Vote 56—Industry and Commerce.

Mr. McGilligan

I move:—

"Go ndeontar suim bhreise ná raghaidh thar £10 chun íoctha an Mhuirir a thiocfaidh chun bheith iníoctha i rith na bliana dar críoch an 31adh lá de Mhárta, 1931, chun Tuarastail agus Costaisí Oifig an Aire Tionnscail agus Tráchtála, maraon le Coiste Comhairlitheach na Rátaí.

That a supplementary sum not exceeding £10 be granted to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1931, for the Salaries and Expenses of the Office of the Minister for Industry and Commerce, including the Rates Advisory Committee."

The Supplementary Estimate, as circulated, gives an indication of the purpose for which this money is required, namely, "Legal costs and liquidation expenses in connection with guarantees under the Trade Loans (Guarantee) Acts, 1924 to 1930." This, in fact, only refers to part of the legal expenses which are losses sustained in connection with trade loan guarantees, and with a particular trade loan guarantee. The whole question of guarantees that had to be made by the State and of all expenses, other than this item, will fall for consideration later, as under a particular section of the Trade Loans (Guarantee) Act the Oireachtas has to have before it, within a month after the close of the financial year in which a loss has been sustained, a statement in regard to the guarantees. The present financial year will be the first in which such a statement will have to be laid before the House. It will have to be laid in April next. The main matters remain over until that statement is before the Oireachtas.

This Estimate is to meet a bill of a firm of solicitors who were acting for the plaintiffs in an action in which an injunction was sought to restrain the Receiver on behalf of the Government from selling certain assets claimed by the company as theirs. Acting on legal advice, we decided to fight the case. We fought it and lost. The solicitor for the plaintiffs is pressing for his costs, and they cannot be met out of the ordinary guarantee money; at least it is thought more desirable to meet them out of a Vote such as this. The expenses on the Receiver's side will form the subject of another Vote in the financial year in which they have to be met. As I say, this Estimate is to meet a pressing claim of plaintiffs' solicitor in the action to which I have referred.

Mr. Lemass

I think the Minister ought to give the Dáil more information on this point. In respect of what trade loan did this action arise? How did the legal action arise? I think it is unfair to pass this sum of money without that information.

Mr. McGilligan

The action arose in connection with the loan guarantee to the Wicklow Ochre and Mineral Grinding Company. It arose because, as I said, there were certain assets claimed by us as ours in order to meet losses incurred in connection with the company. We had put a Receiver in there to wind up the company. We tried to sell the whole concern as a going concern, but failed to receive any offers. We then proceeded to sell on the basis of a break-up. The plaintiffs in the case said that these assets were theirs, and they applied for an injunction to restrain us from selling them. We defended the action, but lost. This Vote is to meet the costs of the plaintiffs' solicitor in that action.

Mr. Lemass

I wonder would the Minister agree to postpone consideration of the Estimate? Until this moment I had no idea of the facts or of what the Vote related to at all. Personally I was under the impression that it related to an entirely different matter. One would like to have an opportunity of looking up newspaper files for some report of that action, and of looking up the information available concerning the Trade Loan Guarantee itself before deciding whether it should be allowed to pass without opposition.

Mr. McGilligan

What purpose would be served by the Deputy reading up legal reports? The facts are that the case was fought. If the Deputy wants to know why the case was fought, it was fought on the best legal advice obtainable. The responsibility is mine for fighting it. The action was entered into, the decision was against us, and costs were given against us. These costs have got to be met. What reading of files will get over that responsibility? If the matter of the Trade Loan itself is in question and if any Deputy wants to investigate the facts under which the guarantee was given, he can do so when the statement comes before the House in the month of April next. This Vote is connected with the solitary point of one part of the costs, the costs of the solicitors for the plaintiff. The action was brought for an injunction to restrain us from selling certain assets which the court held were not ours.

Mr. Lemass

When the Minister says "ours" what does he mean?

Mr. McGilligan

The State's.

Mr. Lemass

Would not the organisation that would have a charge on the assets be the Industrial Trust Company of Ireland?

Mr. McGilligan

We are bound to meet the guarantee in the end. If there was any action taken it was fought on our advice. If in this case we surrendered the assets——

Mr. Lemass

Is it the position that the Industrial Trust Company of Ireland asked the Government to make good the guarantee?

Mr. McGilligan

Yes, but this is a question of a solicitor's costs. A Receiver was put in by us to sell up the business. The Receiver claimed from us an indemnification as to costs before he proceeded to sell. We indemnified him with regard to costs. The solicitors for the plaintiff are now claiming against him, and we have to meet our indemnity towards him. There will also be a sum to be paid in respect of the cost of the defence, a sum at least as much as this.

Mr. Lemass

Is it not the usual practice that a loan is given as a charge against the assets of the company?

Mr. McGilligan

Yes.

Mr. Lemass

Was it done in this case?

Mr. McGilligan

Yes.

Mr. Lemass

Then how does this case arise?

Mr. McGilligan

Because the assets that accrued to the soil were declared to belong to the landlord and not to the company. That was the legal point upon which the action turned.

Mr. Davin

What is the total legal losses involved in this case? What is the loss to the taxpayer in this case, and why is it the Minister does not bring in a Vote for the total amount instead of dividing it into two parts?

Mr. McGilligan

Because, as I have already explained, under the Trade Loans Act, for which the Deputy himself voted, a statement has to be made in the House within a month after the close of the financial year in which losses have been sustained when meeting guarantees. This is the first financial year in which losses have been sustained. Therefore, according to the Act, I must bring forward a statement with regard to this matter within a month after the close of the financial year. This statement to which I am referring will come before the House in the month of April. If the Deputy wants to know the actual money guaranteed, the actual amount was £4,000, and there has been interest accruing to the amount of £1,300.

Mr. Davin

Has there been a total loss?

Mr. McGilligan

There may have been a few hundred pounds realised, but I fear that few hundred pounds will be eaten up by legal expenses. At least, we will have to meet about £5,500.

Mr. Davin

Will the Minister take steps to see that the Receiver will submit a final statement before he eats up anything that may be left?

Mr. McGilligan

That statement should not be allowed. If the Deputy alleges anything against the Receiver in regard to management or costs the Deputy should have a prima facie case before throwing out a charge of that kind without evidence.

Mr. Davin

I know it usually happens.

Mr. McGilligan

I think in all decency the Deputy should not use the privileges of this House to slander a person who is not here to defend himself. If the Deputy wishes, let him throw the responsibility on me.

Mr. Davin

I was throwing the blame on the Minister.

Mr. McGilligan

The question then should be asked in a different way.

Mr. Briscoe

The Minister has stated that in accordance with the Act any amount that the Government is called upon to pay is to come before the House. Does he mean that there will be a discussion on it then or that it will be notified in the ordinary way in the Library?

Mr. McGilligan

It will be laid before the House and there can be a discussion on it.

Mr. Briscoe

Will he notify the House at the time the payment is made, and can there be a discussion on it then, or will he just confine himself to a notice that the payment will be made without coming to the House for a Supplementary Estimate?

Mr. McGilligan

There is bound to be a Supplementary Estimate in regard to this.

Mr. Briscoe

I am talking of the file that lies in the Library on which these records are kept. I am referring to any such money which the Minister might be called upon to pay and which the person who receives the guarantee did not pay on the date upon which it would be called in. Will the Minister say now that he will bring the matter before the Oireachtas in the shape of a notice in the Library or will he give us an opportunity of discussing this particular case in the House?

Mr. McGilligan

The House will have an opportunity of demanding, so far as this particular case is concerned, a debate. I have already stated that this is only part of the legal expenses incurred. The other part has yet to be brought before the House by way of ordinary Estimate. As far as this particular case is concerned, there is a definite right to have another debate if the House wishes. In regard to the rest of the case, all I am bound to do is to lay a statement before the Oireachtas, but having regard to the importance of the case, if a Deputy claimed time for a debate I think it would have to be granted.

Mr. Lemass

Will the Minister be able to meet the State liability in respect of this guarantee without the prior sanction of the Oireachtas?

Mr. McGilligan

I am in the course of meeting it out of money already granted by the Oireachtas. Under the Trade Loan Guarantee Act the sum of £1,000,000 was set aside. It is out of that that this will be met. The safeguard given to the House was that in any case in which a concern failed and a guarantee had to be met this statement had to be put before the House. I think there was bound up with that the implication that some time would have to be given for that statement to be discussed.

Mr. Briscoe

Deputy Davin mentioned the point that as the assets were so negligible would it not be advisable to have the whole thing wound up and not have the additional costs incurred?

Mr. McGilligan

It is already wound up.

Mr. Briscoe

A Trade Loan Guarantee has been made by the State and has been paid?

Mr. McGilligan

That I cannot say, but the concern is wound up.

Mr. Briscoe

The point I am trying to get at is this: is it not better in the interests of the State that where a concern is wound up, and where the State meets a certain liability arising out of a certain guarantee, that that should be done automatically so as to avoid the adding up of receiver's costs on the small residue of assets that may be there, together with the danger of having to meet extra interest accruing?

Mr. McGilligan

These points are elementary, and surely the Deputy does not mean to suggest that they are being overlooked? No avoidable expense is being incurred in this case.

Mr. de Valera

Would the Minister tell us whether the failure in the particular action he took indicates a general weakness in his guarantee to cover loans?

Mr. McGilligan

No such generalisation could be made from this case because a peculiar lease was substituted in particular premises that were in some way tied up with the loan.

Mr. Davin

Would the Minister say whether the failure was due to the bad legal advice originally tendered to the Industrial Trust?

Mr. McGilligan

They were not in this from the point of view of legal advice.

Mr. Davin

Surely the leases were looked into?

Mr. McGilligan

The Deputy does not understand this. The terms on which we allowed the company to look for money were drawn up by me.

Mr. Lemass

Is the legal advice on which the Minister relied in this case the same as the legal advice on which he is relying in the case of the land annuities?

Mr. McGilligan

Quite definitely, no. I have said in this case that people should not try to get behind the person who is responsible, politically. I am responsible in this House for this matter, and there should be no attempt made to debase people's reputations on facts not known to Deputies.

Dáil Éireann debate - Thursday, 26 Feb 1931

Dáil Éireann debate -
Thursday, 26 Feb 1931