Coalition's plan to curb upward-only rent reviews 'will stand up in courts'
Expert legal opinion provided to Retail Excellence in early 2010
The Government's plans to interfere with upward-only rent review clauses are unlikely to be struck down for constitutional reasons, the country's leading authority on constitutional law concluded in a legal opinion seen by the Irish Independent.
Gerard Hogan, who became a High Court judge late last year, provided the opinion in April 2010 to Retail Excellence Ireland. Its contents indicate that landlords, developers and even NAMA will have difficulty striking down legislation due to be published imminently by Justice Minister Alan Shatter on the issue.
Mr Hogan, a constitutional expert previously at Trinity College Dublin, maintains that such clauses can be interfered with via legislation, with the government justifying such a step on national economic grounds.
"The key consideration here is that upward-only review clauses were negotiated in a different economic era where ... the spectre of deflation was not foreseen,'' Mr Hogan said.
"More to the point, the existence of such clauses might be thought to be inflicting widespread damage to the retail sector, because they are artificially blocking the achievement of an internal devaluation in that sector,'' he pointed out.
"Such legislation would seem in principle to be more than capable of objective justification." Mr Hogan said it was not correct to say that property contracts could never be interfered with by the legislative process "for nearly all legislation interferes with contractual freedom in one shape or another''.
Mr Hogan points out that rules forcing landowners to give more than 20pc of their holdings to social housing purposes did not constitute a "disproportionate interference'' with landowners' property rights.
"It follows that the State is entitled to balance the protection of property rights against other considerations,'' he added.
Mr Hogan admitted that making existing upward-only rent clauses void would deprive landlords of valuable rights, but the issue did not stop there.
"The critical question is rather whether such legislation would be proportionate and objectively justifiable," he said. He added that the Oireachtas would most likely decide there were public interest reasons for legislating in the area.