far.

Mr. Sweetman

I beg the Minister's pardon. I have misled the Minister. What I meant was: there never was any sum for the Agricultural Credit Corporation in the Book of Estimates?

Dr. Ryan

I believe not.

Mr. Sweetman

I am still not happy with the Minister's explanation. We will have another day on it when we have both looked it up.

Question put and agreed to.

SECTION 12.

Question proposed: "That Section 12 stand part of the Bill."

Mr. Sweetman

Could the Minister give us some figures about the operation of the chattel mortgage procedure up to this? I think I am right in saying that Section 12 refers to chattel mortgages?

Dr. Ryan

Yes.

Mr. Sweetman

Has the Minister any figures available to show how far that power has been used up to this?

Dr. Ryan

According to my figures, they have issued only £15,000 worth altogether under the chattel mortgage scheme.

Mr. Sweetman

When did it start? Was it with the 1947 Act?

Dr. Ryan

Yes.

Mr. Sweetman

£15,000 in 13 years.

Dr. Ryan

It was hardly worked at all, of course.

Mr. Sweetman

How does the Minister hope it may be extended by this section? As far as I can understand it, the purpose of the section is solely to make the chattel mortgage procedure available to a person other than a farmer—to, perhaps, a merchant or a cooperative society. Would a cooperative society be an eligible person to whom the Corporation can lend under the chattel mortgage procedure?

Dr. Ryan

First, as the Deputy has pointed out, we have taken out the word "farmer" and substituted "a person." This means a chattel mortgage can be applied to a cooperative society. They are not confined to a direct chattel mortgage, but they can secure a guarantee to a merchant covering payment for agricultural supplies or credit to a farmer. They can secure a cooperative society in supplying goods to its members. This clause not only applies to the Agricultural Credit Corporation but to all banks, and it gives them the same power. It probably will be used a bit more generally, although I do not know if it will be used to any significant extent. These were the complaints made against it in the past—that it was impossible to get a chattel mortgage from the Corporation.

Mr. Sweetman

Did I understand the Minister to say that the chattel mortgage procedure was open to other lenders besides the Corporation and the banks?

Dr. Ryan

To other banks.

Mr. Sweetman

Only the Corporation and the banks?

Dr. Ryan

Yes.

Question put and agreed to.

SECTION 13

Question proposed: "That Section 13 stand part of the Bill."

Mr. Sweetman

This is the section which gives the prior right to the Corporation to advance money, formerly up to £400 and now up to £1,000, without examination of title. Is there any stipulation in relation to these priority advances as to the purposes for which they can be used? Can they be used for any purpose whatever or are they restricted in somewhat the same manner as Section 9 restricts advances for the purpose of improvement of the land?

Dr. Ryan

No.

Mr. Sweetman

They can be used for everything.

Dr. Ryan

That is right.

Mr. Sweetman

I am a little uneasy about this provision. In relation to most farms, a sum of £1,000 is a pretty substantial sum. This means, in effect, that the Corporation can advance £1,000 without any investigation whatever in relation to the title and that their security for that £1,000 will jump in ahead of everybody else who has any claim against the land.

Dr. Ryan

Not against the registered claimant.

Mr. Sweetman

I appreciate that. However, it will jump in ahead of everybody else who has any claim under the note that is normally on folios that the registration is subject to equities.

Dr. Ryan

That is right.

Mr. Sweetman

That is a pretty big priority jump. I should not mind it in respect of cases where the registration under the Local Registration of Title Act, 1891, had been there for a very long time. Over the passage of years, the equities tend to get merged in the registered ownership but the Corporation will make the case, and correctly make the case, that very often people do not bother to discharge the equities over the years because of the expense involved. I can fully realise that.

There is another type of case, a case where the holding has only very recently been vested in the applicant, where it has been vested perhaps within the past ten years. There, the position in relation to equities is entirely different. There, the position is that there may well be some really live equities outstanding, not like the old case. I should imagine it would be a better proposition for the Minister, if he so desired, to make two bites of the cherry—to provide one limit for the old case where the equities are virtually gone and a much smaller limit for the new case where there would be a live equity, but where the amount being collected or charged would be substantial perhaps in relation to the equity outstanding but not substantial by relation to the value of the holding.

I know there are some people who go completely and absolutely hot under the collar at the possible injustice there might be under this provision. I should have thought that where you have registered land and a definite anxiety to make it easier for people to get loans by this method, without the very great expense that often may arise in discharging the equities of a very long and involved title, it would operate on some sort of insurance scheme basis, provided, if you like, the Corporation have power to put a charge for £1,000 in priority to the other equities of the title and provided, at the same time, that where the Corporation have done that and it can subsequently be proved that, by so doing, someone who has a genuine interest in the land has been damnified the insurance fund would meet that damnification and the person who has done nothing wrong, who has his interest held there subject to equities, whose only non-feasance is that he did not force the registered owner to incur the costs of discharging the equities and registering his claim on the folio, will be protected to that extent.

The cases, I admit, in which it would happen would be infinitesimal compared with the cases in which this procedure could be used to save cost to borrow from the Corporation—and we are all anxious to do that. It is not fair to create an injustice for one man, a real injustice, so as to make it easier for the other 99 to get what they want cheaper. Our object in framing this legislation should be to make it cheaper for the 99 and to provide a method by which the one per cent. could, when they were able to prove they had been damnified by an Act it was necessary in the public interest to introduce, get compensation because they had been passed over in pursuance of the statutory powers given by us in this section.

Has the Minister got any figures of the cases which have come to the knowledge of the Corporation in which use of this section has meant that the Corporation have gone in ahead of another person with a prior right and have caused that person to lose his prior right? I doubt if the Minister would have, because the Corporation would be concerned only with the recovery of their advances and would not be able to cope with the registration particulars of others.

It would be interesting to know, if one could get the information somewhere, how this has acted in relation to the one per cent. who may have been affected. We all agree that it is a useful provision in respect of the other 99 per cent. but we should not, with our eyes open, do something that might very well make it extremely difficult for a person with a genuine right to recover it, notwithstanding that he had done nothing to prejudice that right himself, that all he had done was to save the registered owner the costs of clearing his title over the years.

Dr. Ryan

The Deputy is aware that, in 1928, this provision was made granting power to the Corporation to issue a loan on registered land. In 1929, provision was made for unregistered lands, when certain difficulties were dealt with. The Corporation tell me they have not had any complaint whatever since then from any person who might have felt he had a grievance with regard to a loan being made subject to equities under that section. They know of no case of hardship. A sum of £400 in 1929 would correspond somewhat closely, I suppose, with £1,000 now. Therefore, I think the sum mentioned here is fairly reasonable.

Question put and agreed to.

Sections 14 to 17, inclusive, agreed to.

Schedule and Title agreed to.

Bill reported without amendment.

Mr. Sweetman

When will the Minister be in a position to advise me of the result of his examination of the points he promised to consider? I may have to consider amendments.

Dr. Ryan

Monday, possibly.

Report Stage ordered for Thursday, 4th May, 1961.