264 / 298
GAZETTE
JANUARY/FEBRUARY 1981
Recent
Irish
Cases
LANDLORD AND TENANT
Landlord and Tenant (Ground
Rents) (No. 2) Act 1978, Section 17
— Acquisition of Fee Simple of
premises. Determination of purchase
price where lease will expire in less
than fifteen years, "having regard to"
(inter alia) a hypothetical rent which
would, in the opinion of an arbi-
trator, be reserved by a reversionary
lease of such premises for ninety-nine
years from the expiry date. Impossi-
bility of ascertainment of such a rent
that a "willing lessor" would accept,
having regard to inflation and other
unknown factors and in absence of
any provision for periodic rent
reviews.
The Applicant held a chemist shop
at Rathmines Road, Dublin, from the
Respondents for a term of 147 years
expiring in 1982 at the yearly rent of
£16. He sought to acquire the fee
simple and on arbitration pursuant to
Section 17 of the Landlord and
Tenant (Ground Rents) Act 1967
("the Act of 1967"), the County
Registrar determined the purchase
price to be £10,000. The factors to
be taken into account when the price
was to be determined by arbitration
were provided for in Section 18 of the
Act of 1967, but that Section was
repealed by the Landlord and Tenant
(Ground Rents) (No. 2) Act 1978
("the Act of 1978") and was
replaced by Section 17 of the Act of
1978. Section 17 of the Act of 1978
provided that where the purchase
price was to be determined by
arbitration it should be the sum
which, in the opinion of the arbi-
trator, a willing purchaser would give
and a willing vendor would accept for
the fee simple
having regard to
(italics added] certain factors speci-
fied in the Section which included (in
Subsection 2).
"(b) Where the land was held by the
person acquiring the fee simple
under a lease which has expired
or is held by him under a lease
which will expire less than
fifteen years after the date of
the service of the Notice under
Section 4 of the Act of 1967 or
of the application of Part III of
this Act, the rent which, in the
opinion of the arbitrator, would
be reserved by reversionary
lease under the Act of 1958 of
the land granted for a term
commencing on the expiration
of the first-mentioned lease."
Section 18 of the Landlord and
Tenant (Reversionary Leases) Act
1958 ("the Act of 1958) provides for
the determination of the rent of a
reversionary lease on the basis that
such lease should be for a term
expiring ninety-nine years after the
expiration of the lease to which it is
reversionary (Subsection (2)). Section
18 (4) of the Act of 1958 provides as
follows:
"(4) Subject to Subsection (3) of this
Section the rent to be reserved
by the reversionary lease shall
be one-eighth of the gross rent
as defined by Subsection (5) of
this Section."
Section 18 (5) (a) of the Act of
1958 provides as follows:
"(5) (a) The gross rent shall be the
rent which, in the opinion of the
Court, a willing lessee not
already in occupation would
give and a willing lessor would
take for the land comprised in
the reversionary lease in such
circumstances that the supply
of similar lands is sufficient to
meet the demand:
(i)
On the basis that vacant
possession is given and
that the lessee pays rates
and taxes in respect of the
land (other than the
lessor's proportion of
income tax) and is liable
to insure against fire and
to keep the premises in
repair:
(ii) Having regard to the
other terms of the rever-
sionary lease and to the
letting values of land of a
similar character to and
situate in the vicinity of
the land comprised in the
reversionary lease but
without having regard to
any goodwill which may
exist in respect of the land
comprised in the rever-
sionary lease."
By reason of the fact that the
Applicants' lease was due to expire in
1982 (i.e. less than fifteen years) the
provisions first quoted of the Act of
1958 applied and had to be had
regard to in the determination of the
purchase price of the fee simple under
Section 17 (2) (b) of the Act of 1978
(also quoted above).
From the determination of the
County Registrar of a purchase price
of £10,000,
the
Respondents
appealed to the Circuit Court and the
President of the Circuit Court
(Neylon J.) stated a case to the
Supreme Court in which he sub-
mitted two questions for determ-
ination:
(1) Whether — in view of the evid-
ence that the Respondents
would not willingly make a
lease for ninety-nine years for
the premises without inserting a
clause for periodic reviews of
rent during the continuance of
the term - I, for the purpose of
assisting me to decide upon the
appropriate purchase price of
the fee simple of the said prem-
ises pursuant to Section 17 of
the Landlord and Tenant
(Ground Rents) (No. 2) Act
1978 can now determine the
rent which would be reserved
by a reversionary lease of the
said premises granted pursuant
to the Landlord and Tenant
(Reversionary
Leases) Act
1958 for a term commencing
on the expiration of the lease in
1982.
(2) Whether, when determining the
rent which would be reserved
by a reversionary lease of the
said premises granted pursuant
to the Landlord and Tenant
(Reversionary
Leases) Act
1958, I am legally entitled to
endeavour in so far as possible
to provide for inflation in view
of the evidence that freely
negotiated ninety-nine year
I