Seanad Éireann díospóireacht -
Wednesday, 4 Nov 1931

Vol. 14 No. 36

Town Tenants Bill, 1930—Second Stage.

Question proposed:—"That this Bill be now read a second time."

Sir John Keane

I feel considerable difficulty in discussing this Bill inasmuch as everybody is disposed to look at it in the light of its personal application. As most people are householders, whether directly or indirectly, the first thought that strikes one is, "How is it going to affect me?" and not how it is going to affect the broad principle of housing. For that reason it is liable to become a measure of a very partisan character. Moreover, because it has such a direct individual application it is inclined to be a measure of considerable political value. For that reason the broad principles in it are disposed to be overlooked. I ask the House to follow me for a moment, to concentrate upon the principles involved, and to dissociate themselves for the moment as to how it affects either individuals or classes of individuals. Hitherto, one may say, broadly speaking, this principle of rent regulation and of housing transactions as appertaining to house property, has been left to the ordinary free play of private enterprise. I know it is the fashion in some quarters to discredit that method, but after all it is the method that has brought civilisation to where it is. It is also the method that applies to most of the ordinary articles of trade and commerce—food, clothing and everything else, and nobody can say that on that ground it has failed. It has got its imperfections, but until we can be shown something better it holds the field. Experiments to show something better have failed ignominiously. That is a point of view that those who lean towards regulation and socialistic principles have got to face. In practice at any rate they have never shown us anything that is better on the average than the present system.

In this case there is a big departure from the system of private enterprise in relation to town property. I know it was done in the case of land, but I submit that that analogy does not exist here. In the case of land all of it, practically speaking, was in ownership and in use. It was only a question there of giving the occupier inducements by security to use that property to better advantage so as to safeguard himself against the impositions of the landlord. But here the problem is entirely different. There is no limit, in practice, to the amount of land that may be brought under the operation of this Bill. But what is limited is the amount of capital that is likely to come forward. Obviously you are never going to get this housing question settled through the medium of private enterprise unless you can get security in the application of capital. In this case you may say, generally speaking, that the entire field of dealings between owner and occupier is transferred to the courts. I can well understand why that view was acceptable to a commission presided over by a judge and on which there was also a prominent solicitor. It is a nice comfortable way of approaching this question—that you take these things out of the hands of the contending parties and force them either to go before an arbitrator or before the courts. But you have to consider the effects of that on the future of building development.

I ask the House to consider whether, with this Act on the Statute Book, marking as it does a very radical departure from the present position, new capital is likely to be attracted to building? I admit that the day is almost gone now when new capital will be attracted to the building of houses for rent payers and wage earners. That appears to have ceased to be an economic proposition, but it has not ceased to be an economic proposition in the case of the better class artisans and renters. Surely we should not relax every inducement to get capital to provide houses on an economic basis for those classes. I am afraid that is going to be the effect of the measure. Faced with the possibility of court intervention, will you get capital to come along and take the very grave risks that are involved, because remember that is part of the problem? Capital put into building is fixed. It is at the mercy of a Government and may easily come to be looked upon as a hen-roost to be robbed. Capital in securities is to a certain extent fluid. If people feel uneasy they can take it out and seek employment for it elsewhere. That cannot be done in the case of capital invested in house building. Under this measure the investor will now feel that he is more and more in the hands of the Government of the day and rather at its mercy, with all the modern tendencies of legislation to regulate and capture what it can lay its hands upon. Therefore, I say, looking at the principles embodied in this measure, there is very great danger that you will not get capital to come forward freely to supply the demand that undoubtedly there must be for new buildings, at least for the better classes who are able to pay economic rents.

There is another aspect of the question to be considered. The average salaried person wants to get a house, if possible, to rent. He does not want to tie himself in any one place. The effect of this legislation will be that the new buildings put up will be more and more for sale and less to let. In that way you will penalise a large class who would prefer to rent a house rather than to purchase it. Then, again, there is the question of public economy. This is a measure that will throw a heavy burden upon the courts and heavy expense on the parties concerned for the services rendered by the legal profession and the valuation office. For that reason it is not to be commended. I ask Senators not to be misled into thinking that this is the final measure dealing with this matter. I venture to suggest that it is only the beginning of a whole series of measures dealing with town property legislation. If you look at the analogy in the case of land legislation, and I do not think the analogy is inappropriate, you will find that for years and years, in fact during all the time down to the passing of the last Land Act, there has been a series of measures extending, amending and consolidating. I think you will find also that the Circuit Court, the judicial machinery set up to deal with this, will be unable to bear the burden that all this involves. It may result in a procedure similar to that adopted in the case of the Land Commission being followed, in which you will have special commissioners and special courts set up to deal with this. That will mean the employment of a good many officials. All that is thoroughly bad for the freedom of enterprise and the freedom of contract which is the driving force in civilisation and progress. If the House accepts that principle it means a radical departure from the system of freedom of contract.

I have not very much to say about the Bill itself. It has done its best to hold the balance between the various parties. There is one section which gives directions to the judge in fixing the rent, where he is to have regard to what is called normal competition. I do not know if there is any precedent for that in legislation. It seems to me to be an extraordinary contradiction in terms. I suggest that the court will have strong regard to scarcity values in favour of the occupier, but will it have any regard to abundance in favour of the landlord? I doubt it. The practical effect of that will be to weight the judgment to one side, and against any advantage coming from scarcity values. I ask the House, in discussing the Bill, to dissociate themselves from its personal application and to look at it from the broad principles that I have tried to outline, and warned the House against accepting.

Colonel Moore

As the Minister is here now, I would suggest that he should explain the Bill to the House.

Minister for Justice (Mr. Fitzgerald-Kenney)

I think the Seanad is aware that a Commission was set up some years ago to inquire into the relations between landlord and tenant with regard to what, roughly, may be called town property. In 1906 an Act was passed regulating the relationship between these two classes of the community. That Act, in its working, was not completely satisfactory. In consequence, this Town Tenants Commission was set up. It brought in a report, and on that report the present Bill is founded. The Bill follows the report of the Commission very closely indeed.

I heard Senator Sir John Keane say a moment ago that this was an attack on the freedom of contract. What precisely is meant by the freedom of contract is never quite clear, because people do not always define what they mean by it. Freedom of contract means one thing to one person and something else to another. But what freedom of contract means is that both parties are free from external pressure and are in a position so that they can fairly contract. In the wide sense, the statement that this does not leave it to landlords and tenants to make, in all circumstances, the hardest bargain that either the one or the other can drive with his co-bargainer is quite correct. Where landlord and tenant are satisfied, it leaves it entirely to them—it encourages them—to come to an agreement, and it discourages, as much as possible, their going to court. It provides new machinery for this purpose. It is only as a last resort that the resources of the court shall be sought. That is to say, when a landlord and tenant cannot themselves agree upon the terms of a letting, the value of improvements or things of that kind, where they are not satisfied to abide by the report of the Commissioner of Valuation, they can go to court.

A new principle is brought into this Bill. It will be found running all through it, namely, that a report can be had both by the landlord and the tenant from the Commissioner of Valuation before they go to court. In that way they will be able to get the impartial views of an expert. I venture to think that, in almost all cases, the landlord and tenant will accept his view or modify it only to some slight extent, and that the number of appeals to court will be nothing like the number that Senator Sir John Keane seems to visualise.

I will now go through the Bill in some little detail. This is a Bill in which the details are practically all in all. To go through the Bill section by section would be a wearisome task. The Bill, I think, is more suited to discussion in Committee than to a Second Reading speech. With the permission of the House, I will just deal with the main principles which underlie the Bill, and leave the details for consideration in Committee. First of all, I would like to point out the class of houses to which the Bill has application. The word "tenement" is used throughout the Bill. The definition section states:

the word "tenement" means land or premises complying with all the following conditions, that is to say:—

(a) it either—

(i) is situate in an urban area and consists either of land covered wholly or partly by buildings or of a defined portion of a building, or

(ii) is situate elsewhere than in an urban area and consists of land not exceeding one statute acre in area and having a house thereon, and

(b) if it consists of land covered in part only by buildings, the portion of such land not so covered is subsidiary and ancillary to such buildings, and

(c) it is held by the occupier thereof under a lease or other contract of tenancy express or implied or arising by virtue of a statute, and

(d) such contract of tenancy is not a letting which is made and expressed to be made for the temporary convenience of the lessor or of the lessee and (if made after the passing of this Act) stating the nature of such temporary convenience.

Therefore premises to which this Bill applies must be premises which are either a building with some little land attached or portion of a building; that is to say one building may contain more than two tenements. For instance, a ground floor might be one shop, the next floor another shop and the third floor might be an office of some kind. Each would be regarded as a separate tenement. It must be situate in an urban area or if outside an urban area there must be only a limited amount of land—one statute acre— attached. I should say here that that last amendment to the Bill was made in the final stages in the Dáil and it will be necessary for me in the Committee Stage to ask the House to consent to an amendment of the Long Title of the Bill, the real difference being if there are roadside houses to which there is no land attached, and I do not think there will be many of them, roadside houses which are purely business premises, dwelling houses which have been occupied so that they would come under the Bill, that they should have the benefit of this Bill. I do not think there are very many in the country but there may be some. There are certain exemptions in the Bill, labourers' cottages and houses of that class, which have been built out of public funds to house a specific class of person, that they should be continued to be used for that specific class of person.

I may as well now deal with the question of the Court. The Court will be the Circuit Court, with of course an appeal from it, but in all instances where the premises are a new letting and where compensation for improvements or any other sum of that kind has to be ascertained, the Court will and, if asked by one of the parties, must, call in the assistance of a commissioner of valuation who will furnish a report which will be available to both persons.

The Bill is divided into several parts. I will deal first with Part II—Compensation for Improvements. The scale of compensation for improvements is this: what will be the capitalised value of the improvements after the letting, such capitalised value not to exceed fifteen times the increased letting value. You consider first what is the increased letting value due to the improvement, then capitalise it, and that is the full sum which is payable to the tenant on leaving his tenancy. The procedure is that the tenant sends in an improvement notice setting out what improvements he proposes to carry out, and the landlord answers that either by an improvement consent, saying he agrees to it being carried out, or by what is called an improvement undertaking—that is to say, he will undertake to carry out improvements himself, adding so much to the rent to recoup himself for the amount of the improvement, or he may lodge objection denying the right to the tenant to make the improvements at all as not being suitable to the holding. Each intermediate landlord, when he receives notice from his tenant, will serve notice on his immediate landlord. When the intermediate landlord's time expires he will be entitled in turn to claim from his superior landlord the value of the improvements on the date of the termination of his tenancy. If the landlord and tenant cannot agree as to whether the improvement should or should not be carried out, or as to what the cost of that should be, or anything of that kind, then, and then only, will they have recourse to the court. There is one case in which a landlord's objection as an improvement objection is final. That is where the tenant holds under a tenancy for a period less than five years, or has been in occupation for a period of less than five years. So much for improvements.

The next thing is the right to a new tenancy. The old Act, as I have no doubt the Seanad is aware, was divided into the right for compensation for improvements and the right of compensation for disturbance. There is an exception here. For practical purposes you may say the right to compensation for disturbance has been almost swept away by this Bill and in lieu of the right of compensation for disturbance the right to a new tenancy has been introduced. The right to a new tenancy is in Section 18. In order that a tenant should have the right to a new tenancy certain things are necessary. The first deals with business premises and in business premises if the tenant has been bona fide carrying on business for three years and if he holds under a lease or contract of tenancy from year to year or under a lease for any higher period than a year he is entitled to a new tenancy or if he holds under any tenure whatever, a quarterly tenancy or a monthly tenancy, and has been carrying on business bona fide for three years or has been in occupation for a period of seven years he also is entitled to a new tenancy. So much for the business part of it.

In addition to that there are certain cases in which residential holdings come under the right to a new tenancy. The first of these is where

(a) such tenement was, during the whole of the three years next preceding the termination of such tenancy, bona fide used by the tenant for the time being thereof wholly or partly for the purpose of carrying on a business and, immediately before such termination, either was held by the tenant thereof under a tenancy from year to year or under a lease or other contract of tenancy for a term of not less than one year or a lease for a life or lives or had been for not less than seven years continuously in the occupation of the person who was the tenant thereof immediately before such termination or of his predecessors in title, or

(b) such tenement was during the whole of the period of forty years next preceeding the termination of such tenancy continously in the occupation of the person who was the tenant thereof immediately before such termination or of his predecessors in title, or

(c) at the termination of such tenancy the reversion of the landlord in the tenement does not exceed three years and such tenement was, during the whole of the period of fifteen years next preceding such termination continuously in the occupation of the person who was the tenant thereof immediately before such termination or of his predecessors in title or

(d) improvements have been made on such tenement and the tenant would, if this Part of this Act did not apply to such tenement, be entitled to compensation for improvements in respect of such improvements and not less than one-half of the letting value of such tenement at such termination is attributable to such improvements.

Those terms, of course, are in a way rather arbitrary, except the last. The term of forty years, for instance, is rather arbitrary, and the other one about the shortness of the landlord's reversion is also, to a certain extent, arbitrary. But these terms have been taken from the Report of the Commission. The Commission has completely agreed and said that nobody giving evidence before it claimed that mere occupation gave a person the right to have a fair rent fixed in the renewal of his tenancy. It did say if a person had been for a very long time in possession, or if he had become really more owner of the premises than the person to whom he had paid rent because he had spent so much on improvements, he ought in those circumstances have the right to a new tenancy. When a person has been for a very long period in a house, and has come to regard that as his home, and possibly it has been his people's home before him, it is rather rough that at the end of a period of time when he is willing to pay the full value of the premises he should be disturbed from it. In certain cases compensation for disturbance is still the measure and not a new tenancy. In business premises the normal measure is the grant of a new tenancy. In exceptional cases that is departed from, and the tenant receives compensation for disturbance instead. Those cases are when the landlord bona fide intends or has agreed “to pull down and rebuild or to reconstruct the buildings or any part of the buildings included in such tenement, or that such landlord requires vacant possession of such tenement for the purpose of carrying out a scheme of development of property which includes such tenement, or that for any reason the creation of a new tenancy in such tenement would not be consistent with good estate management.” In those cases compensation for disturbance is what the tenant gets, and not a right to a new tenancy. The compensation for disturbance varies from the compensation for disturbance which used to be awarded under the 1906 Act. It is measured by Section 22, which says:

"Where the court awards to a tenant compensation for disturbance the measure of such compensation shall be the pecuniary loss, damage, or expense which such tenant sustains or incurs or will sustain or incur by reason of his quitting the tenement in respect of which such compensation is awarded and which is the direct consequence of his quitting such tenement."

When an application is made to have a new tenancy the court decides as to whether the applicant is or is not entitled to have such new tenancy. The court has full power to fix the terms of the tenancy. Section 28 is the section which gives the power to the court. It fixes the duration of the new tenancy and the general terms of it, and in the fixing of a new tenancy the important matter really to be considered is the question of the rent which shall be payable. It always, of course, has been a matter of great difficulty to decide what is a fair rent. The definition which we have taken of a fair rent is practically the definition from the Town Tenants Report. As a matter of fact, when the Bill was first introduced it contained a definition from the report of the Town Tenants Commission verbatim, but it has been slightly modified in the actual wording, without altering the meaning. The rent is fixed first by ascertaining the gross rent and then subtracting from the gross rent the value of the tenant's improvements. The gross rent is ascertained in this fashion:

"the gross rent shall be the rent which in the opinion of the court a willing lessee not already in occupation would give and a willing lessor would take for such tenement, in each case on the basis of vacant possession being given, and in such circumstances that the supply of similar tenements is sufficient to meet the demand and the competition therefor is normal and having regard to the other terms of such tenancy and to the letting values of tenements of a similar character to and situate in the vicinity of such tenement but without regard to any goodwill which may exist in respect of such tenement."

In other words, the court looks around and sees how similar houses in the neighbourhood are letting, and then considers what the value would be if there were a reasonable supply of houses to go round, and a reasonable supply of persons to look for them. That of course would, on the one hand, have the effect of killing monopoly value. As Senator Sir John Keane has pointed out, if a landlord happens to be in the position of being a person with only one house in the neighbourhood, in that way of course it would hit the landlord who, taking advantage of the tenant's position would demand a higher rent than in equity he ought to ask for that house. On the other hand, if houses happen to be in a particular place very plentiful and the tenant has the right of picking and choosing, the Bill goes the other way entirely in the landlord's favour. In other words, what the court is asked by this section to do is "do not let either party take advantage of the very great need of the other party. Try and do what is just, and give what is, as far as you can get it, the true letting value of the premises."

Sir John Keane

Does the Minister suggest that the court will discount a plethora, that when there is an abundance of houses the court shall fix the rent higher than the market would produce?

Mr. Fitzgerald-Kenney

The court will fix what it considers, taking the surroundings of the premises and considering the general need at the time, to be a right and proper rent. Of course, as I have stated, in all these matters the judge can call in and must call in a Commissioner of Valuation to assist him. I venture to say that after a very few rents have been fixed both the landlord and tenant will come to the conclusion without very much trouble as to what a fair and proper rent will be, and that recourse to the court will be comparatively rare.

I come to another part of the Bill, Part V, which deals with a completely different question to that which we have heretofore dealt with, that is the question of building leases, where land has been let at a head rent, as it is called, for a considerable time in order that premises may be built thereon. At the end of the expiration of the lease, whatever term it may be—ninety-nine years or three hundred years or any other period—as the law now stands, the whole building falls into the possession of the ground landlord, who can charge any rent that he likes—that is to say, if he has done nothing except to receive his rent for a considerable number of years, made no improvements or anything of any kind, he may come in at the expiration of a lease of an estate worth very many times indeed what it was worth at the time he made his rent, and the increase in value has been due through no effort of his own or no expenditure of his own. Such cases may occur. We propose here that the person who has actually erected the building shall be entitled to renewal of the lease. There may be many interests between the actual occupier of the premises and the landlord. Where there are such conflicting claims, what we endeavour to do in this Bill is to look for who is the real owner of the bricks and mortar, the person who has spent the money that has developed the property, and give to that person the right of a renewal.

If there are conflicting persons, give it to the person who is nearest the actual occupier, the actual occupier if he comes under what is called in this Bill a proprietary lease, or if not the person next up to him, that is, the nearest landlord to the actual tenant. The fair rent is fixed here upon the same principle as in the renewal of a lease, but after a very considerable amount of debate and discussion in the Dáil. It was finally agreed on, therefore, that it would be better to fix a rule of thumb by which the actual proportion of the rent should go to the owner of the building lease and to the lessor. The rule of thumb which was finally arrived at was; you take the gross fair rent. A quarter shall be taken as the head rent which is to be payable for the future. Under the existing law, of course, if he insisted, the head landlord would be able to take 100 per cent. Now he gets 25 per cent., and as far as I have been able to gather that, though it may not work out with absolute perfection in every individual case, is looked on by persons who have considered the matter on both sides as being a very fair and just working principle.

There are other provisions of the Bill which I do not think I need go into. For example, where there was a covenant in the lease that a tenant shall not sublet, that is now qualified by the words "shall not sublet without the consent of the landlord, such consent not to be unreasonably withheld," which was a very common form in English conveyances. They are not so common in this country. For instance, where a neighbourhood has completely gone down it prevents a house being used for a purpose for which, owing to the going down of the neighbourhood, it is alone suited, unless he is paid a substantial sum. Of course, if that is not a reasonable ground for withholding his consent, this reasonable ground will still remain to him. There are a few other matters of that kind. I do not think that I should go through them one by one. As I said before, I think they are matters to be considered in committee.

Mr. Brown

I did not intend to say anything about the general policy of this Bill, because once the Town Tenants Act of 1906 became as it did become more or less a failure legislation of this kind was only a matter of time. But there are one or two matters that I would like to call attention to just for the purpose of putting the Minister in a position to answer. In the first place, I do not think it was a wise thing to introduce in the definition clause tenements elsewhere than in an urban district. That was done, as the Minister explained, at the very last stage in the Dáil. Now it is a bad principle to introduce a change of that magnitude at that stage, because the factors which apply to tenants of those small houses in the country, or maybe large houses in the country with not more than an acre of land, are entirely different from those which apply to houses in an urban district, and I do not think that they ought to have come to this House without the complete consideration of those factors in the other House.

One other matter that I would like to mention is this. It is more or less a legal conundrum and it is not perhaps quite fair to put it to the Minister. It occurs in Section 20 which deals with the restrictions which are put on the right of a tenant to acquire a new tenancy. It is 20 (1). A tenant shall not be entitled to a new tenancy where (b) "his tenancy is terminated by ejectment notice to quit, or otherwise on account of a breach by such tenant of a condition of such tenancy." The difficulty which I find about that is this. If a tenant breaks one of the conditions of his tenancy under a very common form in leases he forfeits his tenancy. The actual breach of the condition is legally a forfeiture of the tenancy and legally puts an end to the tenancy. But since the Conveyancing Act put an end by mere breach of a condition to a tenancy the tenant can go to Court and have compensation in money as the proper compensation for a breach of the particular condition of the tenancy. The Court can determine what amount of money the tenant should pay although his tenancy has gone and having complied with that order his tenancy comes on as if it had not been put an end to. Once notice to quit has been served, does that exclude him from getting a new tenancy under this Act although the Court would have a right to continue the tenancy on certain terms?

Mr. Comyn

I was glad to hear Sir John Keane begin by saying that we should discuss this measure without any regard to party affiliations, that we should discuss it on its merits. I was very surprised immediately afterwards to hear him use the stock phrase of a particular party: "You are invading the freedom of contract." The Minister has sufficiently answered that, I think, by saying that it is all a question of what is a free contract. Who are free contracting parties? Are parties always equally free, or are they ever equally free? Is a landlord who has 40,000 houses in the same position as an unfortunate man with a few children who has no roof to cover them? There is no such thing as absolute freedom of contract. People have to do the best they can in the varying circumstances of life.

The next matter is this. He said: "Oh, if you introduce legislation of this character you will prohibit the building of new houses; you will deter people from investing in new houses." Seeing that the first Town Tenants Act was passed twenty-six years ago, I think it is rather a belated argument. Moreover, if new houses are not built, and if it is necessary that they should be built, there may be some way of encouraging them besides putting unfortunate tenants under restrictions that are unjust. This is a matter which, when it arises, will be dealt with by Parliament and dealt with adequately. Immediately after saying that builders would be deterred from building houses he finds himself pressed in another direction, and he asks the Minister if there is a plethora of houses how is the fair rent to be fixed? His arguments are inconsistent. When Senator Sir John Keane advises people to discuss a measure of this character on its merits, I venture to say to him that when he is discussing measures of this character a man of his great ability ought to forget phrases that are simply the catch-word of a Party and are of absolutely no value at the present time.

The Bill at first sight seems to be a measure which would not conduce to much excitement. I see, however, that in the course of this discussion there are a great many things which will require serious consideration in this House. With the greatest respect for the other House, I think they have sent forward a measure which is capable of improvement and modification. I do not agree with Senator Brown when he says that the amendment which was introduced in the Dáil on a late stage was an amendment of great importance. That is the amendment whereby a house on half an acre of land in any part of the country comes within the provisions of this Bill. Of course you cannot say it is a Town Tenants Bill after that. The modification I think was made in order to get rid of the difficulty of finding a definition of a village. They have now found in fact that a village might mean a house on half an acre of ground. I am sure that offends the Senator's legal skill, but if he finds some other method of getting rid of the difficulty I am sure the Seanad will accept it.

I propose to go very briefly through the main parts of the Bill. I think there are a few matters which have escaped the attention of the Minister and his advisers when they were drafting the Bill. With regard to improvements, the Bill provides for improvements in houses which are held, of a head landlord, through a middleman by a tenant, and for the service of notice by the tenant on the middleman, and by the middleman on the landlord. I think there is no provision made for the case in which the middle interest is of no value, and consequently the middleman will not take the trouble to serve the notice on his head landlord. What is to happen in a case of that kind? There is no provision made for it in the Bill. I think it is a matter in regard to which an amendment will be necessary.

There is another question which is of importance to town tenants at the present moment, namely, what is to happen in cases where proceedings have been taken and which are actually pending before the courts? Are fresh proceedings to be instituted or is there to be some amendment whereby the proceedings already carried out are to be deemed to be proceedings taken under this Act? That is a matter, of course, for the Committee Stage, but I mention it now in order that the Minister may have notice of a matter which is occupying the attention of legal men.

Next we come to the provisions dealing with the right of a tenant to a new tenancy. If the rights of property have been invaded I must say they have been invaded in the mildest manner possible. Let us see what right a tenant has to a new tenancy. In the first place if it is a business house he must have been there for three years and the man who came before him must have been there for 12 months in the case of a tenancy from year to year, or for seven years in the case of a smaller tenancy. A great many tenancies in Dublin and in towns throughout the Free State are held from week to week or month to month. In such a case as that the small trader, the little shopkeeper, in order to have a right to a new lease must have been there paying his rent for three years and the man before him must have been paying his rent for seven years. In the case of business premises, do you not think that is the most gentle interference that could possibly be made in regard to the estate of the landlord? Senator Sir John Keane at the end of his speech stated that this was a very mild measure. I agree with him.

Mr. Fitzgerald-Kenney

The Senator has apparently misread the section; he is reading "termination" for "commencement."

Mr. Comyn

I am sorry the Minister has put me to the trouble of reading this long section. I assure the Minister that, notwithstanding all the time, the care and the attention he has given to this, when it comes to be construed it will be found to be construed as I have informed the Seanad. This is the section:

(1) On the termination within the meaning of this section of a tenancy in a tenement, this Part of this Act shall apply to such tenement if such tenement complies with any one of the following conditions, that is to say:—

(a) such tenement was, during the whole of the three years next preceding the termination of such tenancy, bona fide used by the tenant for the time being thereof wholly or partly for the purpose of carrying on a business and, immediately before such termination, either was held by the tenant thereof under a tenancy from year to year or under a lease or other contract of tenancy for a term of not less than one year or a lease for a life or lives or had been for not less than seven years continuously in the occupation of the person who was the tenant thereof immediately before such termination or of his predecessors in title.

Mr. Fitzgerald-Kenney

The Senator is mistaking "termination" for "commencement." If the tenant has been three years under a tenancy from year to year, or has a higher interest, that is quite sufficient; if he has been seven years under a tenancy less than a tenancy from year to year, that is quite sufficient. It does not require seven years before the commencement.

Mr. Comyn

If that is the Minister's meaning, perhaps on the Committee Stage he will admit an amendment.

Cathaoirleach

It is really a Committee point.

Mr. Comyn

I am not stating what is merely an individual opinion on this question. I think it needs a clarification, if that is the Minister's meaning. The next important matter is in regard to ordinary dwelling-houses. You are not entitled to a new lease of a dwelling-house unless you and your predecessors in title have been in occupation of it for forty years—almost two generations. Certainly this is a mild measure. I would have imagined that a lifetime in a house would be sufficient to qualify for a renewal, particularly as some of these old houses are worn out in the space of a lifetime. These are the only observations I will make in regard to the right of renewal.

Senator Brown called attention to a very important portion of this measure, Section 20 dealing with the restrictions on the right to a new tenancy. When the Senator was speaking it occurred to me that that was the section on which the Seanad might be able to do the greatest public service. I think these sub-sections dealing with the termination of the tenancy—I will not say they are misleading—do not mean in law what the ordinary person would be inclined to read into them. Does the termination of a tenancy by ejectment for non-payment of rent mean the service of an ejectment notice or the delivery of possession following an ejectment?

Mr. Brown

Or the medium stage.

Mr. Comyn

Or the medium stage? What is to happen in the case of landlords who have been so vigilant in regard to their own interests as to serve notice to quit before this Bill ever becomes law? Are these people to be rewarded for their vigilance? Are they to be in a better position than the landlords who allow the usual method of dealing to take place between themselves and their tenants? I think what really is the termination of the tenancy ought to be fully defined in this measure.

I pass from that to the section dealing with compensation. There is a right to a new tenancy under this Bill and there are provisions for compensation in the event of a new tenancy not being granted. Why should not a new tenancy be granted? There are three reasons set out by the Minister in Section 21. One is that the landlord wants to reconstruct; the second is that the house is required for a scheme of development; and the third is "that for any reason the creation of a new tenancy in such tenement would not be consistent with good estate management." Let us say a shopkeeper has a house at a corner of a street and he has established a business there. His landlord comes to him and says: "I want you to leave that place." The tenant says: "No; I am protected by the new Act passed in 1931." The landlord will say: "No. Your house is like a piece of grit in the eye of my new scheme of estate management, and that house must go." The house must go, and consequently the tenant has to go, and he gets the right to compensation. That is rather good treatment for the landlord, but rather harsh for the tenant. But then there is compensation to be given to the tenant. Let us see how the compensation is restricted. Section 22 sets out:

Where the court awards to a tenant compensation for disturbance the measure of such compensation shall be the pecuniary loss, damage, or expense which such tenant sustains or incurs or will sustain or incur by reason of his quitting the tenement in respect of which such compensation is awarded and which is the direct consequence of his quitting such tenement.

Now there is a sting at the end of it, or if you wish to put it in another way, there is the postscript to the lady's letter which means everything that is of direct consequence. That section was framed by a skilful lawyer, and I rather think it must have been framed by a lawyer who was bred in the school that Senator Sir John Keane represents to-day. I think it is necessary to advert to these matters so that the Minister may have an opportunity of considering the nature of the amendments which I believe will be brought forward here.

There is another most important question that ought to be fully considered in connection with this Bill. It is the question of building sites, especially in growing cities. I spoke of the arguments which had been used by Senator Sir John Keane on the one side. I will also be critical of some of the arguments which are sometimes used on behalf of town tenants. One of them is, why should a man be entitled to the increased value which is due to the growth of a large city? That seems an attractive argument at first, but, when you examine it, it appears to lose its attractiveness, for the simple reason that all property has no value except in relation to human beings. If there were no people in this country the land of this country would have no value, just the same as the waves on the seashore would make no noise unless there were ears to hear them. It is the people who create the value where they are congregated in cities or dispersed through the country. I do not rest my case on that argument. I do rest it on this argument: that where an increased value has not exactly accrued—that is, where there is a city growing and developing and new buildings are being put up, and where there is merely a prospective value and where there is a gambler's chance of an increase in value—I think that is the kind of so-called property that is well out of the control of the State or the municipality.

In the case of Dublin or Limerick and other cities and towns in the Free State there is the right of the public to secure that building sites will be acquired at a reasonable cost. In many cases the value of a house, the rent of a house, depends in great measure upon the amount which has been exacted or extracted for site value. My submission is that in developing cities the procedure should be so regulated that people will not be in a position to make too much out of the fact that they happen to own lands in desirable positions near a city. These are the only observations that I wish to make on this Bill at the present stage. It is not very much of a Bill. Nobody need be unduly excited about it one way or the other.

I differ from my friend Senator Brown when he says that the Act of 1906 was a failure. I think in many ways it was a considerable success. It blazed the trail in this matter of town tenants legislation and this Act of 1931 will not be the last of the measures dealing with town tenants. It is by no means drastic and, so far as I am personally concerned, I would not be in favour of very drastic legislation because the problem is a most difficult one and the interests of all parties have to be considered, not least the interests of some people who are supposed to be landlords. In this category we frequently have widows or maiden ladies who are given ground rents or houses as a safe and secure provision for their old age. That creates a difficulty in regard to town tenants legislation.

I think if the Minister is to be commended upon anything it must be for the extraordinary mildness of this measure. He has contrived in 59 sections to do as little as he possibly could. In that he has been quite successful. Whether he has been successful in his definition of what a town is or what a town tenant is, is a matter for the Seanad to say. Up to the present I never thought that a house in the country on half an acre of ground was a village.

Colonel Moore

I have only a few words to say in regard to a matter communicated to me from the country. It seems that in Kilkenny the Corporation gave a grant of £100 per house to individuals engaged in building houses. The State gave another grant of £100, and the building corporation concerned got a loan of £200 for each house, making £400 in all. Of course the loan of £200 had to be repaid. The building corporation got into financial difficulties, and after a short time it cleared out and the whole business was handed over to an individual. That individual carried on operations and when he had them completed he let the houses at certain rates to various people. Those people complain that they are grossly overcharged. I will not go into that question because what they say may or may not be the fact. The Corporation of Kilkenny seems to be of that opinion, but I am not going to say whether they are right or wrong. It does seem to me that when the State and a body like the Kilkenny Corporation advance money for the building of houses that money should not, through an accident such as I have described, be allowed to be utilised for the aggrandisement of any person who may happen to take on the work. I think this is a matter that should be seriously taken note of. Whether it can be regularised now I do not know, but some steps should be taken to prevent an occurrence of that sort in the future.

Mr. Connolly

I do not propose to say very much at this stage of the Bill. In my opinion it is a highly technical measure and one that requires a considerable knowledge, not only of the traditions of town tenancies, but of legal matters as well. There are one or two matters that have been brought to my notice, and I would like to submit these to the Minister so that we may have some guidance as regards what we can do in Committee. I wish to stress a matter referred to by Senator Comyn, namely, the notice to quit. It is suggested that we might make this at least retrospective to the date of the introduction of the Bill. It is alleged that shrewd landlords, learning of the terms likely to be embodied in this measure, took occasion to serve notice to quit in the belief that this would absolve them from certain terms of compensation when the Bill became law. I do not know whether that is the case, but such is the suggestion.

There is another matter that arises out of Section 18, and about which there does not seem to be any definite understanding as regards the term. I refer now to the term "predecessors in title." It has been suggested to me that that requires clarification. Does it mean the preceding tenants over the period mentioned, and is the tenant the person who has title to the house? Is all that clear and distinct enough? My informant leads me to believe that this is possibly going to lead to a good deal of litigation, and that the litigation might be prevented by having it clarified while the Bill is going through the Seanad. I take it that Section 18 (a) refers purely to business premises. I would like to call the attention of the Seanad to possible hardships under paragraph (b):

(b) such tenement was during the whole of the period of forty years next preceding the termination of such tenancy continuously in the occupation of the person who was the tenant thereof immediately before such termination or of his predecessors in title, or...

I think it is generally admitted that the forty years clause has caused more criticism and aroused more objection to the Bill than any other section in it. A very serious anomaly could arise by a literal interpretation of that sub-section—at least so it seems to me. Let us assume that I am in occupation as a tenant of a house for 35 years and the landlord is able by some means to serve me with an ejectment order or a notice to quit. Under the terms of this sub-section I apparently could be put out of occupation without any compensation, and without any right to a new tenancy. I may be wrong, but that is the interpretation one could place upon that sub-section.

Let us take the other position that might arise. I may go into a house and my predecessors in title may have occupied that house for 39 years. By means of a year's occupation I may become entitled to certain privileges under this Act. I would like that matter to be clarified, and I am sure Senators would like to understand where exactly we are before we come to the Committee Stage, or if we can possibly have certain matters rectified by means of amendments.

There is the other question in Section 44 which has caused a good deal of uneasiness in certain people's minds, that is in regard to intermediate landlords. The question arises there of tenants giving notice to their immediate landlord, and of that notice being transferred right through to the superior landlord. I would like to know from the Minister if he is perfectly satisfied that that is adequately covered by the terms of the Bill. Assume for a moment that the subsidiary landlord neglects to inform the superior or head landlord. What I am anxious to know is, is the superior landlord absolved from all responsibility through the neglect of the subsidiary landlord to pass on information with regard to arrangements he may have made as to improvements carried out by the tenant? These are the only matters that I want to deal with at present. In my opinion the section that will require most attention from the Seanad, and that has caused the greatest heartburning, is the one dealing with the forty years' period.

Mr. Johnson

There was a long agitation for a Town Tenants Bill. A great many resolutions were passed and demands made from all parts of the country for such a Bill. A Commission was set up to consider the question. The Commission reported and demands were made for the carrying out of the recommendations in its report. Finally we have the Bill now before us. Strange as it may seem, the big majority of those who looked forward to a Town Tenants Bill are not affected by this measure at all. I wonder whether the Minister can give us an estimate, taking, say, Dublin, Cork, Limerick and Waterford, of the number of town tenants who might conceivably be brought within the Bill and the number who could not in any circumstances be brought within it. I venture to say that the great majority of town tenants in the larger urban areas and in cities would not by any means be affected by this Bill. Therefore, the measure may be said to affect mainly the shopkeepers and the occupiers of business premises, and perhaps a relatively small number of people who have dwellinghouses on fairly long leases.

The Minister, in the course of his speech, referred to the question of the right to a new tenancy and the forty years period which is dealt with in Section 18. That matter has been the subject of criticism here and in the Dáil. In defending that period the Minister said that the report of the Commission indicated that no witness had suggested any shorter period, but he did not remind the Seanad that the report of that Commission made recommendations in favour of the setting up of a fair-rent court to which any town tenant might apply for the fixing of a fair rent of his tenancy, should any question arise as between the landlord and himself. If that were provided for I could understand the Minister saying that the right to a new tenancy is not of such great moment, particularly in towns where there is any building going on, or any probability within a reasonable period of houses being available for letting. The provision for fixing rents which was recommended by the Commission is not given effect to in this Bill except in a limited class of cases. That fact makes the Bill much less interesting to me, at any rate, than it would be if it dealt with all kinds of tenancies. I agree with those who have criticised the forty years limit as making the benefits provided for in the Bill of very little value to the tenants intended to be affected. Forty years is entirely too long a period to comply with the conditions in respect to the right to a new tenancy. I think some shorter period ought to be inserted.

I have been asked to obtain information and guidance respecting the provision with regard to building leases. It has been pointed out to me that in certain towns—probably these are typical of many other places—there are occupants of houses under building leases where in fact the predecessors— they may have been the great-grand-parents or the grandparents—of the present occupiers actually built the houses themselves. They carried the stones from the seashore and built the houses with their own hands. Their building leases expired within the last two or three years, and the present occupiers are holding on under the provisions of the Rent Restrictions Act. I wonder what is their position, and have they any rights under this Bill?

Mr. Fitzgerald-Kenney

Is the Senator now dealing with the case of town tenants holding under the Rent Restrictions Act?

Mr. Johnson

These tenants held under building leases. They may be protected at present under the Rent Restrictions Act. That Act will expire. It may be renewed, but it is a temporary Act. It is expected to expire at some time or other and to be replaced, presumably, by permanent legislation. The question put to me with regard to this particular type of tenant is whether he is excluded from any of the protections given under the sections that relate to building leases, apart from the protection at present secured to him under the Rent Restrictions Act? I think there is a very good case for giving the right to such tenants to a renewal at a fair rent. I do not know how it can be done, but it does seem to me to be unreasonable that, because the lease in these cases expired before this measure was introduced, no benefit at all should come to that class of tenant. The fact that such people built their houses with their own hands, and that the landlords have done nothing whatever except to draw rent, puts the landlords out of court from the point of view of justice, whatever may be said about the legalities. It puts them out of court in regard to the right to take possession of these houses, and practically denies the present occupiers any rights in the houses which they or their fathers or grandfathers built.

There is a little point to which I wish to draw the Minister's attention, because it may be one that I, at least, could not deal with on the Committee Stage. It touches a matter that was referred to earlier regarding houses with a bit of land not exceeding one statute acre. Part V of the Bill deals with the special provisions in relation to building leases. Sub-section (1) of Section 44 provides that the expression "building lease" means a lease in respect of which the following condition is complied with:—(a) the land demised by such lease is situate wholly in an urban area. Now if there were such houses in the country, presumably they would be denied the benefit of such a section in relation to building leases. Perhaps that has been overlooked. If it has been, I hope it will be remedied. I do not know whether it is reasonable or proper on such an occasion to ask the Minister to give the House some information as to whether it is intended in the near future to introduce legislation to deal with the tenancies of houses which are not covered by this Bill and are not protected by the Rent Restrictions Act. The number of such tenants in, say, Dublin, Cork, Limerick and Waterford is very large. All the talk about town tenancies—the statements made regarding the Rent Restrictions Act fulfilling the needs of town tenants and the working classes—does not touch the very large number of people who are living in houses with a valuation of £25 and over. Many of these, of course, are used by two or three occupants—as, for instance, in the case of a tenant who takes in lodgers. A very large number of people in and around the city occupy houses which are not protected at all by the Rent Restrictions Act and are not proposed to be protected by this Bill. Therefore we may say that this Bill only deals with a very limited number of town tenants, and that there is still something required to protect the interests of that very large number of town tenants who are still without any protection at all.

Mr. Linehan

I want to ask the Minister whether this Bill includes weekly tenancies. I observe from the definition of the word "tenant" under section 2, paragraph (c) that one of the conditions to be fulfilled in order that a house would be a town tenancy under the Bill is that "it is held by the occupier thereof under a lease or other contract of tenancy." I am anxious to know whether the words "other contract of tenancy" would include a weekly tenancy or not?

Mr. Fitzgerald-Kenney

Yes. In concluding the debate on this Bill I do not think I need say very much in reply to the various speeches that have been made. I will consider the point raised by Senator Brown who asked that paragraph (b) of sub-section (1) of section 20 be made more clear. Points were raised by Senator Comyn and Senator Connolly about tenancies which had expired before the passing of this Act. I think the Senators would not have raised these points if they had read section 37 which deals specifically with that matter. That section provides

Where a tenancy in a tenement terminated before the passing of this Act and the tenant of such tenement is at the passing of this Act in occupation of such tenement notwithstanding such termination and without having obtained a new tenancy in such tenement, such tenancy shall for the purposes of this Act be deemed to terminate immediately after the passing of this Act and this Act shall apply accordingly.

In other words, a tenant who is in physical occupation at the time of the passing of this Act is entitled to take advantage of it. Senator Connolly also wanted to know what is meant by the expression "predecessors in title." He seems to have overlooked the fact that "predecessors in title" is defined in the Bill. I do not think it could be more clearly defined:

The expression "predecessors in title" when used in relation to a tenant means and includes all previous tenants of the tenement of such tenant under the same tenancy of such tenants or any tenancy of which such tenancy is or is deemed to be a continuation or renewal, and the said expression when used in relation to a landlord means and includes all previous landlords of the tenement of such landlord.

These words are perfectly plain to me. You hold the same premises and you hold them under the same title. Senator Johnson raised a point about tenancies under the Rent Restrictions Act. I draw the Senator's attention to Section 6. It possibly may answer his point. I do not think there are any other points that I need deal with on this Stage. If there are any Senators who think the Bill defective on any point then we can have the advantage of getting their views in concrete form on the Committee Stage.

Question put and agreed to.

Committee Stage ordered for Wednesday, 18th November.