Landlord and Tenant (Reversionary Leases) Bill, 1957—Committee Stage.
Sections 1 to 3, inclusive, agreed to.
SECTION 4.
I move amendment No. 1:—
To delete sub-section (3) (a) and substitute the following:—
Where a lease is for a term of not less than 50 years and either commences on or after 1st January, 1914, and the rent reserved by the lease is less than the rateable valuation of the land thereby demised together with the buildings thereon as first fixed or revised subsequent to the date of the lease pursuant to the Valuation (Ireland) Act, 1852, as amended and adapted, or commences before 1st January, 1914, and the rent reserved by the lease is less than half the rateable valuation of the land thereby demised together with the buildings thereon as first fixed or revised subsequent to the date of the lease pursuant to the Valuation (Ireland) Act, 1852, as amended and adapted, it shall be presumed until the contrary is proved that the buildings were erected by the person who at the time of their erection was entitled to the lessee's interest under the lease.
This amendment is designed to remove an ambiguity in the Bill. The Bill, as it stands, is unfair to leases made prior to 1914. I understand that the majority of rents fixed since 1914, where the rent is less than the valuation, are ground rents. The assumption is quite false in connection with rents fixed before 1914. It was the normal practice in fixing rents for long leases, to allow the tenant to pay a rent which was less than the full rack rent as an encouragement to him to look after the property and keep it in repair, and this was especially the case when a house was let to a new tenant who carried out repairs, at his own expense, at the commencement of the lease. Many landowners were more concerned with the security of their rent than with obtaining the highest possible income. It would be quite normal in such a case to let a house for a long term at, say, 66 per cent. of the full letting value. In the case of lettings made before 1914, this figure would be less than the Poor Law Valuation.
I have a number of examples, with which I do not wish to weary the Seanad, of building leases where, in fact, the rents were a good deal less than the valuation prior to 1914 and I would ask the Minister to consider if the amendment which I have put down would not be more suitable, in the circumstances of the case, than the section as it stands.
I am afraid that I could not accept this amendment in its present form. I would be prepared to compromise with the Senator. Perhaps, instead of accepting the proposition that half of the rateable valuation of the land be the test, I would be prepared to compromise and to say three-fourths, if that would meet the Senator's point.
I happen to be remotely interested in this amendment. I wonder would the best thing at this stage, having heard that, be to leave it for the Report Stage, because I imagine consultations with various interested bodies might be necessary before some of us could make up our minds on that? I wonder would Senator O'Brien agree with that?
There is a danger that I might change my mind.
I should hope the Minister would not.
I want to be perfectly clear what the Minister's suggestion is. I take it that the suggestion is, in lines seven and eight of the amendment, instead of "less than half the rateable valuation", to say "less than three-fourths"?
Yes. I am suggesting three-fourths instead of half.
Then perhaps the Minister will be good enough to let that matter stand over until Report Stage?
Amendment, by leave, withdrawn.
Section 4 agreed to.
Sections 5 and 6 agreed to.
SECTION 7.
Government amendment No. 2:—
In sub-section (3), paragraph (b), line 8, to delete "charged or chargeable" and substitute "reserved" and before "period" to insert "specified".
This amendment proposes to meet a point raised on the Report Stage in the Dáil. Section 7 provides a number of tests for determining whether a sublease granted by a building lessee has had the effect of transferring the beneficial or proprietary interest to the sublessee and whether it has accordingly given the valuable right to a reversionary lease to the sublessee to the complete exclusion of the building lessee. One of the tests is that the sublessee must have paid a substantial capital sum to the building lessee as part of the consideration for granting the sublease. It is provided that this sum must have been at least 15 times the rent or the greatest rent reserved by the lease, but for this purpose a penal rent or any exceptional rent charged or chargeable for a period not exceeding five years is to be disregarded. The exceptional rents which were intended to be covered by this provision were those charged for merely the first few years of the term, the rent thereafter dropping to a nominal figure. It is understood that a number of these leases, which were really in the nature of conveyances, were granted in comparatively recent times.
It was suggested that, on the wording of these provisions, a sublessee whose lease contained a provision for paying a higher rent on an alteration of user and who in fact became liable to pay the higher rent at any time within the last five years of the term of the sublease, would qualify as a proprietary lessee. The amendment is designed to remove any doubt there may be on the matter.
Amendment agreed to.
Question proposed: "That Section 7, as amended, stand part of the Bill."
Sub-section (2) (a) says:—
"that the said sum of money so paid or expended or the total of the said sums of money so respectively paid and expended (as the case may be) was not less than 15 times the yearly amount of the rent or the greatest rent reserved by the lease."
I suggest to the Minister that he substitute ten years for 15 years. I think it is the normal practice in relation to rent generally that a rent can be bought out for ten years' purchase. It is a general rule of thumb. In this case, 15 years seems to be a bit high. I would ask the Minister if he could consider between now and Report Stage whether it would be possible to substitute ten for 15.
I suppose that, if we are to consider certain matters on Report Stage, this could also be considered. However, this amendment, was brought up at the Select Committee which went out of existence when the last Government's term of office came to an end. There was no opportunity of discussing it apparently, at that committee, but there was an amendment put down before it. The commission which dealt with this matter in what I think was a very meticulous manner did not have any representations made to it in this respect, nor did they themselves make any recommendations in regard to it. In view of what Senator Ryan has raised, I will undertake to have it examined, without giving any assurance that we can meet the point.
Question put and agreed to.
NEW SECTION.
Government amendment No. 3:—
Before Section 8, to insert a new section as follows:—
(1) Where—
(a) a lessee executes a mortgage by subdemise of the whole or part of the land comprised in his lease, retaining a nominal reversion therein, and
(b) the land comprised in the subdemise is sold for the enforcement of the mortgage,
the purchaser shall, for the purposes of this Act, be deemed to have acquired the interest of the lessee in the demised land for the entire of the unexpired term of the lease, including the period of the nominal reversion.
(2) This section shall apply to mortgages and sales whether effected before or after the passing of this Act.
This amendment also meets a point raised in the Dáil and has the effect of giving a right to a reversionary lease to a purchaser from a mortgagee by subdemise who has gone into possession and sold the entire of the lessee's interest in the premises except for what is called the nominal reversion, that is, the last day or so of the lessee's term. In such a case the purchaser would have acquired the interest of the lessee except for this nominal reversion and can reasonably be regarded as having as great an equity to a reversionary lease as a sublessee from a building lessee who may have retained a far longer reversion. The result of the nominal reversion being left outstanding is that such a purchaser does not qualify as a building lessee or a proprietary lessee. The disentitling effect of the nominal reversion is now being removed.
Amendment agreed to.
Section 8 agreed to.
SECTION 9.
I move amendment No. 4:—
In paragraph (b), line 24, to delete "this Act" and substitute "the Act of 1931".
I understand that the Minister is prepared to look into the points raised in this amendment and in amendment No. 5 and, on that understanding, I am prepared to withdraw this amendment at this stage.
I am not accepting amendments Nos. 4 and 5. In the first instance, amendment No. 4 is based on a misinterpretation of Section 18 of the Bill which the draftsman advises gives the same rights in respect of leases renewed after 1931 as Section 9 gives in respect of leases renewed before 1931. In view of that, the question of accepting these amendments does not arise.
Amendment, by leave, withdrawn.
Amendment No. 5 not moved.
Section 9 agreed to.
SECTION 10.
Government amendment No. 6:—
In sub-section (1), line 29, to delete "shall be entitled" and in line 32, before "to" to insert "shall be entitled on application".
This amendment and Nos. 7 and 9 may be taken together. They are merely drafting amendments.
Amendment agreed to.
Section 10, as amended, agreed to.
SECTION 11.
Government amendment No. 7:—
In sub-section (1), line 48, to delete "shall be entitled" and in line 52, before "to" to insert "shall be entitled on application".
This amendment is consequential on No. 6.
Amendment agreed to.
Government amendment No. 8:—
In sub-section (1), line 53, to delete "premises" and substitute "land".
This is simply a textual amendment.
Amendment agreed to.
Question proposed: "That Section 11, as amended, stand part of the Bill."
The effect of putting in the word "land" instead of the word "premises" may lead to a misunderstanding. A proprietary lease must necessarily include the buildings on the land and in the Bill before it was amended, it clearly includes the buildings; but it is not clear now whether that is so. If the Minister would be willing, in line 53, after the word "lease" to add "together with the buildings thereon", any possible misunderstanding would disappear.
"Land" includes buildings. Does that clear up the Senator's point?
May I make a point for clarification? According to Senator O'Brien, "land" might not include buildings and he wants something to secure that the buildings are covered as well as the land. However, it is possible that, as a matter of convention in drafting these Bills, "land" always does include buildings. In that case, the suggestion is hardly necessary.
Yes. It means the land and everything affixed to it.
If I were satisfied that land always included buildings on land, there would be no point in what I am saying; but I cannot find in the definitions of Section 2 of this Bill any definition covering that point. I would have thought of land just being land, unless it was specifically defined as being something else.
The Senator will have to accept my word for it, and I have to accept the word of my technical experts.
It is a well-settled legal convention.
Question put and agreed to.
SECTION 12.
Government amendment No. 9:—
In sub-section (4), lines 36 and 37, to delete "the time for making the application" and substitute "such time".
I have already referred to the fact that this amendment is consequential on Nos. 6 and 7.
Amendment agreed to.
Section 12, as amended, agreed to.
Section 13 agreed to.
SECTION 14.
Government amendment No. 10:—
In sub-section (2), line 22, to delete "An applicant" and substitute "A lessee" and in lines 23 and 24, to delete "and his executors, administrators or assigns" and in line 27, to delete "application" and substitute "grant of the reversionary lease".
The object of this amendment and of No. 11 is to enable a lessor who intends to rebuild or develop property to apply to the court for a decision as to whether he will be given possession at the expiration of the lease or leases concerned. As the Bill stands, the matter can only be determined on the application of the lessee who may not apply until the lease has expired. It is desirable, as has been suggested, that the lessor should be able to get a decision some years before he becomes entitled to possession in order that he may be in a position to proceed with the work when the lease expires.
Amendment agreed to.
Section 14, as amended, agreed to.
NEW SECTION.
Government amendment No. 11:—
Before Section 15 to insert a new section as follows:—
15—(1) Where the court is satisfied that a lessee would, but for the provisions of Section 14 of this Act, be entitled to a reversionary lease, compensation in lieu of such reversionary lease shall be paid in accordance with the provisions of this section.
(2) (a) The compensation shall be payable by the successful objector or if there is more than one successful objector by them in such proportion as the court may determine.
(b) The compensation shall be paid to the lessee unless, apart from the provisions of Section 14 of this Act, his title to a reversionary lease was subject to obtaining the consents required by Section 10 or Section 11 of this Act, in which case it shall be paid to the lessee and the proprietary lessee or lessees whose consent was so required in such proportion as the court may determine.
(3) The measure of compensation under this section shall be the loss which will, in the opinion of the court, be suffered by the lessee and by such proprietary lessee or lessees, if any, as a direct consequence of the lessee's having been declared not to be entitled to a reversionary lease.
(4) The compensation payable to a person, being the lessee or a proprietary lessee, under this section shall become due and payable on the occurrence of whichever of the following events is the later, that is to say, the expiration of one month after the amount of the compensation is fixed or the date on which that person's lease terminates either by effluxion of time or by agreement between the parties to it.
(5) Where compensation is payable to a person, being the lessee or a proprietary lessee, under this section and the interest of that person in the land comprised in his lease is subject to a mortgage or charge for securing money, the mortgage or charge shall attach to the compensation and any person who is liable to pay compensation and who has notice of the mortgage or charge shall pay the compensation in accordance with the joint direction of such lessee or proprietary lessee and the mortgage or chargeant or, in default of such direction, into court.
(6) Where compensation awarded by the court under this section is not paid within the time specified in sub-section (4) of this section or within such extended time as the court may allow, the following provisions shall have effect:—
(a) any building lessee, subject to obtaining the consents required by Section 10 of this Act and notwithstanding the provisions of paragraphs (a) and (b) of sub-section (1) of that section, and any proprietary lessee, subject to obtaining the consents required by Section 11 of this Act and notwithstanding the provisions of paragraphs (a) and (b) of sub-section (1) of that section, shall be entitled to obtain from his immediate lessor a reversionary lease of all the land demised by his lease;
(b) the provisions of Section 14 of this Act shall not apply;
(c) the granting of the lease shall operate as a discharge of the said award of compensation; and
(d) the court may make an order for the payment by the successful objector of such damages as the court considers proper for the loss which the building lessee or proprietary lessee has suffered as a direct consequence of the declaration of disentitlement to a reversionary lease.
(7) In this section "successful objector" shall, where the context so admits, be construed as including his executors, administrators and assigns.
This amendment is consequential on No. 10. The only reason why we have to produce a new section is that it is much quicker to do this than to amend each of the words that is affected in the present section.
Amendment agreed to.
Section 15 deleted.
Section 16 agreed to.
SECTION 17.
I move amendment No. 12:—
In sub-section (3), paragraph (c), line 27, after "lease" to insert "other than a covenant restricting the use to the then existing user of the premises and/or a covenant restricting erection of additional buildings."
The reason for this amendment is that in old leases it is not unusual to find that there are very few restrictive covenants. In modern leases there are nearly always restrictions on user and on the erection of additional buildings. The object of this amendment is to enable a landlord to frame a reversionary lease in modern form, without incurring a reduction in rent. It has never been disputed that in equity the landlord is entitled to the value of the land, as opposed to the value of the buildings. Therefore, he should be able to frame covenants so as to ensure that any new ground rents from new development will come to him. The value of property as a whole will depend on the use to which it is put; and it is, therefore, impossible to ascertain what is the letting value unless the user is prescribed.
I am unable to accept the amendment because it is clear that these are new restrictive covenants. From that point of view and also from the point of view that the commission's unanimous recommendation was in favour of the provision as it stands, I cannot accept the amendment.
Amendment, by leave, withdrawn.
Government amendment No. 13:—
In sub-section (5) (c), line 6, to delete "to 1955" and substitute "as amended".
This is a drafting amendment. The present collective citation of these Acts is the "Rent Restrictions Acts, 1946 to 1956", and before the end of the year it will be the "Rent Restrictions Acts, 1946 to 1957". The draftsman thinks it better to change the formula as proposed in the amendment.
Amendment agreed to.
Section 17, as amended, agreed to.
Sections 18 to 21, inclusive, agreed to.
SECTION 22.
I move amendment No. 14:—
In sub-section (1), line 39, before "shall" to insert "and who has applied to his immediate lessor for such a reversionary lease".
I am informed that the present effect of this sub-section is to create a perpetuity, that is, if the lessee, having made at the correct time his application for a reversionary lease, does nothing, he will be entitled to continue to hold the premises on the terms of the expired lease so far as applicable. When this becomes known, there may be tenants who will never proceed beyond the application stage. Section 24 as it stands would not enable the court to determine the tenancy so created, although it might do so, if amended by the insertion after the word "grant" in line 47, of the words "acceptance or refusal". Even if this were done, however, it would still leave the matter very vague. Accordingly, I should like the Minister to consider the possibility of accepting a new amendment which is not on the Order Paper and which I will read; that at the end of Section 22 there should be an express proviso in the following terms:—
Provided always that if any such person who shall have made an application to his immediate lessor for a reversionary lease under this Act shall refuse or neglect to proceed with such an application, or to accept a reversionary lease the terms of which shall have been fixed by negotiation, for more than three months after having been required in writing so to do by his immediate lessor, then and in any such case such immediate lessor may apply to the court and the court may make such order as justice shall require, and in particular may make an order determining any tenancy subsisting by virtue of this sub-section.
I am informed that if some proviso of this kind is not inserted in this Bill tenants, by masterly inactivity, by doing nothing at all, can acquire a tenancy in perpetuity and it is to prevent that from happening that this additional clause is suggested.
It seems to me only reasonable that this amendment should not be pressed at this stage. The Minister should be given time to consider it for Report Stage.
I am not accepting the amendment, in the first instance, because it is completely covered by amendment No. 15 which I shall be moving in a moment.
An Leas-Chathaoirleach
Is the amendment being pressed?
Senator O'Brien has proposed an amendment which he intended to put down for the next stage. I should like the Minister to consider that amendment for the next stage.
The Minister's point is that the next amendment covers the issue raised by Senator O'Brien's amendment.
That is the one on the Order Paper, but perhaps it does not cover the one he now suggests.
An Leas-Chathaoirleach
The House is not aware of it. Perhaps Senator O'Brien could put his new amendment down for the next stage.
Amendment, by leave, withdrawn.
Government amendment No. 15:—
In sub-section (2), line 48, to delete "by any person" and in line 49 to delete "him" and substitute "a person".
Under sub-section (2), lessee who has applied to the court is entitled to remain in possession on the terms of the old lease until the court proceedings terminate, notwithstanding that the old lease may have expired. With this amendment the sub-section will apply where any person interested, for example, the lessor or a superior lessor, applies to the court.
Amendment agreed to.
Section 22, as amended, agreed to.
SECTION 23.
Government amendment No. 16:—
In page 13, after sub-section (5), to insert the following new sub-section:—
(6) Where under sub-section (4) or sub-section (5) of this section the court appoints an officer of the court to execute a reversionary lease for and in the name of, or for and on behalf of, any person, the court may order the rent payable under the reversionary lease to be paid into court to such account as it shall fix, or may make such order and give such directions in regard to the payment of such rent as it may deem proper.
I gave an undertaking in the Dáil, when an amendment on these lines was withdrawn, that I would introduce it in this House after consultation with the appropriate court officers. It specifically empowers the court to give the necessary directions as to the disposal of the rent where a reversionary lease has been executed by an officer of the court.
Amendment agreed to.
I want to revert for a moment to Section 17. I overlooked the fact that I should have mentioned in paragraph (c) of sub-section (5) of Section 17 we use the plural and we say "Acts". It reads: "If the premises, or any part thereof, are controlled premises within the meaning of the Rent Restrictions Acts..." I want to amend that paragraph by taking out the letter "s" and making "Acts" singular.
That is a consequential change following on amendment No. 13.
Amendment agreed to.
Section 23, as amended, agreed to.
Section 24 agreed to.
Title agreed to.
Bill reported with amendments.
Report Stage fixed for Wednesday, 11th December.
