On the last occasion the Minister gave very kindly response to my suggestion that we should not take this Bill in one chunk. Is that still the position?
Landlord and Tenant (Amendment) Bill, 1979: Committee Stage.
I have split the brief into a number of parts and I should be delighted to assist the Senator in any respect having regard to his convenience and to the convenience of his party. But while I am a full-time politician I realise that the Senator may have other matters outside the House to deal with.
Full-time while in Government.
I realise that. I am only a transient.
For my part, the only problem I may have is in respect of Part III.
The procedure is that the House will deal with the Bill section by section. Should the House agree that it is necessary to postpone a section the Chair will facilitate Senators in that regard.
I do not know that this is the appropriate section on which to raise this matter but there does not seem to be anything in the Bill that would allow for savers, for people caught at the transition stage. I know that some people have business premises that they let a couple of years ago. They started by giving a two-year lease to business tenants and then there was a break followed by the granting of a second two-year lease. I expect the purpose of this Bill is to enable anybody who has been in a business premises for the three years or longer in these circumstances to have a right to a new lease.
This might be more appropriate on section 3.
Section 11 might be the appropriate one.
What I am concerned about is that there are some people who very genuinely would not have let their premises at all if they had known that this legislation would be introduced. I wonder whether there is some room for an allowance for such people, for example, maybe somebody who has had a premises let for the first time within the past three years.
I take the Senator's point. I think he will find that there is provision for that point. But I will deal with it on the appropriate section.
Nearly everything that I want to say will come up later. However, there is one point which I think appropriate to make now and that is the extension to the country with the removal of the one-acre provision. It seems to raise, for the first time, the question of whether under this Bill the business of agriculture is intended to be covered. This seems to me to be more appropriate for a Bill specifically designed to relate to agricultural holdings. I think that is what happens in other places but I do not think that this kind of a Bill which is dealing with a different type of business should by accident suddenly come to apply to, for example, a stud where there are hundreds of acres which are ancillary and subsidiary to the manager's house and the stud boxes and so on. You might find, without it being the intention, of the Minister or anybody else, that the lessee will have rights under this Bill. I am not saying that there should not be deliberation giving such rights in certain circumstances but it seems to me to be a matter for farming policy and agricultural policy. It is a different area and would not have been within the terms of reference or within the ambit of consideration of the commission which reported so helpfully on this whole field but it seems, if I am right in this, that one may have to have an exclusion for agriculture. I do not know whether it takes in operations like stallions servicing mares, for instance.
As the Senator says, it is a matter which would require consideration. I do not intend to give an unconsidered opinion but I would be delighted to deal with it on Report Stage.
This appears to raise the most serious issue in the whole Bill. While it is new in this Bill it is a repeat of the old Bill. So there is nothing partywise about it. I am very unhappy about exempting the State authority from the obligations of a code which originated with the Town Tenants (Ireland) Act, 1906. There was originally only the provision of compensation for disturbances where tenants had to go about their business when their tenancy ended. That provision was extended as a concept of the 1931 Act in effect to prevent the exploitation of goodwill which might have been built up by the tenant so that the landlord would be able to get more from that particular tenant than the market value generally of the premises. It seems to me that the State should be subject to all the obligations of a landlord without exception.
This proposal is a serious departure from what has been the governing law in this area from the beginning. It is not recommended in either of the commission reports. It goes against the judicial finding about our constitutional position—that the king can do no wrong. It does not hold here. While I am not saying that the king can do no wrong, here we are providing for a different treatment for the king, or the State in succession to the king, treatment which the State will be receiving in the courts generally. I imagine that problems have emerged in some areas and the existence of these problems has led to an attempt to find an oversimplified solution to them.
Going back to section 3, the interpretation section, "State authority" means any authority, being a Minister of the Government, the Commissioners of Public Works in Ireland or the Irish Land Commission. I do not want to be outlandish about this but the Minister for Finance owns a very large amount of the shares in Irish Life. Irish Life own a very great deal of property which is leased to a lot of tenants who are carrying on their business in these properties. What if some day some Government decided, through the Minister for Finance as a shareholder in Irish Life, to call back the shareholding into the name of the Minister for Finance? He would be a Minister of the State and all the tenants of Irish Life buildings would immediately be shorn of their rights by virtue of this Bill. I am sure this is not any part of the Minister's intention. Even if we accept the principle, which I do not think we should, we can provide against this sort of thing.
There are two situations about which I would like to ask the Minister where special provisions will have to be made. My colleague referred to savers and transitional provisions generally and perhaps this is another area where they may arise. What is the position of the Board of Works, a Minister of State, or the Irish Land Commission? They buy properties where tenants are acquiring rights. Do the tenants cease to have them on the State's acquisition? What happens to the tenants' rights at that stage?
There is another situation where the Board of Works or the Minister or the Irish Land Commission sell with tenants with no rights to private investors or purchasers. Are the tenants in that case to be given credit for the time during which they were tenants of the Minister, the Board of Works or the Irish Land Commission, as the case may be, as against the investor? What is the position of the investor in such a case? It seems that these two situations have to be provided for.
Take the situation where the Minister for Finance or the Board of Works are tenants of half a block and a business tenant has the other portion of the block. What happens to the business tenant, who thinks that at the end of his period of years he is going to have his rights under the code, if he finds that his cotenant in that building has bought the superior interest and because he is now faced with the State authority owning the landlord's interest, where originally it was the private landlord, the rights he has against the private landlord are gone? The Minister is a State authority and the tenant can exercise no rights against the State authority. I feel this is not what we want to do and we should in some way try to provide for it.
The section is irreconcilable with another move of a new kind, if I am correct in my thinking about the Bill, where we are actually subjecting local authorities to rights to which they are not at the moment subject. All that I have said with regard to the removal of the obligations from the State authority and the transitional provisions I think may be required both to the State coming and the State going out would seem to apply likewise to the position of tenants of a local authority. Are tenants of local authorities, for example, suddenly to discover that they are entitled to credit for the years when they were there without rights against the local authority?
There is a division between central and local government here. It seems strange that the central Government should be freed from the obligations in the very Bill which introduces these obligations from the first time to local government. Why should the central Government be freed at the time the local is being subjected? I know this was in the original, but that is not my point. I do not see the logic of it.
I thought Senator FitzGerald would remind the Minister of the question which he asked on Second Stage, that is whether the State acts as a lessor with regard to business premises. The Minister said that he would look into this matter and perhaps he would let us know what the position is.
I have a very careful note on this matter. I realised that Senator FitzGerald would be raising the point Senator Molony has just mentioned and several other points which I very much appreciate. I will set out an historical background I have prepared on the whole problem. As Senator FitzGerald has said, the simple truth of the matter is—and he said it is none of his business and I accept that—that this was in the original draft of the "Cooney Bill" which did not see the light of day because there was a change of Government in 1977. That is not relevant to Senator FitzGerald's very persuasive and almost unanswerable argument.
Up to mid-1976 it was widely or generally held in legal circles that the Landlord and Tenant Acts did not bind the State as lessor, a view based on a more general belief that the State would not be bound by a statute unless provision to the contrary were made in the statute either expressly or by necessary implication. On this basis no express provision was made in the 1967 Ground Rents Act, although the matter was fully considered.
Because of proceedings taken by a tenant in 1976 in relation to the tenancy of one of the shops forming part of the GPO buildings, the matter was the subject of advice by the Attorney General and a doubt was raised as to whether the State was not, in fact, bound by the Landlord and Tenant Acts. As a result of this, and the views expressed by the Department of Finance, the then Minister for Justice, now Senator Cooney, decided to insert a positive provision in the Landlord and Tenant Bill, 1977, which has lapsed, to the effect that the State was not so bound. The provision now appears in section 4 of this Bill.
Section 4 proposes that a State authority shall not be bound by the Bill in its capacity as lessor or immediate lessor of any premises. "State authority" is defined in section 3 of the Bill as a Minister of the Government, the Commissioners of Public Works in Ireland or the Irish Land Commission, these being the only authorities who hold land or buildings on behalf of the State.
Being put on notice by Senator FitzGerald on Second Stage, I want to make several points which might be helpful as to the reason why the State might be exempted. The basis of the exemption of the State, as landlord, from the provisions of the Landlord and Tenant Acts lies in the recognition that the role of the State as a landlord is not the same as that of a private individual or corporation. Whereas in the latter case the ownership and leasing of lands and property represent an enterpreneurial activity motivated by profit, the State is normally involved in the ownership and leasing of lands and property only incidentally to its administration of such lands and property, possession of which by the State is necessary in the public interest. The following examples might be helpful to the Senator, though no doubt he will reaffirm his own argument when I have outlined them.
The Minister for Tourism and Transport owns tracts of land in the vicinity of the three State airports, ownership of which is necessary in order to ensure against development of the lands in a manner that would inhibit airport operations.
Secondly, the Minister for Defence holds lands adjacent to certain military installations for purposes such as those I have mentioned. Additionally, most leases of land made by or on behalf of the Minister for Defence include a proviso that possession of the lands may be recovered at any time if military exigencies so demand.
Thirdly, the Commissioners of Public Works hold lands at such places as national monuments, the Phoenix Park extension, along the banks of the River Shannon and at the State harbours of Dún Laoghaire, Howth and Dunmore East. In most cases, actual possession of the land is unnecessary but it is essential that the commissioners retain control over the development and user of the lands.
Lastly, the Minister for Tourism and Transport has vested in him, by the Foreshore Act, 1933, the bulk of the foreshore around our coasts. Retention of control over the development and user of the foreshore is obviously necessary for the preservation of public rights of way, rights of navigation and rights of fishing over and from the foreshore.
Accordingly, land is held on behalf of the State in a wide variety of circumstances. If the exemption of the State from landlord and tenant legislation generally were to be removed, for example, in the absence of an express provision in the statute, the public interest that is involved in the holding of such lands would be at risk, though because of the variety of the circumstances it would be difficult to analyse the consequences. That exemption might be challenged in the courts.
This is one of the difficulties I find myself in in reading out this type of reply, for which I take responsibility in the final analysis, without reservation. It is very difficult to analyse the consequences of what I have just indicated to Senators. These are the realities. All Departments were consulted about the Bill. Certain Departments took the view that exemption might be made an expressed condition of the refraining from comment. It can be safely assumed that had the exemption not been expressed these Departments would probably have maintained their objections. In any event, detailed consultations with Departments would be necessary to elucidate the consequences of a change.
The Landlord and Tenant Commission, for the information of the Senator, have made no recommendation for a change. The prudent course is to include a provision in the Bill that would leave the position of the State as it has, by common consent up to the present, been taken to be. This is what is done in section 4 of the Bill. While recognising that the Senator has from his own experience made very persuasive points, I think in all the circumstances I have outlined it would be unwise to move from what can only be taken as a well-established practice. I would appreciate it if Senators would take the view that it would be unwise to move away from the established practice or precedent.
That is a very helpful statement. However, I do not think it deals adequately with a number of those cases; it is rather difficult to take them all in. In most of the cases specified there would not have been Landlord and Tenant Acts rights anyway. There would not have been tenements there under the definition of tenements. I do not think foreshores of Ireland will be easily seen as tenements.
It is an example of the difficulty.
Perhaps it could be helpful to refer back to the language of the public service in the definition section. Who could ever wish, for example, to put the Minister for Defence in a position where he could not absolutely deny rights to anyone in relation to a property which is relevant to the performance of his functions as Minister for Defence? It does not seem to be safe in the new situation where, conceivably the State will go into the business of buying its own premises and may find itself with tenants. There should be transitional provisions either way, whether the State is buying in or selling out. That ought to be clarified.
My own judgement would be affected by knowing whether there are many cases of the kind where local authorities have provided housing for the working classes under that old Act and at the same time thrown in a shopping centre and knowing whether the central Government have, in fact, many tenants who might have rights. It would be very useful to know what the situation is, apart from the general information which the Minister gave.
I had to leave the House for a short time. I understood the Minister to say that the State is regarded as being exempt from the landlord and tenant statutes. I would be grateful if he would give me the basis upon which it is felt that the State is; so exempt, under the 1931 Act for example.
I can give the Senator a copy of my notes.
I would be grateful for that. Does it contain the basis upon which it is felt that the State is exempt?
It does. I have set out very clearly the reason why we believe that the State should be exempt. The Senator might not agree with me.
That is not my question.
It is a matter of argument. Senator FitzGerald has very persuasively turned the situation the other way around and I have to stick to my brief in the sense that there is a legal precedent for retaining section 4 as it now stands. The arguments made by Senator Molony and Senator FitzGerald might be first class, and no doubt are, but I cannot be persuaded in any other regard. I also pointed out to Senator FitzGerald that the provision was supported by the then Minister for Justice, now Senator Cooney. I agree that this is not necessarily relevant to the argument, but it was retained in the 1977 Bill which lapsed.
I thank the Minister for his kind remarks about our persuasive argument. I made no argument whatever on this section.
I was talking about Senator FitzGerald, but I am sure I will pay the same tribute to Senator Molony at a certain time.
I merely want to make an inquiry. When I read this Bill first I understood that this was a new provision completely. I understood through my own ignorance, if that be the case, that the State was just as much obliged by the 1931 and 1958 statutes as any private individual is. I understood the Minister to say that legal opinion is that the State is exempt from the provisions of those Acts. I am curious to know what the basis of such legal opinion is.
As I pointed out to Senator FitzGerald, up to the middle of 1976 it was widely or generally held in legal circles that the Landlord and Tenant Acts did not bind the State as lessor.
I will explain why. This view, I understand, was based on a more general belief that the State would not be bound by a statute unless provision to the contrary were made in the statute either expressly or by necessary implication. On this basis no express provision was made in, for example, the 1967 Ground Rents Act. This is what the Senator has in mind, although on that occasion the matter was fully considered.
The other reason I pointed out to Senator FitzGerald is that proceedings were taken, as I understand it, by a tenant in 1976 in relation to the tenancy of one of the shops forming part of the GPO building. The matter was the subject of advice by the Attorney General and again a doubt was raised as to whether the State was not, in fact, bound by the Landlord and Tenant Acts on that occasion. As a direct result of that particular case, that is the shop in the GPO complex case, and the views expressed by the Department of Finance, the then Minister for Justice, Senator Cooney, decided to insert a positive provision in the 1977 Bill, which subsequently lapsed, to the effect that the State was not so bound. That is the reason, in addition to our own conviction, that section 4 of the Bill is drafted as it is. Section 4 of the Bill proposes that a State authority shall not be bound by the Bill in its capacity as lessor or immediate lessor of any premises.
As I have pointed out to Senator FitzGerald, section 3 of this Bill defines a State authority. This is a matter of legal authority, a matter of legal opinion. It does not fully deal with the argument made by Senator FitzGerald in relation to the items he has mentioned.
I will deal specifically with the matter of Irish Life and the fact that the Minister for Finance owns a large chunk of the shares of Irish Life. The argument in relation to what Senator FitzGerald has said is mainly in the area of theory, and it really would not work out in practice. There is a possibility, but the world is full of possibilities and probabilities.
Whilst Senator FitzGerald is entitled to use that example to support his own case, I do not think that the matter would work out the way he suggested. However, if there is the vaguest possibility that it might happen the way he relates it, then he is entitled to use it. All I can say to him is that it is most unlikely that such a situation would happen in a democracy where there are so many checks and balances. That is what this whole democracy of ours is about. Whilst there is always a possibility, I do not think that it will ever arise.
Would the Minister consider even a rough outline of an amendment to cope with the situation which he so helpfully described to us to take care of dangers where the State found itself in a business situation like anybody else and where the tenants should have as much protection as they would in the case of an ordinary business? Obviously I would not dream of expecting, and would not even try, to produce an amendment which would be acceptable in its terms, but if the idea were acceptable, an amendment could perhaps be drafted by the Minister's advisers. Is it worth doing that kind of thing?
The Senator's approach to this whole matter is extremely civilised and I think that the response to that type of civility should be the proper sort, and I am prepared to have a look at the section again. As I pointed out to the Senator on the last occasion, I raised this matter elsewhere. In the final analysis I carry the can; that is as it is and as it will be. The responsibility is mine and mine alone and in no way am I trying to shed any of that responsibility.
I was concerned about the situation of the State in relation to section 4. Whilst I am still concerned, I feel that the Senator is entitled to a reply to his question. I would be delighted to deal with this matter on the next Stage. I do not want to be optimistic about an amendment. I very much doubt if there can be any type of amendment which might dilute the absoluteness of section 4. I nevertheless would be glad to help and co-operate with the Senator in that regard.
I am glad to hear that the Minister is prepared to reconsider that.
I would not be optimistic about it. I do not want to mislead the Senator. I will have a talk with my people about it and I will come back to Senator FitzGerald on the next Stage.
Is it not true that the State holdings the Minister is concerned about are ones that are non-business in the ordinary sense of the word? We are not talking about an office block being let. Is it not possible that those ones he is concerned about could perhaps be listed in a Schedule to the Bill?
As I pointed out to the Senator, the State effectively in relation to the matters that I have outlined and the examples I have given, is not in an entrepreneurial situation. It is not in the business of profit as are the speculators and others in our midst. Consequently, the State is in a different situation. The State is in a special position in relation to the property it holds. It is under severe public control, public scrutiny and public question and is subject to the mechanisms of the House in relation to a Dáil question and is subject to the mechanism of this august assembly in relation to the matters that Senator FitzGerald has mentioned. In that way there is tight control over the State situation.
As far as the speculator is concerned, or the entrepreneur—to use a more polite term—his is a private transaction and he is in the business of profit. He is there to make as much money as he can for himself on the basis of a once-off transaction. The State, as I see it, is in a special position, and the more I speak about it—and I am glad that the Senator has raised it—the more I become convinced that section 4 should stand as it is without amendment. Having regard to the approach by the Senators to the whole question of the Bill, I would be delighted to have a look at the possibility of an amendment setting out the possibility of a Schedule. I would not be too optimistic about it and I do not want to mislead the Senators in that regard.
When the 1931 Act was introduced the situation was that one could not carry on a business unless one had buildings in which to carry on that business. A number of businesses are now conducted, particularly in an Ireland where the Act is going to apply not merely in the city and in the country, only where it is not in excess of one acre. Is there a case for giving people who take and provide the facility of car-parking the same rights as anyone else carrying on a business even though they have no buildings as such? If they have any building like a bit of a hut to stand in from the rain, it is very doubtful if the car park would be regarded as ancillary or subsidiary to the hut. In fact, the hut would be ancillary and subsidiary to the car park. Similarly, there are fields in and around the city used for the display of agricultural machinery, for the disposal of effects of businesses—liquidation sales and that sort of thing. Can the word "tenement" be revised in any circumstances to include such cases?
My second point is relative to the language used in subsection (3), that is as it is expressed particularly in subsection 3 (c) (i). It seems it would be very easy for a person who had a proposed purchaser of the interest in his lease, which he knew the landlord would refuse, perhaps rightly refuse, to incorporate a company and have the intended purchaser of his interest, which would be refused, take the shares in the private company. That may have to be revised to catch the situation where the subsection could be used as a loophole to get over a covenant properly restrictive of assignments.
My third and last point is a question. Does subsection (2) mean that a State authority is deemed to be in exclusive occupation of an entire block, even if it is most evident and provable that it is not in extensive occupation, that the rest of the block is sublet to other people? First, can the definition of "tenement" be changed to include the cases I have illustrated? There are many other cases that might occur to the Minister or to other Senators where the ground is the real source of the business and where any building in it is subsidiary or ancillary to the business which is being carried on. That was not the situation in 1931, but it exists because of market developments of one kind or another. It is certainly more of a reality where we are extending the Bill to the country. My second point relates to getting over a covenant restrictive of assignments by fiddling with shares, and my third point relates to subsection (2).
On the Senator's first point in relation to the meaning of "subsidiary" and "ancillary", as I understand it, any unbuilt on land included in the tenancy must be subsidiary and ancillary to the buildings on the land if the property is to comprise a tenement which would relate to section 5 of the Bill. The right to a new tenancy under Part II of the Bill, which replaces Part III of the 1931 Act, or to compensation for improvements, which in Part IV of the Bill is restricted to tenements, and the right to a reversionary lease, which is dealt with in Part III of the Bill, applies only to so much of the land and the lease as is subsidiary and ancillary to the buildings. To define "subsidiary and ancillary", as the Senators are aware, "subsidiary" and "ancillary" are not defined in the present law or in the Bill itself.
The Landlord and Tenant Commission considered the phrase and did not recommend any change. However, at the request of the Minister for Justice the commission are examining the expression, and the general feeling is that the commission will not recommend any change in relation to it. The question of what land is subsidiary and ancillary to buildings depends so much on the circumstances that any definition might be worse than none. That is to say, it might be better to leave each case to the court's discretion and leave it to the courts themselves to define the exact meaning of the words and to give exactitude to the expressions "ancillary" and "subsidiary". As I understand it, the same test of subsidiary and ancillary land applies in relation to the right to buy out the fee simple. Where the value of land is concerned, that right can be of great financial importance, hence a definition of "subsidiary" and "ancillary" that was not only fair and seemed to be fair could, as the Senators will appreciate, be very controversial indeed.
The Senator raised the question of the distinction between "urban area" and "non-urban area" and the definition of "tenement". As defined in section 2 of the 1931 Act, a tenement situated elsewhere than in an urban area must not exceed one acre and must have a house on it. The Bill proposes in section 5 the deletion of this provision together with any reference to an urban area. Consequently, a tenement whether or not in an urban area will, under the Bill, simply consist either of a defined portion of a building or of built-on land with the requirement that any unbuilt-on land is subsidiary and ancillary to the buildings. The removal of the distinction between urban and non-urban area was recommended by the Landlord and Tenant Commission in their first report. The commission have had representations on whether or not a particular tenement was in an urban area as defined in the Act, which presents difficulties because, inter alia, of the absence of any definition of town and village—in particular, properties situated near the boundary of, say, an urban district created problems. Again, the commission took account of the recent tendency to erect buildings for commercial purposes in places where there is doubt as to whether they come within the definition of “urban area”. These sites could exceed one acre and the tenant would not, therefore, be entitled to the benefits conferred by the landlord and tenant legislation. In brief, the commission found that in the definition of “tenement” the urban and non-urban area distinction had effectively become an anachronism, had become out of date and, consequently, was not relevant, as Senator FitzGerald properly mentioned, to present-day practices in the area of landlord and tenant generally.
Section 5 (2) applies where the State authority holds the tenancy but another State agency is in occupation. On the matter of the third point, where, for example, the State holds part of a building, say, the ground floor, the Senator asked what the position of the other tenants would be in relation to the rest of the building. In those circumstances each of the cases of the tenants in the other part of the building would be dealt with on its own merits and each of the contracts of tenancy in a dispute would be adjudicated on by the court in relation to the court's interpretation of whatever contract they had with the landlord. Their situation would not be affected by the existence of a State agency as a tenant in part of or in the whole building.
I am not sure that the Minister has dealt with my query about the person who is the tenant and who, instead of looking for a consent to an assignment of his tenancy which he knows he will not get from the landlord, incorporates a private company, takes over and carries on the business, or whatever activity may be there, and then transfers the shares in the private company without the permission of his landlord. The private company has under the section succeeded him in the tenancy, and is entitled to a renewal. He gets his money for the sale of his shares. The landlord does not want the new man; the landlord lawfully could have refused the new man; the landlord has been outwitted. In the case that I am positing where the landlord could lawfully and properly have refused consent to the permission, surely this is a loophole.
The Senator has a good point. If the landlord knew of the existence of the proposed lessee he would not have allowed him in. There is obviously a legal subterfuge used to get through the piece of legislation which might be used as a loophole. I will have a look at it on Report Stage.
Does the Minister see any consistency between section 6 and section 4?
Section 6 relates to premises provided by a local authority as distinct from premises provided by a central authority. In the circumstances, it is proper that section 6 be seen as distinct from section 4, and I do not see any great inconsistency in relation to it. Having compared the two, I find that there really is no inconsistency. If I am dealing with section 4 on Report Stage, in those circumstances I do not think it reasonable to expect me to deal with section 6 under the same circumstances.
The section itself re-enacts section 3 of the Landlord and Tenant Act, 1931, with certain drafting changes, one change of substance. The words "provided or deemed to be provided by a housing authority" reflect the wording of section 118 of the Housing Act, 1966. The change of substance arises from a recommendation of the commission in their first report that business tenants of buildings that have been provided under housing legislation should have the right to a new tenancy under the 1931 Act. Section 6 of the Bill proposes this change by way of excluding business tenancies from the scope of the provision. This is a very good recommendation by the Landlord and Tenant Commission. While there could be some form of inconsistency read into section 4 as against section 6, it is a matter of interpretation. Whilst we want to keep it out of the hands of the lawyers as far as we can in the context of litigation, we must have as perfect a legal instrument as we can to prevent misinterpretation and the possibility of loopholes escaping our notice in the drafting of this legislation.
This section gives us the key to the solution of the problem with regard to the State. Where the authority which is a local authority, in this case, but might well be a central authority, is doing the duty of providing housing, it is making it very clear that, where it is providing housing in fulfilment of its duties, rights are not enjoyed by people who get these houses. Where, incidental to the performance of that duty, it throws in a shopping centre, it is saying that the business tenants in that shopping centre will have as much right against that local authority as they would have if it were done by any property development company in the world. This is the way we should treat the State also. Where the central authority is doing something in fulfilment of its primary function, like providing defence, or developing the Air Force, or any one of the things the Minister indicated to us, there should be no rights garnered in these cases. Where it goes on to do something else, such as acquiring premises and making a subletting lease, it is going into business whether it intended to do so or not. If it is going into business it should consider what business rights will be created, what, in justice, ought to be the tenants' rights. One set of tenants ought not to be treated differently from another set. For 70 odd years the view has been that tenants of business premises who have to leave these premises should be compensated for being disturbed. Questions arise, which we will discuss later, as to the point at which tenants should get these rights. If giving them renewal rights for nearly 50 more years in addition to compensation for disturbance means that they will be paying for the goodwill they created around these premises and if that is regarded as just treatment of tenants by anybody who owns property and who provides the property to these tenants, then justice requires that the State which goes into that business, even incidentally, should be treated in exactly the same way as a private landlord.
The key is in the terms of this section where the Minister is doing this for the local authority. It is providing that the occupiers get no rights under this Bill. When people invest their capital and spend their day at work in these premises, they get rights against the local authority. They should get the same rights against the central authority, because it might have been the central authority that provided these shops instead of the local authority.
There is a deep philosophical agrument here. The point the Senator is making is whether the central authority should be in business on behalf of the Government, or on behalf of the taxpayer. When the State holds property in trust for the people it should be kept out of the business of profit. There is a certain integrity which the State has as a central authority in relation to dealings with land and property under its control. We should preserve that integrity. We should not let the State go into private entrepreneurial speculating business. It would be a wrong concept. While there appears to be an inconsistency between sections 4 and 6, it is not there. I will certainly consider the matter with my advisers between now and Report Stage. I do not hold out much hope for a change in relation to this matter. It is a matter of philosophy whether the State holds property in trust in the manner in which it does. It is a matter of public policy. It is a matter of maintaining and guarding the integrity of the central authority against charges of ill-dealing and wrongdoings in the private market place in the context of the sale or otherwise of property. I feel very strongly about maintaining the integrity of the central authority in that regard. Civil servants should not be put in the position of dealing with private speculators. The civil service have never been found wanting in the service of this country and we should preserve that principle.
How unsatisfactory has the Minister found the President of the Incorporated Law Society, who is being dropped?
I must pay tribute to the President of the Incorporated Law Society, who is not being dropped. I would never drop the President of the Incorporated Law Society. I should like to pay tribute to that Society as a body. They, as a body of solicitors, have, without urging on our part, given their opinions on legislation which would be of concern to them. In the circumstances, it was not felt necessary to highlight once more the fact that the Department or Departments should consult with the President of the Incorporated Law Society. Whether the Department of Justice like it or not, the President of the Incorporated Law Society and the Society consult with them. We appreciate their consultation and continue to look forward to the cooperation which exists between the Department of Justice and the President of the Incorporated Law Society. There is no insult intended to the Incorporated Law Society as such. There is no question of dropping the President or the body which he represents. We are letting him down gently.
On section 2, I made the point that some people may be surprised by this Bill when it becomes law. There are throughout the country many owners of business premises who have let portions of them and who have never intended letting them to tenants for a period in excess of three years, so as to avoid tenants attaining business rights. There are people who have houses or properties that are, in effect, investment properties, people who have had to make a decision at the start of their careers, when investing in such properties, whether such property is to be an investment or not, and whether it is envisaged that tenants should have rights or not. I am concerned about many casual people, not people who are in the game of investing in business premises in a big way, but ordinary people who have purchased, as a small investment, a house in a town and, perhaps, have the ground floor let to a shopkeeper. They have gone to some trouble to ensure that any tenants who had possession of the premises at any time would not get control and would not, then, be entitled to a long lease. Solicitors have been granting two-year leases or, perhaps, two-year and nine months leases, breaking and granting again. This Bill, and properly so, puts an end to that. It is better, if people are in the premises for a period in excess of three years, that they have the right. However, landlords should be given the right to put their house in order and also have the right to be looked after with regard to premises which they thought up to now were still fully within their control and could be taken possession of once a lease ran out, as that will no longer be the case. Perhaps the Minister would deal with the point and let me know whether he had any intention of allowing some transitional period for people like this.
Yes. As I understand it, the Senator's point is that what we are dealing with here are repeals and consequential provisions and what I interpret the Senator as wanting me to answer is what happens to existing tenancies and so on, to existing agreements, what happens to them between now and the passing of this Bill.
Perhaps the Minister would deal with the promotion and scope of the Bill.
Yes, well, as I understand the Senator, again I have at my disposal comprehensive notes. I would refer the Senator to the Interpretation Act of 1937, section 21 (1) which reads:
Where an Act of the Oireachtas repeals the whole or a portion of a previous statute, then, unless the contrary intention appears, such repeal shall not—
And paragraph (e) reads:
(e) prejudice or affect any legal proceedings, civil or criminal, pending at the time of such repeal in respect of any such right, privilege, obligation, liability, offence, or contravention as aforesaid.
Paragraphs (a) and (b) read:
(a) revive anything not in force or not existing immediately before such repeal takes effect, or
(b) affect the previous operation of the statute or portion of a statute so repealed or anything duly done or suffered thereunder, or
And paragraphs (c) and (d) read as follows:
(c) affect any right, privilege, obligation, or liability acquired, accrued, or incurred under the statute or portion of a statute so repealed, or
(d) affect any penalty, forfeiture, or punishment incurred in respect of any offence against or contravention of the statute or portion of a statute so repealed which was committed before such repeal, or
and then (e), as mentioned. There are two other subsections, (2) and (3) of section 21 of the Interpretation Act of 1937. That might take care of the Senator's point. This is the saving situation.
I do not see, with respect, what that quotation of the Interpretation Act has to do with the points I have made. There may be some misunderstanding between us.
Yes, I think there is.
As I understand the present position, a tenant of a business premises, once he is there on a lease for a period in excess of three years, acquires his own business rights. This is equity, the right to a long lease. To avoid tying up their premises, landlords have in the past granted a two-year and nine months lease. They kept themselves under the three-year limit. Some people have granted a two-year lease to tenants and, wishing the tenant to continue in business but not wishing to have their premises tied up, have finished with the two-year lease and have granted a subsequent two-year lease to the same tenant. I agree with the provisions of this Bill. It is a good idea that, no matter what a tenant's entitlement to the premises are, if he is in a premises for a period in excess of three years he is entitled to the business right to stay on there. There are, however, some people who may be short-footed by this measure being passed, people who never intended to have their premises tied up. There is nothing in this Bill to save those people, who are entitled to be looked after. Landlords should be put in the position where they can say, "I know that, if I let X or Y into these premises under whatever circumstances, he can acquire business rights in them". I wonder whether the Minister would consider some form of transitional provision so that a landlord or an owner of a premises would have the choice of deciding whether he wants his premises to be an investment premises or whether he wants to retain possession of them.
I do not know whether this is an adequate answer to the not unreasonable question the Senator has raised. The Senator will not argue about the section; he says he agreed thoroughly with the intentions of the section.
Of the Bill.
Of the Bill. My information is on the basis that the proposed changes have been public for ten years, since the first report of the commission, that the proposals, in the main, were contained in the 1977 Bill and that parties have, effectively, been on notice of the proposed changes. It is only fair to point out that this matter has been on the stocks for quite a long time and anybody who was entering into the situation described by the Senator might have been engaging in a piece of foolhardiness. I should also remind the Senator that section 13 (2) of the Bill allows parties to avoid giving or gaining rights.
I accept that.
Also it allows arranged breaks in the tenancy, to stay outside Part II of the Bill. In circumstances, the answer to the Senator's questions might be contained in those latter references, rather than the first part of what I said.
I would ask the Minister to reconsider that. I appreciate the points made in relation to section 13 (2). I am not concerned about that. I know that this provision was in the 1977 Bill. It was covered in the Landlord and Tenant Commission report but I do not believe that casual houseowners who have let their ground floors as shops are familiar with the details of the Landlord and Tenant Commission report.
Well, I am sure their legal advisers would be.
I can assure the Minister that there are legal advisers who have never seen that report. There are many people who, to avoid being caught in a situation like this, have confined themselves to two year leases. I believe there is a strong case to be made for allowing them to have the opportunity to decide what they want to do for the future. I am sure that some section can be put in and I do not believe that it will do a tenant any harm. It is fair and reasonable that a person who owns a premises be given the opportunity to make up his mind. It is only going to happen once and that is on the coming into force of this law. After that, it will be clear what the position is. I would ask the Minister to reconsider it.
The Minister should consider that this is a drafting point in aid, generally, of what the section is trying to do. Regarding the use of the phrase "at that time" in section 13 (1), why is there departure from the use of the language in the corresponding provision under section 19 of the existing Act?
This Part applies to a tenement at any time if (a) the tenement was during the whole of the period of three years ending at that time;
and so on. Does that mean that that Part did not apply until the three years ended at that time? I do not think that that will stand up to an examination of all the sections in the Part. You will find yourselves in an embarrassing situation if you hang all the sections of the part to an application only at the time, which is an ending time which gives rise to the rights. That is my first point for the Minister's consideration.
The second is a like point. The language "unforeseen temporary break" which is in subsection (2) is, in fact, the language used in the report of the commission. I wonder, however, if it is apt legal language—apt to cover all the cases, many of which are illustrated, but not intended to be exhaustively illustrated, in the paragraphs of the commission's report. What does "unforeseen" mean? Unforeseen by whom? Is it a correct word for an "act of God" situation, which is, in fact, what was referred to in the commission's report? There are many things which occur which are not acts of God, which may be unforeseen by one or both of the parties. Is it intended that these temporary breaks should all be taken into account? I just mention this in case better language can be found; better language should be sought.
The third point is something which I am sure has not been overlooked. I cannot see the reason for the distinction between the different treatment of subsection (1) (a) and subsection (1) (b) or, indeed, subsection (1) (c). Why should the unforeseen temporary break be disregarded if the court considers it reasonable to disregard it, if occurring in the case of a tenement being used wholly or partly for carrying on business when it is not to be disregarded, even if the court considers it reasonable to disregard it, in the case of the family equity situation or the long-term equity situation? Why should it not be disregarded if the court considers it reasonable to disregard it in the extensive improvements equity situation?
I am not going to get a great deal of support on this. I can, certainly, be "clobbered" by the Minister saying that all Ireland has not been shouting for it, but the whole world was not shouting for Einstein, either, before he made his great discovery. In fact, in the market place, the three-year period is disadvantageous to small people starting their business. If landlords could give a five-year letting it would be advantageous for the tenant to be given that length of time to prove himself and satisfy himself. After two years and nine months, which is the effective period we are talking about, the tenant may not know whether his business is going to be a success or not. At that very point, he must leave—all the more so, under the provisions of this Bill. Must the landlord save himself by seeing that he does leave? It is arguable that three years, which was originally intended to benefit tenants, is now, in practice and in effect, seen to the disadvantage of tenants whose landlords are so anxious to keep themselves free from statutory rights of tenants. The Minister is not being asked by me to give a reaction to that point now; in fact, I should prefer if he did not. Even though this is a point that everyone has made, I also want to make it.
The next point is one about which I am exceedingly unhappy. I am not at all concerned about the reduction of 30 years to 20 years; indeed, some people thought it could be ten years. I take it that what we are talking about here is the family in long tenancy of premises who should be regarded as having, by the long occupation, rights not to be put out of what they think of as their home. I certainly think that is the proper idea. Twenty years is probably a bit better than 30 years. I would agree with the 20 years as meeting that situation. I am unhappy, particularly for the reasons given, with the situation where the tenant can sell, for value, interest to somebody, perhaps a few weeks or days before the 20 years. Somebody may take a speculation, it might well be a speculation so expressed that the money came back to the buyer if the speculation did not come off. In effect there is a trafficking. There is no longer protection of the family home situation. It is quite simply that a chunk of the value in the property is being transferred to the tenant who is not any longer concerned to preserve the family home but is concerned to sell what, in effect, is not his.
I greatly hesitate to criticise anything that the commission reports, because of its membership and the very great experience of the members, particularly the Chairman, Mr. Justice Conroy. I must, however, do it. The reason given in the commission's report does not carry any conviction. Under the language of the equivalent section of the 1931 Act in this case, the tenant could dispose of his interest by will. This might mean that it could, of course, go to a stranger. Of course, the intention of the original Act was that a tenant could leave it to his or her daughter, or son, or sister, or whoever it may be, and this would keep the family home for the family. The simple fact that disposition could be made to a stranger does not seem to justify bringing in a situation where this can be disposed of for value.
Let us look at the facts. Very often in these cases the realities are—and I do know what I am talking about—that the poor landlord has very well-off tenants occupying. It is this kind of situation that we are talking about, not rent restriction cases or housing the working class; we are talking about mansions, particularly as this Bill will extend outside the urban areas. The Legislature is, quite simply, transferring a chunk of property from one man to another, from one man who may not have a lot to another man who may have. I would require to hear many more arguments for making that change than are offered in the commission's report. The commission, in their report, indicate some awareness of this problem. They report, but do not repeat it in their recommending paragraph, that the change of tenancy should be upheld unless the purchase is effected shortly before the termination of the interest, which latter case should not be allowed to happen. They do not, in their specific recommendation, place this limitation on it. This at least, indicates an awareness of the points that I am making. I am thinking back to one particular case where a man, with an income 20 times the income of his landlord, sat in the landlord's premises, taking advantage of this section under the 30-year arrangement, but at least he could not sell it. It is now proposed that he should be entitled to sell it.
On the first drafting point, in regard to the expression "at that time", which is mentioned on a number of occasions in the section itself, the Senator wants that expression interpreted. As I understand it, it means that the tenant can qualify under Part II as soon as he satisfies the necessary conditions, and without reference to the date in which his tenancy expires. My information is that the Bill has been carefully drafted on that basis. The Senator has pointed out that there might be some doubt about the efficacy or otherwise of the use of "at that time". It is fair to say that unexplained its meaning is unclear but explained it becomes very clear. That, basically, is the reason why "at that time" is included and has been referred to on a number of occasions in the section. Again, the Senator raises a valid point in relation to subsection (2) of the section under discussion. He mentions subsection (1) (a), which reads:
An unforeseen temporary break in the use of the tenement shall be disregarded if the Court considers it reasonable to disregard it.
The Senator's concern is in regard to the use of the expression "unforeseen". He has a point and I shall deal with it on Report Stage.
I do not think the Senator needs my comment on the fourth point he raised. He has expressed his own view on it and it does not require any further comment.
Regarding the Senator's third point, the 1931 Act already gives rights after three years to business tenants in certain circumstances. I do not think that these rights can be taken away by making the period five years. The business tenant is pretty well protected under this section.
On the question of the disposal of the property for reasonable value, this is entering into the area of which the Senator has personal knowledge from dealing with problems of this nature. Because of my own lack of experience in regard to this I do not intend to enter into conflict on argument with him. This is a genuine social problem. All I can do is to assure him that the section, as drafted, would take care of the individuals who might in some way be harmed under the circumstances outlined by the Senator. I do not give that undertaking, not being competent to enter into the type of discourse proposed by the Senator. For that reason, I do not intend entering into any deep discussion on it.
I have a query on subsection (1) (a). The best way I can make the query is to give the Minister an example. A landlord makes a letting in writing for two years and, without any break in occupation or use, makes a second letting in writing, for a period of two years. Has the tenant had three years occupation to satisfy paragraph (a), there being no break?
There being a letting in writing for two years, before the end of the two years the landlord and tenant enter into an agreement for a further two years, is that what the Senator is saying?
In those circumstances, if the matter came to the notice of the court, I understand that the landlord and tenants might be aware of the legal implications of such a case. As I understand it, there should be no difficulty about whatever arrangement the landlord and tenant might enter into. I am subject to correction and could have the matter raised between now and Report Stage, but I do not think that subsection (1) (a) would affect, effectively, that particular contract between landlord and tenant. However, I shall have the information for the Senator on Report Stage.
There is a good deal in my point about landlords being slow to make lettings where rights would be gathered against them. I know this Bill contains what has always been part of this code, provision that there should be an option out of these contracts. I think where tenants have rights or are in a position to gather rights under the existing code, there will be no question of these rights being taken from them. Could we, however, in relation to this element of three years, have a provision whereby a tenant could validly agree to make it five years, to place the total restriction as five years and that that could be a valid agreement? Tenants would thereby be allowed to take properties for the length of time that they need them and that landlords were prepared to give them. They would agree, and it would be valid if they did so, but they could not agree to escape in any other way the provision of the Act. Again, I do not want an answer to that now, but think that it is worth considering and might be a solution. I know there is danger in any of these kinds of contracts, but if it is absolutely restricted to this section for this particular purpose it might get over the difficulty.
Yes. I take the Senator's point. This, I understand, will come up further on in the Bill and when it arises I will deal with it. My information is that it comes up under section 79. I put the Senator on notice of that and if he is not satisfied between now and tomorrow, or whenever I am permitted to take the Bill—hopefully in as short a time as possible—he could raise the matter again with me.
I have one question. Section 13 (2) reads:
For the purpose of subsection (1) (a) an unforeseen temporary break in the use of the tenement shall be disregarded if the Court considers it reasonable to disregard it.
I wonder whether some guidelines should be given to the court or whether there should be another sentence added to that to give some reasoning. What is reasonable or unreasonable? What is the court to use as a yardstick to measure whether a break was unforeseen or whether the court should reasonably consider that it should be disregarded?
The Senator, from his own experience as a solicitor, will appreciate that the majority of cases under the law of landlord and tenant do not come to the notice of the court on the basis that the tenancy agreements are made without any necessity for recourse to law and are generally drawn up in an amicable way and one party agrees with the other.
In the context of a disagreement the court comes into being. There is a very small minority of landlord and tenant cases which come to the attention of the court. It is a small number in relation to the amount of landlord and tenant contracts which are drawn up on a daily, weekly, monthly or yearly basis. In the circumstances, what is reasonable could be left to the reasonable interpretation of the judge adjudicating on the arguments before him. I do not see any conflict there at all. It is as well to let the court decide in a reasonable manner what is reasonable and not to bind it. In other words it is as well to leave the interpretation as flexible as possible in the interests of justice to both parties. I would respectfully suggest that that might be the answer to the Senator's very reasonable question.
I appreciate what the Minister has said and I sympathise with it in many respects, but there is a problem in this area. Say, for example, that a landlord lets a premises on a lease for two years and nine months. The landlord says to the tenant on expiration of the lease that he must vacate the premises but if he comes back to him in one month's time he will give him another lease of two years and nine months. What is that tenant's position? Is that tenant entitled to a long lease or is he not?
Again, with respect to the Senator, that would be a matter for interpretation by the court having regard to the provisions of the Landlord and Tenant Acts.
The Minister must have some notion of what he would hope the court would decide. Obviously the court has to decide the facts in every case but nevertheless it is one way in which landlords may try to get around the provisions. Is it the Minister's intention that this can be done?
I appreciate the Senator's point. I would not be in a position to tell the court how it should interpret a section. I might in some way be pre-empting the court's interpretation of this section by setting out exactly how it should be interpreted and that might be a wrong departure.
The Minister has introduced the court into it and is asking it to make a decision on something. What I want to know is whether or not it is envisaged that in the case of a landlord who grants the lease and then asks the tenant to vacate the premises for one month giving him to understand that he will get a further lease for a limited period after that, is it the Minister's intention that such a tenant should have the right to obtain a long lease or is it the Minister's intention that he should not have?
As I understand it now the situation is that the two years and nine months' tenancy does not give rights under Part II of the Bill. Consequently one could not outlaw such an arrangement. I think that answers the Senator's question.
With respect to the Minister it does not. I am talking about a situation where somebody is in a premises for two years and nine months. To avoid the provisions of the Act, the landlord asks him to vacate the premises telling him his time is up but if he comes back to him in one month's time he will let that tenant back into business there again. He gives him another lease for two years and nine months so that person has been in business there for something in excess of five years with one month's break. Is it the Minister's intention that that tenant should be entitled to get a new lease?
I can only rely on my own argument in relation to this matter. Under section 13 (2) the courts will decide the question of the rights or otherwise. I cannot go any further than that.
Surely the answer is that that particular break is not unforeseen. Therefore, no rights would accrue.
This is what I said to the Senator in the first instance.
If the Minister is considering removing the word "unforeseen" on Report Stage——
I am not considering removing the word "unforeseen" on Report Stage. I am considering Senator FitzGerald's point in relation to the question of the placement of the word "unforeseen" at section 13 (2). That is the undertaking I gave. I did not say anything about the removal of section 14.
I misunderstood the Minister.
It is quite understandable. One can appreciate with all the questions and answers it becomes confusing. What Senator Cooney has said replies to the question posed by Senator Molony and this was pointed out by me in the first part of my reply to the Senator.
On the question of the use of the word "reasonable" in subsection (2), the Minister has made the point that he would leave it to the court.
I have no option.
Senator Molony raised it in the context that Parliament should give the court some guidance as to Parliament thinking, and I want to follow that up. As drafted, if the court is to decide in every case whether it is reasonable or not to disregard an unforeseen temporary break, two conflicting interests will arise—the landlord interest and the tenant interest. I can visualise the situation where the superior court, on the first such case coming before it to decide if the Circuit Court interpreted this matter correctly, might give a decision in favour of one party or the other. It might, for example, give a decision in favour of the tenant and thereafter inferior courts would be bound to interpret the word "reasonable" as being reasonable with regard to the tenant's interest. That is why I say that it is a matter of policy for the Oireachtas to say to the courts that they want the court to consider the tenant's interest to be greater or they want the court to consider the landlord's interest to take precedence. There is a precedence for it in the rent restrictions code where, on ejectment the court is entitled to consider whether a greater hardship would be done to the landlord by failing to give possession or to the tenant by giving possession. There is a guideline laid down by the legislature for the court in exercising its powers under a particular section. In this case all that we are saying to the court is that it should disregard an unforeseen temporary break if it thinks it reasonable to disregard it. The point I am making is that it is unfair to the court. It could happen that the set of circumstances of the very first case that came up might provide the precedent that thereafter the interest to be weighted will be that of the tenant rather than that of the landlord. The courts might thereafter find themselves having to strain backwards in order to comply with the precedent that has been laid down. It implies a matter of policy that we have to make a decision as between the landlord and the tenant. That is why I think there is merit in Senator Molony's point.
I take the Senator's point. What the Senator wants is for the Seanad to set down guidelines for the interpretation of the court in relation to section 13 (2) and indeed in relation to all other parts of the Bill which will arise for discussion from time to time. My suggestion is that it would be unethical and it would be contrary to the laws of justice and equity and all the other principles which we hold so dear to ask the court, in the context of section 13 (2), to weight the interest of the landlord against the interest of the tenant. The balance of justice must be seen to be properly preserved. I would suggest, as a guideline to the court, that they look at the reasonableness of the interest of the landlord vis-a-vis the tenant and vice versa. I do not think there can be any conflict in the interpretation thereafter. That is all I can do. Senator Cooney might have a different view on it. I am not altogether satisfied about the efficacy of the proposition which the Senator said exists in the rent restriction code that the Oireachtas as a matter of principle should be setting down the guidelines for the court. I do not have to follow precedents and I do not regard precedents as sacrosanct—quite the contrary. I feel that it is wrong for Members of the Oireachtas or for Ministers, whether they be of senior or junior species, to set down the guidelines for interpretation by the court. I have very seldom in my own practice as a barrister found Members of the Oireachtas running to the reports of either the Dáil or the Seanad to see how they might interpret the case before them, least of all landlord and tenant cases. I have deep doubts about Senator Cooney's proper analysis of what existed in the past. To suggest that the courts should weigh one interest against another is all right, but to suggest that one interest should be weighted is an entirely different proposition. I have the gravest doubts about such a proposition.
I am sorry to stick at this point.
I am here to be of as much service as I possibly can.
I wish to come back to this question. It is our responsibility now to decide what rights should or should not be given to landlord and tenant. I abandon the point I made about laying down guidelines for the court. We should decide now whether or not a tenant, who has a short lease and because the landlord wants to keep his premises free he insists that the tenant vacates it for a month and thereafter be granted a further lease, is entitled to a long lease. I thought part of the intention behind this Bill was to ensure that a landlord would not be in a position to do that and that he would have to make up his mind once and for all whether he was going to have his premises as an investment property or whether he wanted immediate possession and control or the right to attain the possession and control of them.
As I read the section and it is I agree with what Senator Cooney says about the word "unforeseen". A landlord can continue to do that. We should now decide whether or not that is right. The reason I made that wrong interpretation was because the explanatory memorandum to the Bill at paragraph 13 (1) certainly implied if not expressly stated that this new section was recommended by the Landlord and Tenant Commission. The Landlord and Tenant Commission in paragraph 174 (3) says:
A tenant should not be deprived of his right to a new tenancy merely because during the three year qualifying period there has been a temporary break in the carrying on of the business in the tenement. If the tenement has not continuously been used during the three year period the Court should have a discretion to decide whether it would be reasonable to hold whether or not the break in carrying on the business was such as to deprive the tenant of his right to a new tenancy.
If that recommendation were included in the Bill the problem I am talking about would not arise at all. The problem arises because this word "unforeseen" appears. I do not know where the word "unforeseen" came from but it seems to be the problem. Another problem arose over the placement of it in the paragraph. Maybe the Minister would tell us why the word "unforeseen" was introduced at all and whether or not he would be prepared to stick by the recommendation of the Landlord and Tenant Commission and leave it out altogether. It is a matter of policy; it is not a matter for the courts at this stage.
I appreciate that and I will have a look at the use of the word "unforeseen".
Has the Minister any idea why it came in?
I would have imagined that it was put in the section to give it a proper meaning. I think it is self-explanatory if subsection (1) (a) is read with subsection (2). For the purpose of subsection (1) (a) an unforeseen temporary break in the use of the tenement shall be disregarded if the Court considers it reasonable to disregard it. If Senator Cooney wants interpretation I think section 13 (2) interprets section 1 (a) very well.
However I will examine the use of the word "unforeseen", in the light of what the three Senators have said, between now and Report Stage. I cannot give any undertaking in relation to the uplifting of the word. I believe that if it is taken out the efficacy of subsection (1) (a) is somewhat diluted.
Can the Minister give an example of what sort of a situation could cause an unforeseen temporary break in the use of a tenement? Would it be something like a fire or illness on the part of the tenant?
Yes. Does the Senator want an explanation as to the reason for subsection (2)? According to the information available this subsection proposes that the requirement of the three-year user for business in subsection (1) (a) shall be taken to be satisfied even where there has been an unforeseen temporary break in the user for business, if it would be reasonable to disregard the break. This change from the 1931 Act provision is in line with the recommendation of the commission. I am sure Senators Molony and FitzGerald have the commission's report before them. At paragraph 170 of the first report the commission recommended the amendment to permit a casual temporary break in the tenancy due to repairs or reconstruction or as the result of damage by fire, tempest or acts of God, structural alterations or improvements, illness of the tenant or for any other reason as may seem just to the court. That is an unforeseen temporary break.
The Minister is interpreting the commission's report and saying that that is what they meant.
That is right. How else can I do it?
The word "unforeseen" alters the meaning of the commission's report quite drastically. The report says the tenant should not be deprived of his right merely because during the three-year qualifying period there has been a temporary break. The Minister is now qualifying that by saying that there has been an unforeseen temporary break, which is totally different. As Senator Molony has pointed out, leaving in the word "unforeseen" permits landlords to continue to play with tenants by giving them two years nine months, break for a month, two years nine months and they never get any rights ad infinitum. It would appear to me from reading the commission's report that they wanted to end that sort of a situation.
In addition I will say that it is fair to allow temporary arrangements in order to stay outside the Bill.
Is that Government policy?
It is in the case of, for example, tenancies of property waiting for development.
That would be a different matter altogether.
I will certainly have a look at the word itself. All I can do is interpret it as I see it or as it is presented to me. The Senators can interpret it in another way. But an opportunity might be had between now and then to have a look at the word "unforeseen".
Would it be the Minister's policy to permit a continuance of the situation where landlords can give a lease of two years and nine months, break it for a month or a week or a day, give another lease for two years and nine months and continue to break it? Is it a matter of Government policy that that situation should be continued within our legal code of landlord and tenant?
That is the policy of this provision. This is our policy and as I understand it this policy is unchanged since the lapsed 1977 Act. There is nothing new about it. All I can do is prostrate myself at the feet of the Senators opposite and undertake to have a look at the word "unforeseen" which seems to be causing an awful lot of unforeseen difficulties.
I am sure we would all like to go on to the next section, but the words "bona fide" have been dropped from the corresponding section of the 1931 Act. I wonder why or what kind of malicious damage the words "bona fide" could be doing.
It is just a piece of superfluous jargon which lawyers are inclined to use. I think the Senator would agree with me that it is really not necessary in the context and it is purely a drafting matter. "Bona fide" is a cliche. Why use the words "bona fide"? Why not use "with the best of intentions"? Why confuse people?
That is what is meant.
It is about time we started using printable English and understandable English. I know solicitors know what bona fide means.
There was a time when thousands of people in rural Ireland understood for good reason what bona fide was. They still do.
There is a rather important legal point, and it is that when they come to interpret this section the courts will have to take note of the fact that the legislature has dropped the words bona fide. Whatever use they had before, their dropping will have a legal significance in the construction of this subsection. The intent of these words in the existing section surely was that the user was not to be a fictitious, formal, symbolic user. It was to be a genuine bona fide user, wholly or partly for the purposes of carrying on a business. Now the courts, faced with the landlord's argument, will be constrained to say that these words need not now have that meaning and that it can be a symbolic, fictitious, formal use. It need not be that kind of full use which the words “bona fide” mean. I would suggest to the Minister that if there is no particular point in dropping it there is considerable point in restoring it.
Again the Senator makes the point on the use of the words "bona fide" but the courts within their reasonable interpretation——
They have to look at the context that exists when they are construing an amendment to that statute which this is.
Surely it is implied in the statute and in the section that the element of good faith, the element of bona fides, exists and that they must interpret it should not have to be spelled out. It is a drafting amendment.
There are business premises which are only used as an accommodation address because it is useful to have it and to have rights as well. These situations exist. The courts will now be required to give particular meaning to the legislature's decision to drop the words "bona fide".
My information is that this is a purely drafting amendment. While I take the Senator's point that the courts will have to look to the legislation that is presented to them the courts can also interpret legislation. I know that they must keep within the confines of what the legislation states. I would have thought that the element of good faith prevades and is seen as a thin line to uphold this legislation and spelling out the words "bona fide" makes no difference to the legislation as drafted. I know the Senator has his point. I do not, with the greatest respect, agree with him on it. The courts can be left, in their own integrity, to interpret the legislation which is passed by this House. In addition to the specific legal references which are set out section by section and part by part, any interpretation of that must also take into account the element of good faith by both parties to a particular argument before any court whether of the inferior or superior variety.
The question of good faith in the sense in which the Minister is using it does not arise. I would draw the Minister's attention to the fact that bona fide occupation never was required. It was occupation under the next succeeding paragraph under the thirty-year rule that was. The man did not have to be bona fide in occupation of his premises because he could go away for six months if he wished to. It was still his occupation in that sense but here the bona fide relates to the question of user. The premises could be locked up in my view and could be used occasionally. The man could say “I am no longer selling goods across the counter. I take orders by telephone from time to time. I have chosen to run down my business at a pace which will keep me going for the next 30 years.” That would be in conformity with the new legislation but not with the old legislation. Unless the Minister sees some wonderful advantage in this provision, he should not include it.
I take the Senator's point and I undertake to consider the matter. My information is—and I accept responsibility for it—that this is purely a drafting amendment and that it was found in the circumstances not to be required in the context of the section. The Senator, again from the light of his own experience, has put forward a very reasonable proposition and if I consider it is necessary to put it into the Report Stage I will do so. I will give the Senator at that time reasons for inserting it or for not inserting it as the case may be.
I notice that the corresponding section in the 1960 Act with regard to the notice to quit uses different language from the language used in this section. I am sure there is good reason for it. I should like to compliment the Minister and his Department on the explanatory memorandum which all of us here found the greatest help in creating nuisances of ourselves here today. I do not think that the explanatory memorandum covered this particular point: why the words "expiring on a gale day" appear in the 1960 Act and "expiring on any day" appear in this Act. I thought that the recommendation of paragraph 325 was merely to repeat in relation to this what was the law. This seems to be not a repeat of the law but a change of the law. The answer to my second point is quite clearly that it is not so but I ask the question for purposes of clarity. The phrase "business premises" in the 1960 Act has a different definition to the definition of "business premises" in this Bill, because if you refer to section 54 of the 1960 Act the word "business" is shortly defined as including
all trades, professions and businesses, whether or not carried on for gain or reward, and also the public service.
But in this case, without boring everybody by reading it all again, under section 3, "business" is given a far more extensive definition. This should be examined. My own view would be that this is a case where the context otherwise requires and that the definition in section 54 is the one which would apply but I am not entirely satisfied about that when I find that section 54 is repealed in the Schedule by section 11 of this Bill which would knock it out of the court so that there would not be anything for the court to look at to discover what was a business premises. In my view what is desired to be and what would be right to have in this case is the definition which is in the 1960 Act but you then need a saver which I do not find in the Bill. Is the saver in section 11 sufficient?
I do not think so.
However, this is a point which can be looked at and perhaps the Minister would explain why "gale day" is treated as it is.
As the Senator has stated subsection (1) of the Bill before us applies the benefits of part 2 of the Bill corresponding to part 3 of the Landlord and Tenant Act, 1931. It refers to those business tenants who were decontrolled by the 1960 Rent Act and who by reason of section 54 of that Act were given instead the right to a new tenancy under part III of the 1931 Act. Accordingly it represents the re-enactment of the corresponding provisions of section 54 of the 1960 Rent Act and section 54 of the 1960 Rent Restrictions Act is being repealed. The provisions of the Bill that provide for the re-enactment in full of that section are set out in reference to section 11 of the Bill.
The other matter that the Senator raised was the question of the use of the words "expiring on a gale day" and he makes the point that here again having regard to reference to his argument in relation to the deletion of the words "bona fide" in the previous section that perhaps it might loosen the meaning of the intention of the 1931 Act vis-a-vis this Bill before us. I should like to assure the Senator again that this is a drafting matter and the draftsman has settled the very question in this way. Again, it is the deletion of the use of rather out-of-date language where it does not affect the overall effect of the section. I would put it to the Senator that in the circumstances the words he suggests be deleted might be retained. They do not loosen or in any way weaken the section itself.
Perhaps I might ask on section 16 a very general question about the rights of tenants. As I understand it, a lease is a devise of property for a term of years or indeed from year to year. A tenancy agreement may be an agreement in writing or it may be a verbal agreement and it may be for any period. You may have a tenancy from week to week. I appreciate that in asking this question I am going a little outside the scope of the Bill because I am concerned with the rights of tenants in private houses rather than those who are tenants of what are legally described as tenements. The question is this: is there any way in which a tenant from week to week who has only a verbal agreement with his landlord, can acquire the right to buy a freehold to the property in which he lives? In the last Landlord and Tenant Bill, a lease was defined as "an agreement in writing" and it seems to me that it is very wrong if a man who has lived in a house for many years, has made improvements to it, and who has paid his rent, but who, simply because he has not a legal document to wave at his landlord has not the same rights as somebody who has an agreement in writing.
While the question of a right to a new tenancy is not totally related to the specific matter under discussion, in a general way it could come within the ambit of the section. The Senator is asking whether a tenant on a oral week-to-week tenancy—in a flat situation—can buy out the fee simple. I would have thought not in the circumstances, that in the reality of the situation there is an unwritten agreement, an oral agreement, between the tenant and the landlord, that the agreement is on the basis of a weekly tenancy and that as long as the tenant is of good behaviour that agreement oral as it is only extends to the terms of the unwritten agreement, that is that the tenant is of good behaviour and keeps within the normal confines of the accepted standards of good behaviour, that he behaves himself within the flat. I would have thought that in all the circumstances to in some way, give him the right not only without a lease on a year-to-year basis or without a written weekly agreement to extend an oral agreement in some way to the purchase of the fee simple of a flat would be unreasonable. Therefore, I think the answer to the question is "no".
The Minister has misunderstood me. I am talking about houses in rural areas, not flats.
The simple truth of the matter is that tenants on a week-to-week basis do not have the right to buy out fee simple, and it only applies to certain lessees and certain yearly tenants. It certainly does not apply to the case which the Senator has properly brought to my attention. I understand that she is referring specifically to rural areas, but if she wishes to bring to my attention any particular case she may have in mind and with which she may be experiencing some difficulty in regard to a constituent, I would assure her that I would have the matter examined. She may take it that my legal statement is the correct one.
I think the equivalent section, section 20 of the 1931 Act, is not very lucid but I have never heard of any trouble resulting from it. That possibly is because the agreement is only between two people, the tenant and the landlord. Could there not be problems now where the question of the terms of a new tenancy will be proved to be agreed not merely by the landlord and the tenant but by a whole variety of persons? Is it necessary to have the language used in the section? Would it not be preferable to have the provision fixed clearly as being the agreement with the immediate lessor?
Yes, the Senator has a point there, but I think the section is clear enough, and having regard again to the interpretation that the Senator has raised I do not see any particular difficulty in this section. I get the Senator's point but I cannot foresee arising any of the difficulties the Senator has raised. I am sure the people who would be interpreting this section would have the same experience as the Senator himself in any difficulty.
This is a rather long section. It provides that the landlord may obtain possession of the premises from the tenant if he proposes amongst other things to carry out a scheme of improvement or if he wishes, for example, to knock down some old buildings which are in poor condition and replace them with an office block. The proposed legislation provides that the landlord should have obtained planning permission first before he can get the tenants out. But it later provides that in the event of the landlord not carrying out the works which he proposed to carry out, the tenant could apply to the court for damages. I wonder if there is not some possibility of allowing the tenant to return to the premises in the event of a landlord not carrying out a scheme which he originally said he would undertake. I do not know whether the relevant section of the 1931 Act was ever abused in this respect, but there seems to be an opportunity for a landlord to abuse a tenant if he says he proposes to carry out a scheme of improvement. There is a new obligation on him now at least to obtain planning permission. If, though, he obtains planning permission and never has the intention at all of carrying out the scheme of improvements, the tenant can now apply for damages to the court. Damages may not be of very much use to him if in fact he has already had to vacate the premises. Would the Minister not consider that it might be desirable that the tenant should have the right to go back into the premises? At least there is a case to be argued for it.
That point is argued for in one of the recommendations to the commission. They may not have actually recommended it but it certainly was an advice or an argument. My only point on this is that it should be sufficient if the landlord has applied for planning permission for the work.
I would refer the Senator to section 58 (5) of the Bill. That section gives the right to renew the claim for a new tenancy if compensation is not duly paid.
That is where compensation has been paid. It does not arise on the question we are raising.
We are saying that rather than be compensated or rather than seek damages the tenant should be entitled to regain possession of the premises.
Which subsection is the Senator specifically referring to?
Section 17 is rather long. It is subsection (4) which reads:
Where, in a case in which an application for a new tenancy has been refused on a ground mentioned in subparagraph (i) or (ii) of subsection (2) (a), it appears to the Court that the landlord has not, within a reasonable time, carried out the intention, agreement or purpose, as the case may be, on account of which such application was refused, the Court may order the landlord to pay to the tenant such sum as it considers proper by way of punitive damages.
I am suggesting the alternative that should be allowed into the paragraph, "regain possession of the premises".
The Senator is referring to the last subsection of section 17 which is one of the longer sections in the Bill. The subsection itself is a new provision to replace the provision of section 22 (2) of the 1931 Act. For the information of the Senator, section 22 (2) of the 1931 Act renders a landlord liable to punishment for contempt of court if having procured the refusal of the grant of a new tenancy on the ground of having rebuilding or development plans, he does not, within a reasonable time, carry out his intentions. The Landlord and Tenant Commission recommended, which is a recommendation from the first report at paragraphs 197, 212, 222, section 2, that this should be replaced by a provision that would confer benefit on the tenant who would be deprived of his new tenancy, that is, by a provision for the recovery of special compensation by way of punitive damages, and subsection (4) provides accordingly and allows the court discretion to award punitive damages to the tenant in appropriate cases.
There must be some misunderstanding again. I accept that but I am merely asking why not, instead of allowing punitive damages or in addition to allowing damages, let the tenant regain possession of the property which he is being deprived of? The court may decide, on the facts of the case, whether he should be allowed to do that.
The Senator's proposition is a real proposition. It was considered by the commission in their first report at paragraph 197 but the members of the commission, in their wisdom or otherwise, decided that they could not recommend it and it is on that basis that the matter is not enshrined in the legislation, as the Senator requests. So one can appreciate that in all the circumstances and having men with the experience of those on the commission, looking at the Senator's reasonable alternative, they simply could not recommend what the Senator requires.
May I take it the Minister is satisfied that the tenant should not be allowed to return to the premises?
The Minister is satisfied with the legislation as set out in the section.
A question to the Minister as a well-known common law lawyer: I wonder if the description "punitive damages" is the right description for damages in this context. I constantly get mixed up between punitive and exemplary damages. I know one is harsher than the other. I think punitive is the largest reward.
I wonder, in this case, if it is apt to permit the court to give punitive damages, which can be enormous. Would "exemplary" not meet the requirement.
It is again a matter of interpretation. The Senator is looking for methods whereby to assist the courts in their interpretation of the particular section or sections. The Oireachtas—the Seanad in this instance—in discussing this Bill has before it the use of the words "punitive damages". This is a reasonable reference. As the Senator said, punitive damages are harsher than exemplary damages. I do not see any reason why it should not be left as it is. It is to help the court to exercise its discretion in relation to harsher damages. Punitive damages in the context would give the court the right to lay down a substantial sum on damages. It leaves them outside the ambit of exemplary damages and I do not think this is a bad situation.
This is a very important section, and has become more important in the 12 years that have passed since the commission reported that this Bill should be introduced, having regard to the desirability of redevelopment of much of the centre city of Dublin. I should hate to think that we had passed legislation here which would create further obstacles to that redevelopment. There are two points here. A landlord may find that he is unable to carry out a development scheme. He may be entirely bona fide but it may be a big scheme which would involve taking in other premises as well as these premises. They may not fall in in time, he may run out of money or his financiers may withdraw. In that case it ought to be open to the court, where the landlord is prepared to offer the premises back to the tenant, to take the value of the tenancy into account in assessing where there has been a failure, for good reason, where there has not been any kind of vicious action by the landlord.
I take it that by punitive damages we are talking about a sort of fake operation which resulted in a tenant being put out unjustly. But if the scheme, for good reason, cannot go on the court should, be able to have regard to what would be just between the parties and to take into account that in a situation of that kind the landlord is prepared to give the premises back to the tenant. I wonder if this should not be an alternative to the existing provisions of the Act. I am not sure that the commission have adequately considered situations where the development scheme depends on whether or not that part of the premises now occupied by a tenant will ever fall in. He may not have the scheme he will actually develop worked out at the stage in which he wants to get these premises back and where, for the common good, they should be given back to him where compensation is given. In this sort of situation I take it the landlord pays compensation. Where a tenant is not getting a new tenancy, I take it that in this situation he is getting some compensation for the disturbance.
He would be.
That is taken care of. There ought to be some overall power in the court in regard to a genuine failure by a landlord to carry out a development and perhaps we should have some alternative set of provisions. There are cases where one cannot get planning permission because one cannot put in a plan until one knows whether one can get all these houses or not. We ought to be very concerned in regulating the property rights of everybody, including tenants who may have very considerable value attached to their interests, and we should not let them obstruct progressive re-development for the benefit of the entire community. I am not absolutely sure as to what these alternatives ought to be, but there ought to be some alternative to the simple case where planning permission can be obtained. The alternatives which are there under the existing code ought to be maintained.
The Senator has a very good point, and the landlord's rights have to be taken into account. Where a landlord gets planning permission and for some reason or another he cannot continue with the planning permission because he runs out of cash or alternatively his backers withdraw from assisting him, then in those circumstances what are his rights vis-a-vis the tenant? The section sets out reasonably the entitlements and non-entitlements of the tenant and the consequent entitlements of the landlord in the circumstances.
In the event of the landlord not being able to pursue his planning permission for various reasons outlined by Senator FitzGerald, the tenant would then resort to the courts and would ask the courts to take a hand in how the eventual outcome might emerge, having regard to the fact that the landlord cannot continue with his planning permission, as a consequence of which that falls in. Has the tenant got the right then to go back into the house or whatever part of the premises he might be entitled to be compensated for? It is not unreasonable to accept that in those circumstances the court would take a hand in the matter and it will be a matter for the discretion of the court to protect the rights of the landlord and the tenant by giving a decision in favour of one or the other, having regard to the balance of justice, the balance of probability.
I see the Senator's point. There are two parties to every agreement and in this instance we are talking about a landlord and tenant. He takes the view that the landlord should be protected. It would be a matter for the courts to interpret how the landlord might be protected in the circumstances.
Somewhere else in the Bill we deal with the provision in the old section 27 about landlords who cannot be found, people under disability and so on. That is somewhere else in the Bill.
Yes. If I say a thing exists, my information is that it does, but on the basis that it does not I assure the Senator I would come back to it.
If I am reading this correctly, there is one thing which is most certainly wrong. Section 20 (2) (a) (i) would entitle a tenant the day he signs his lease to serve a notice of intention to claim a new tenancy on the expiry of his lease. In the case of a tenancy terminating by the expiration of a term of years, notice of intention to claim relief may be served before the termination of the tenancy. Is that what it means?
No, it is not what it means.
How long is he to wait before he can serve it?
It is a question of reasonableness.
No. It is a question of what is in this section.
Section 20 (2) states:
A notice of intention to claim relief may be served—
(a) in the case of a tenancy terminating by the expiration of a term of years or other certain period or by any other certain event—
(i) before the termination of the tenancy, or...
Is it valid to serve notice the day after the tenant enters into the lease?
I would not have thought so.
Will the Minister draw our attention to any piece of language that says it is not?
There is no piece of language that would suggest that. He would not have qualified for rights under section 13. It would be useless for him to make a claim.
It would keep him in order. The landlord would be put on notice.
We are here to discover points like that.
This is one of the healthiest sections in this Bill. One of the problems we have had in the past with a lot of landlord and tenant law was the technical nature of three months before such and such a date or two months after it, and this created a lot of trouble and problems for people. Apart from the one point which Senator FitzGerald has mentioned, it is a good section.
I would like to join in that. I approve of this, and there is a great improvement in many of the other sections.
What is the reason for the change? It was two months. Section 21 (1) states:
A person who serves a notice of intention to claim relief may, at any time not less than one month thereafter, apply to the Court to determine his right to relief...
Did the commission recommend that? It used to be two months.
Section 21 (2) states:
If he does not do so within three months after service of the notice, any person on whom the notice was served may apply to the Court to determine the matters to which the notice relates.
This is absolutely right because there is a defect in the existing code. It is a very good subsection.
To what does the word "alternatively" refer in subsection (2) (c)? The language there needs to be knitted in a little more closely to what has gone before it.
Yes. It is a valid point, a drafting point and it might well be looked at. As long as it does not unbalance the meaning of what goes before it or what comes after it, I would be glad to look at it.
Section 22 (2) (d) provides for the situation in which a tenant, instead of looking for a new tenancy, serves notice of intention to claim relief or compensation for improvements. It provides as follows:
(i) on the hearing of the application, the court if satisfied that the tenant is entitled to that relief, may in lieu of awarding that relief make an order requiring the necessary person or persons to grant, and the tenant to accept, a new tenancy in the tenement on such terms as the court (subject to the provisions of this Act) thinks proper and specifies in the order...
It seems to me here, and I often wondered about this in the 1931 Act, that the court was foisting a tenancy on an unwilling tenant and maybe an unwilling landlord. I can see the reasons for it in one sense. A tenant who has been there for ten or 15 years has put a lot of work into the premises, has improved it, decorated it, or structurally altered it. It is a more valuable premises as a result of the work he has done. Now he applies for relief, not to get a new tenancy but to get some compensation or acknowledgement for the improvements he has brought about in the premises. Presumably this would arise on the landlord's application. The landlord would say to the court that he is not prepared to give this tenant money for the improvements he has made in the premises but he can have the new tenancy and he will not take it.
The court have under this section the choice of foisting a new tenancy on the tenant. I can see the reasons in one sense. In another sense we might be better if we allowed for some compensation for improvements. The tenant after all has invested in the premises and the landlord is certainly going to benefit from it. If he is going to re-let it, it must have an enhanced value in rental terms. The tenant has invested money in it and he is entitled to some compensation rather than the new tenancy being thrown on him that he does not want.
I am sure that the courts would take that into account. Section 22 (2) (d) states: in that case the tenant may proceed with his application for relief by way of compensation for improvements, but—
(i) on the hearing of the application, the court if satisfied that the tenant is entitled to that relief, may in lieu of awarding that relief make an order requiring the necessary person or persons to grant, and the tenant to accept, a new tenancy in the tenement on such terms as the court (subject to the provisions of this Act) thinks proper an specifies in the order...
In those circumstances if a court, interpreting this section and seeing the alternatives effectively open to it, would be unwilling to give or to grant—and here a little discretion could be exercised—relief by way of requiring the tenant to accept a tenancy which he does not require, I do not think the court would do that. It is open to the court to do it, and I accept that in the circumstances in specific cases it might well be done. The court will not pay as much attention as Senator Cooney might think to what we would say in the Oireachtas in relation to our interpretation of the legislation before us. The court in the circumstances would not foist a tenancy on an unwilling tenant. There is the possibility that the tenant himself might have other courses open to him in the event of the court, as it were, "forcing" him to accept this solution as outlined. I would think that the court in those circumstances would have recourse to the first part of subsection (2) (d).
There is a new definition of gross rent which in effect provides that instead of evidence being given in court of rent in the vicinity of the premises in respect of which the application is being made, evidence will be given of the letting values of tenements of a similar character to the tenement and situate in a comparable area. This opens things up considerably. It is a good idea, but maybe there should be some restriction. For example, in the past if people in Thurles were applying to the court they have been roughly confined to other examples of similar rents and similar houses or premises in the town of Thurles or in the immediate surrounding areas. The intention now is to open it up so that they can go to other comparable areas. I wonder whether it is fair on the landlord and tenants who have to consider these matters and consider their proofs in court. I wonder whether it is fair that somebody is able to come into court and say that similar premises are making £X in Ballyhaunis, County Mayo, or Gorey, County Wexford, or even in Northern Ireland or in Great Britain. The section is not confined to the country. I wonder whether the Minister is satisfied that the section may not lead to some difficulty, because it is so wide open.
This is a broad interpretation. It is best to make the interpretation of the law reasonably flexible in order to ensure that justice is done to both parties. Narrow definitions are wrong in principle and do more harm than good. Whilst this is, as the Senator has said, wide open in the sense that he has described it, nevertheless it is a reasonable proposition and would allow the court discretion in the matter.
The court has no discretion in this matter. It is open under this section to a person to introduce evidence about the value of premises for rent in Cork or Donegal, or anywhere else. There is not even a restriction that confines it to Ireland. I am open to correction on that. I do not know whether my interpretation in that respect is correct. It is not a good idea that it should be open to the whole of Ireland. If it is to be so, whoever is giving evidence should be obliged to put his opposite party on notice of what he intends to do to enable the other person to get the value of similar premises in the area in which the other person intends to produce proofs. It will present serious problems otherwise. Having it too broad is just as bad as having it too narrow.
Various valuations in various towns could be given as an example and so on. People will have valuations well set before going to court. That is the reality of it. The point that it could apply outside Ireland does not arise.
The Senator is being frivolous. Let us come back to Ireland and let us stay within the four green fields or as much of them as we have. Solicitors on behalf of their clients go in for a piece of property and value it. They will not go into the court half prepared. They will be well versed in the circumstances of their claim.
I can see problems arising. The point I am making is a reasonable one.
It is a reasonable one.
If somebody wishes to introduce evidence as to valuations 200 miles away, some restrictions should be put in the section or alternatively there should be an obligation to give notice to the opposite party.
Legal ethics arise, and certainly if I was dealing with my opposite party in the circumstances I would give notice.
The Minister would divulge the case.
First of all, the Senator said one should give notice and now he says that would mean divulging the case. What does the Senator want?
I am talking about legislation, not the ethics of the Bar Library.
Ethics is not a bad basis. We might not have need of recourse to law so often if we were more ethical in our dealings. I do not mean that in a personal way.
The two words are really the same. The existing section provides for 21-year leases and we have suddenly opted for 35-year leases. Why? I know the commission recommended 35, but the explanation for that is quite simply that landlords were making leases with breaks to suit their own convenience in inflationary circumstances for as long a period as they could get away from the Landlord and Tenant Acts. They were using periods like 42 years and then they found that this was subjecting them to additional stamp duty. They reduced it to the longest period possible away from the initial grant of the tenancy which would carry review provisions of their own formulation to catch the tenant and keep him outside the Landlord and Tenant Act and cost them least. This was a period less than gave rise to the stamp duty under the Finance Act. How much consideration has anyone given to that solid, factual reality? The UK practice is for a much shorter period of time—for 14 years. It has a degree of unreality about it where we are considering here giving statutory rights of renewal of premises that may not have full lives of 35 years in modern circumstances. The case is not made in terms of good business to do this.
We will come later to deal with the break provisions. In general the change in subsection (5) is one that I would welcome, perhaps not precisely in that form. The tie down made an already unreal subsection more unreal. We are caught by the terms of the language that was used in 1931. Is there ever a situation where the supply of similar tenants is sufficient to meet the demand and competition, therefore, is normal? I was present in court when a judge was reaching his final conclusion as to the rent he had fixed and he said that he had been in practice for over 40 years and during that period there never had been normal times. The actual position historically was that a tenant got his new lease at a rent which was 25 per cent under what he would have to pay for the premises on the market. Now, what is the position? Because of inflation the rents being fixed by the courts are as much as 60 per cent higher. Why do we not go for market value? It would be a realistic measurement. "Sweepstake" is the name of the game at the moment, but a good ticket to buy is a tenancy for a few months. If one could hawk a few of these and have mala fide business occupation or use and then acquire a right to a 35-year lease under this Bill, one would suddenly find oneself in the money. If inflation continues as it is, even with the break periods, there would be real value attaching to these leases.
There is a case for a deliberate provision allowing an option in a lease document to go to arbitration, so that parties are not forced into the expense of going to court. We could have a formula whereby it could be lawful to provide that the new tenancy would be determined by people who knew something about this matter. I cannot see why we could not have an approved formula in a lease whereby the terms of the new tenancy would be determined outside the court if the formula was written into the original lease, a procedure whereby a skilled man in that field would do this business instead of shoving it off to lawyers who know nothing about it other than what they half comprehend from the instructions they get and the talk they gather from valuers. We could have that approved formula and a failsafe device whereby a party aggrieved by unreasonable behaviour could make application to the court. At the same time there are situations where the parties cannot agree, in which case let there be a formula which we have approved whereby experts will determine it for them.
I am grateful to the Senator for his long and learned exposition. I do not intend to enter into argument with him; I do not want to devalue his clear knowledge of the law.
On the question of the gross rent generally, which relates to subsection (5), and the queries raised on the subsection, the Landlord and Tenant Commission considered the gross rent formula in section 29 (f) of the 1931 Act. They came to the conclusion that no suitable alternative formula could be devised and that the proper course to adopt is to try to eliminate the defects that have appeared in the gross rent formula by providing for periodic reviews of the rent fixed under the formula—this is proposed in section 24 of the Bill—and by providing that comparison be made with the letting values not only of similar tenements in the vicinity but also with the letting values of similar tenements that, although not in the vicinity, are situated in a comparable area. Apart from drafting changes, this is the only change proposed in this subsection which otherwise provides for the re-enactment of section 29 (f) of the 1931 Act.
In regard to the period of 35 years, the Commission's argument is fully set out in paragraph 253 of their first report.
It is a bit of a cod.
I appreciate that you have said that it is a bit of a cod. This would be a reflection on the people who proposed it, but I am sure that the Senator does not mean it in that way. The practice has been, as the Senator will agree, that terms of 21 years have almost always been fixed. The Landlord and Tenant Commission considered the position and recommended that, provided provisions were made for rent reviews at seven-year intervals, the new tenancy should be for a term of 35 years unless the tenant opted for a shorter term, and that as many superior interests as necessary should be brought in to support the grant of a 35-year term. Subsection (2) proposes that the new tenancy should be for a 35-year term or such less term as the tenant may nominate. Section 18 (2) of the Bill contains a proposal to bring in as many superior interests as necessary. Section 24 contains the proposals of rent reviews which will, no doubt, be the subject of heated discussion during our debate on the merits or otherwise of this Bill.
The power ought to be left to the courts to fix a shorter period than 35 years if there is solid evidence that the building has not got 35 years of life in it. In a landlord and tenant situation, where the covenants of repair are largely considered to be unenforceable, division between the interests of an inefficient kind means that the building suffers neglect.
To tell the truth, I am not going to be as excited about this section as the Minister thought. Perhaps Senator Molony will provide the necessary excitement. My objection to it is that it is not sufficiently geared to changing realities. In Europe all these things are indexed. As a result of having an inappropriate index, we have an idiotic index in the new capital gains tax. If we had a proper index it might possibly be more sensible than this. In the situation they are in, many people will say that five years is all right. There might be sense in the Minister taking power to make that term shorter. The circumstances could change again so that there could be an obstacle to the use of the capital that is wrapped up. I suggest some sort of flexibility. If he preferred, he could leave the court power to vary the term, though this might be a power that the court would not want.
As I understand it, the capital cost of entering into a tenancy for 21 years without review is prohibitive. The proposal contained in this section is to give rent reviews. The commission's proposal was to give a rent review after seven years on a 21-year lease. The Senator has made a remarkable observation in that he queries the propriety of making the rent review interval five years. Having regard to the need to keep a certain continuity between rent reviews, a five-year review period was thought proper.
It was seven years ten years ago; it is five years now; it might be three years in two years' time.
I take the Senator's point. I can see that the Senator would like to attach the CPI or some other index to the suggested rent. We did not accept the recommendation of the commission, and we reduced their proposal of a seven-year rent review by two years to five years. Whilst Senator FitzGerald's argument is worthy of consideration, he might agree on long reflection that the proposal contained in the Bill is correct.
This Bill is bringing a range of new situations under the control of this code because of the abolition of the one-acre limit outside urban areas. Is the Bill intending to create the situation that people presently without rights will be possessed of rights as a result of what goes on before the Bill becomes law? Will people who disposed of their property on the basis that this code did not apply to that property and who made lettings over the years wake up and find that the code now applies and that the properties are subject to claims and restrictions that did not apply when the lettings were made? Is the position to be that this will apply only to new lettings taking place after the Bill becomes law? Will the owners of fine houses in the country who made friendly lettings suddenly find that their friendly tenants own the houses or are at least entitled to renewed leases which, in terms of value, may be much greater than the houses in question? It may have been a temporary convenience arrangement not expressed as such. It may have been an arrangement between a man and his widowed sister-in-law who suddenly finds the property is gone and the management of the property is gone. Is there any information on this subject?
This brings us back to Senator Molony's original point on the question of saver. I would say the same proposition applies to Senator Molony's query. I am sure that the people who would be involved would have the protection of the existing law, in so far as it applies to them.
In relation to the section itself and the general query raised by Senator FitzGerald, this section proposes the re-enactment with drafting changes only of section 38 of the Act which provides for the right of a tenant to continue in occupation on the same terms subject to the subsequent adjustments as necessary in a case where a claim for a new tenancy has not been determined before the previous tenancy has been terminated provided that termination did not take place by ejectment or surrender. Such a case could arise where the landlord has failed to serve notice of the termination of the tenancy and where a valid claim for a new tenancy under section 20 of the Bill is made after termination. It could also arise where a claim for a new tenancy made before the termination of the existing tenancy remains undetermined before the termination. My note refers me to section 21 of the Bill. The protection which Senator FitzGerald seeks is there. There can be no doubt about eroding the rights or entitlements of either party.
Would the Minister have any objection to putting into the Bill a section saying that it shall not affect any lettings made before the passing of the Act? I think that would solve these difficulties.
We had a long discussion on this section.
I thought the Minister was going to consider it.
We had a long discussion on the question of saver and I undertook to consider the matter.
I think we had an understanding that when we got to this Part we would have done enough work today on the Landlord and Tenant Bill.
I am willing to take responsibility for not continuing with it.
I thought we had an understanding on Second Stage that we would be able to break it into parts.
Is there an undertaking in relation to a motion on Thursday week?
There is a motion down for next week. I am not clear whether we have agreed to take it on Wednesday or Thursday.
The undertaking was that I would have all Stages of this Bill subject to the motion being taken.