Perhaps the Minister would indicate what is in the section.
Companies (Amendment) Bill, 1981: Committee and Final Stages.
Question proposed: "That section 1 stand part of the Bill".
In this Bill the Principal Act means the Companies Act, 1963.
Question put and agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill".
Can the Minister indicate what this section embraces?
Under section 11 of the Principal Act, a company limited by guarantee and not having a share capital must register articles of association. Section 16 (b) of the Principal Act provides that articles for such a company must be in accordance with the form set out in Table C in the First Schedule or as near thereto as circumstances permit. In contrast, section 13 provides that if a company limited by shares do not register any articles of their own or if they register articles which do not exclude or modify the regulations in Table A, those regulations will apply to the company as if they were contained in duly registered articles. The proposed amendment would give a company limited by guarantee and not having share capital the option of not registering articles of association, an option enjoyed by companies limited by shares. In that case under the provisions of section 14 of this Bill the regulations in Table C will automatically and without further formality become the articles of association of the company in the same manner as described in Table A applying to companies limited by shares.
Question put and agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill".
There is a question here concerning the address of a company's registered office. Very often all that appears in the returns is possibly the name of the townland or of a street but with no number given. There should be an obligation on a company to register their main office for the purpose of facilitating the service of documents. Very often the registered office may be given as a solicitor's or an accountant's address while in the same town or city the company may have their principal trading place at a different address. There is an assumption frequently that the main trading place is the registered office and documents tend to be served there. As this is a technical fault which can be taken advantage of in proceedings, perhaps the Minister would consider some tightening of the obligation with regard to strict notification of a company's registered office. Perhaps the Minister would even consider imposing an obligation that the registered office should be at the main place of trading.
Subsections (6) and (7) of section 195 of the Principal Act provide inter alia that the particulars of the first director and secretary of a company should be sent to the registrar of companies within 14 days of appointment. In many cases this provision is ignored and a large proportion, up to half, of newly-registered companies fail to forward the particulars within 14 days. In an effort to redress this situation and to reduce the work involved in pursuing newly-registered companies who fail to provide the requirements, it is proposed in this section to provide before incorporation for the delivery of particulars of directors and secretaries to the Registration of Companies Office.
Assigned consent to act as director or secretary is also provided for. This is a new requirement. Similarly, the period of 14 days allowed by section 113 of the Principal Act for notification of a registered office is being largely ignored and that information will also be required before incorporation.
On the Deputy's point that the principal place of business should also be the registered office, there is an argument for that certainly but it might create some problems in the sense that the formalities that need to be complied with might more easily be complied with at the registrar's office rather than at the place of business where frequently nowadays the secretary of a company is often an incorporated entity formed by accountants, or people like that, for the purpose of carrying out the secretarial work of companies. While in many cases I do not think it would create any problem I believe it would in a number of companies. I should like to think about the matter before I commit myself to it.
Question put and agreed to.
Sections 3 and 4 agreed to.
NEW SECTION.
I move amendment No. 1:
In page 5, before section 5, to insert the following section:
"5.—Section 114 (1) of the Principal Act is hereby amended by the insertion after paragraph (c) of the following paragraph:—
`(d) notice of the issue of debentures of a company shall be mentioned in all of the said company's documents referred to in paragraph (c) of this section.'.".
The purpose of the amendment is to provide that where a company have issued a debenture particulars of that fact should be noted on all letters, papers, invoices and documents of that company. As we know, a debenture is a mortgage of all the assets of that company and it is a potentially serious matter for a member of the public having dealings with a company where such a debenture exists. A likely result of that in the event of a debenture being called in by the bank, or whatever other institution would hold it, is that a person entering into that business with the company could find himself at the loss of his money or at the loss of owing money to him by the company. That happens often. I am aware that there is an obligation on the company to register particulars of the debenture in the Companies' office and that it is open to any person to go down to the Companies Office to see if there is a mortgage by the company. However, the reality of the situation is that the average member of the public is unlikely to do that. It is most unlikely that he would be aware that he could go down to the Companies Office and make a search to see whether or not the company had mortgaged their entire property to some financial institution or whatever.
It would be some help if a company were obligated to put on all its papers particulars of the fact that a mortgage debenture existed. In other words, if a person wanted to do a deal with such a company, a building company where he would be putting a deposit on a house, he would see from the papers of that company that the company had issued a mortgage debenture over their assets. Companies are already obliged by law to put certain information on all their papers and documentation, things like the situation of the registered office, particulars of the directors and the registered number. Our amendment proposes to add one further important item, from the point of view of members of the public, to the details and particulars that a company would be obliged to specify on all documentation. That in many cases might bring to the notice of members of the public who are about to have dealings with the company the fact that danger was looming ahead of them in their dealings with that company and the fact that somebody else had a mortgage ahead of them so that in the event of something going wrong with the company they could be in danger of suffering serious losses. The intent of compelling the company to register the mortgage at the Companies Office is directed towards the same purpose but this would provide an additional safeguard to that end.
I support the amendment. There is no doubt that there is an extraordinary degree of naivety in the minds of many persons dealing with limited companies. People seem to have the impression that because one establishes a company and proceeds to produce rather glossy and well-designed notepaper and seems to enter into industrial or commercial activity that, automatically, one has some divine protection under law. In the performance of ones work as a public representative one never ceases to be amazed at the number of individuals and trading companies who are caught in this situation. Our amendment would be a salutary reminder to the public in their company dealings that debentures should be clearly indicated on company documents. It would be a forewarning to persons of the extent to which the company have other commitments. It is a basic suggestion and one which I believe will appear extensively in company law in the years ahead. We commend the amendment to the Minister.
I understand the considerations which lie behind the proposing of the amendment. I will explain the reasons why I believe the amendment must be rejected but I undertake to examine carefully those considerations and any other measures which would put an end to the various forms of abuse. They will be included in the Bill which I already mentioned will deal with domestic as opposed to EEC issues. The notice which will be required by the amendment will impose an impossible burden. It is not practicable to give that information on documents such as cheques and invoices as required by section 114 (1) (c). As Deputy Taylor recognises not everyone understands the meaning and relevance of a debenture. The Principal Act requires that a debenture and charges be registered at the Companies Registration Office or otherwise they are void against the liquidator and any creditor. In those circumstances these charges will always be promptly registered and be available for inspection at the Companies Registration Office.
I should like to expand a little on the impracticability of the proposal as I see it. It would be necessary to print on each cheque and invoice the existence of and the broad nature of the amount of a debenture. A company might change their debenture a number of times within a year and it would be impossible to expect a company to comply with that. There is the other point that a mortgage, either equitable or legal, by the company would have to all intents and purposes as far as a creditor is concerned the same effect in financial terms but if the mortgage were not registered as a debeture there would not be an obligation under this amendment, if it was passed. That would seriously mislead creditors or others. The net effect of it would be that people would engage in mortgages rather than in debentures. The value of the point of the amendment would then be lost. The real problem is the physical one of printing details of debentures on documents of the kind mentioned of which a company might issue tens of thousands in the course of a year.
Of course they issue thousands of such documents but the point is that they are all printed. I cannot see that there should be any problem. When they give in their printing order that fact should be printed on them. Their invoices and cheques are printed anyway. We are not asking that the amount of the debenture should be specified but only that notice should be given of the issue of the debenture, the fact that this is a company which is tainted by the fact that a debenture has issued.
The Minister made reference to a mortgage. Certainly a mortgage bears some similarity to a debenture but there is the very keen difference in that a mortgage is directed to a specific asset of a company whereas a debenture normally takes the form of a floating charge over the entire assets of the company. This puts a debenture into a different category from a mortgage.
This is a very reasonable amendment and I do not see that it would put any undue burden on a company. Letterheads and cheques are printed by the company anyway and what increased difficulty would it present to the company when complying with their obligations under section 114 of the main Act to add a further sentence to the effect that they have issued a debenture? This would be a protection to the public and would involve no great problem for the company. The intent is that the public should know about these things and that is why details must be registered in the Companies Office. Why not have a slightly wider dispersal of this very crucial information?
Members of the public will not go to the Companies Office to find out if there is a floating charge in existence on a company from whom they wish to purchase a house. We have recently seen some examples of hefty liquidations and receiverships. An unfortunate member of the public who has paid a deposit on a house may find that a receiver has been put in by a financial institution. These institutions look after their own interests and do searches before they part with any money. The unfortunate purchaser finds that he is committed to a certain company in the important matter of buying a house but the transaction has been put into a state of limbo. He cannot sue or get his money back while the receiver is in full charge of all the property of the company. That is the effect of the debenture. The receiver takes full control and calls in whatever money is due but he operates the company with only one objective: to secure the money for the bank which put him in. It usually is a bank who take this action. Receiverships can go on for very many years and in the meantime the unfortunate person who paid a deposit on a house in ignorance of the fact that the company had mortgaged their entire assets to a bank finds himself at a loss when finally the bank have taken whatever assests exist. He never knew that the debenture existed.
Why not avail of this very simple expedient of making it obligatory to give the widest possible publicity by companies to the fact that they have issued a debenture? A person should see on printed documents issued by a company that a debenture has been issued so that he can find out what this means. It should be drawn to the attention of the public in printed documentation that a company have this taint. This is a reasonable request. The average citizen knows little enough about these matters. Why not, at no cost at all to the company, give this additional possible protection?
Would it be possible in practice to find a firm of building contractors which would not have issued a debenture?
It may be. I do not know.
What protection or added safeguard would it be for, say, a house purchaser to read on a firm's advertising literature that there was a debenture in existence?
The amendment would apply not only to building companies but to trading companies or any types of companies. I agree that in many cases it might not help but it would focus the mind of a person about to deal with a company. A person could be impressed by the assets of a company and conclude that he would be perfectly safe in entering into business commitments with the company. However, that could be very far from the truth. The company could have assets of £1 million and debts of £1.5 million owing on the debenture. If the person about to deal with the company spotted the fact that a debenture had been issued he might find out that the company had mortgaged their entire property to a bank and that in the event of anything going wrong with the company the bank would have first call on the entire assets. There could be cases where it would help members of the public to know that a debenture had been issued. All that is required is that the company make an additional provision when doing their printing.
The point Deputy Cooney has just made is the most practical.
It is narrow in that it only relates to builders.
Yes, but it could be extended beyond builders. I have not looked this up but I am probably right in believing that companies such as Guinness, CRH, Smurfits——
Gallaghers.
——Irish Distillers and other leading industrial companies have all issued debentures. I do not accept Deputy Taylor's use of the word "taint" or that a company which has issued a debenture is tainted in some fashion. What possible advantage is it to a member of the public to say that he will not deal with Smurfits because they have issued a debenture? I am not certain that they have issued a debenture but I would be surprised if it were not so. Is that person to go to Smurfits and say that Deputy Taylor warned him at a certain column in the Official Report of 26 May that he should not deal with them because they had issued a debenture?
Some people dealing with Gallaghers might have appreciated the advice.
I do not think that any great advantage would have accrued to anybody dealing with the people concerned. I would have thought that anyone seriously dealing with them would have looked at the file in the Companies Office. It would be amazing if Gallaghers did not have any debentures in existence because it is unlikely that any other building company or similar type of company would not have debentures. With regard to the point that it is not a problem to print this on cheques and so on, that may well be the case; but if the debentures change a month later will all the cheques and invoices that have been printed have to be withdrawn because of the change in the nature of the debentures? I am afraid this is not really practicable and would not be of any value to the public.
Amendment, by leave, withdrawn.
Question proposed: "That section 5 stand part of the Bill."
The Minister mentioned he has a Bill to deal with matters that are raised domestically as needing reform in our company law code. I do not know if this is the section on which to mention this, but I should like to draw the attention of the Minister to the need to impose an obligation on a person who transforms his private business into a private limited company so that the change in status would be formally notified to the customers and that without such formal notification of change of status the personal liability of the promoter would continue. People set up private companies using their personal name and add the word Limited and the creditors find they are presented with an insolvent corporated company having thought they had been dealing with a private individual. I think that loophole should be plugged. The Minister should give consideration to it by the appropriate legislation, whether by way of further amendment to this Bill or in another Bill.
I do not think it would be feasible to amend this Bill on those lines but I would be agreeable to that being done in further legislation.
Question put and agreed to.
Sections 6 and 7 agreed to.
SECTION 8.
Question proposed: "That section 8 stand part of the Bill."
I presume the figures in subsection (2) are increased penalties?
Yes.
Question put and agreed to.
Section 9 agreed to.
SECTION 10.
Amendment No. 2 is in the name of Deputy Taylor, Deputy Desmond and Deputy Ryan. Amendments Nos. 3 and 4 are related and amendment No. 10 is consequential. Amendments Nos. 2, 3, 4 and 10 will be taken together for discussion by agreement.
I move amendment No. 2:
In page 9, paragraph (a), line 17, to delete "employees.';" and substitute the following: "employees;
(j) any amounts (including costs) due to a person who paid a deposit to the company in respect of a new house;".
The purport of the amendment is two-fold. First, it identifies certain categories of persons having dealings with companies and, in the event of certain transactions, gives a preferential right to those persons because of the special situation that arises.
The first is in the case of a person who has paid a deposit to a company in respect of a new house. This was highlighted by recent unfortunate receiverships and liquidations by building companies. The amendment provides that, where a person has paid a deposit on a new house to such a company and where that company goes into liquidation the deposit held by that company would rank as a preferential debt by the company in liquidation to the person who paid the deposit on the new house. The intent is that such a person would thereby be given a higher chance of recouping the money paid as a deposit.
We know it is a great struggle, particularly for young people, to put together the money needed for a deposit on a new house. The cost of building land and houses has escalated considerably, loans are difficult to get and the amount of deposit required is high relative to the cost of the house and people's incomes. It is an appalling thought that a young couple having struggled for many years to put together the money for a deposit then find that they lose their deposit when the company goes into liquidation. In many cases that would mean the complete end of any possibility such a couple would have of being able to raise a deposit to set up a home for themselves and their families. That is the first category of special case we identified as suitable to be dealt with as a preferential situation.
The second refers to a case where a company has given a guarantee or indemnity in respect of a new house to remedy defects in that house. It is standard practice when a new house is sold that the building company or developers who sell the house give a guarantee they will remedy all defects that become obvious within a fixed period — sometimes one year, sometimes 18 months or two years. This is apart from the guarantee scheme of the national house-builders which covers certain structural defects of a limited nature. The purpose of the amendment is to ensure that, in the event of a company going into liquidation during the period when the guarantee against defects was still in force, that money would become payable to the unfortunate buyer of the house and would be dealt with as a preferential payment. Some defects can be very serious. Unfortunately, defects in new houses are all too common and sometimes quite substantial sums of money are payable by building companies to purchasers of new houses within the first year or two of purchase. The purport of the amendment would be that payments becoming due under this category would be dealt with as preferential.
The third category is different. It deals with the situation where a guarantee has been given by a company which sold goods to a purchaser acting as a consumer. It has always been recongnised that a consumer, the person who buys for retail for his own personal use, requires a special degree of protection and that was recognised in the Sale of Goods and Supplies of Services Act, 1980, which defines a consumer. This could apply to sales of television sets, cars and any goods. We know that companies selling such goods on occasion give guarantees against defects arising within a certain period. The purport of the amendment would be that moneys becoming payable under such a guarantee would be dealt with as preferential.
Amendment No. 10 is, advisedly, a new departure. It would provide that where a guarantee was given in respect of defects in a new house or where a deposit was paid on a new house or in respect of goods purchased there would be a liability element on the people who were directors of that company at the time the deposit was paid or at the time the guarantees were given. It seems to me entirely wrong that by means of the device of limited liability in companies the directors, in all cases, should be enabled to escape entirely all personal responsibility for matters with which they were concerned or should have been actively concerned and have had knowledge of that the time they entered into the transactions. I would say — and this is the purport of the amendment — that in the case of a person who puts a deposit on a new house and finds himself at a loss when the company go into liquidation at a later date and that deposit money is passed into the hands of that company notwithstanding the preferential provision that would be accorded by the amendment, the people who were directors of that company at the time the deposit was paid are liable to recoup the losses to the person who paid the deposit on that new house.
It highlights a situation that arises with companies very often, including building and development companies. That is the practice of bringing onto company boards what might be described, for want of a better word, as "gentlemen" directors. By that I mean people who have no direct involvement with the affairs of that company but who are brought in for prestige purposes, to give colour. People will look to see who they are going to deal with, who the directors of this company are, and they will see some very well known names and get the idea that by reason of the fact that such a well known person was a director of the company it would have an air of respectability that in many cases might not be warranted by the affairs of that company. This is a habit that has been increasing. People who have very little, if any, involvement with the day to day affairs of the company or even any knowledge of the actualities of the running of that company or its financial position, will accept appointments as directors for the sake of a director's fee to be paid annually for little trouble. That is all right as far as it goes, but anybody who allows that to be done with his name for that purpose should carry some measure of responsibility in return for getting a director's fee for little or no effort; he should have some responsibility. The amendment we are proposing would bring that about by making that director, in common with the other working directors of the company, personally liable. In the event of a building company going into liquidation and a person having paid the deposit being at the loss of it the director would be liable. The same applies to the other two categories, namely, a company that has given guarantees in respect of defects in a house or a guarantee in respect of goods. When such a guarantee is given the people who are directors either know or should know what the financial situation of the company is and what the prospects are and if they proceed to lend their name to the company and give out these guarantees they should have a personal responsibility in such situation.
Those are three categories that we identified as warranting cutting back to some small extent the blanket indemnity that directors otherwise have when a company goes into liquidation. At present they are enabled to wash their hands of liability to unfortunate people who very often incur quite substantial losses arising from company liquidation. When they enter into these commitments then, in these limited cases at least, they should carry a personal responsibility. I do not say that the three cases we have identified are in any way exhaustive of special cases that might arise where personal liability should attach to directors notwithstanding the fact that the company has gone into liquidation. There are probably others that would be equally deserving and perhaps could be examined at a later date, but these three examples require special protection above the normal — the defenceless position of a person putting a deposit on a new house, a person who having bought a new house and having got a guarantee in respect of defects finds that because the company goes into liquidation he has to carry that heavy loss himself, and the consumer buying goods who finds the guarantee in respect of the goods is worthless because of a company going into liquidation. The amendment would have the effect of enabling such people to go after the directors who either knew or should have known about the position when they entered into those commitments.
I sympathise with what Deputy Taylor proposes here. Of course there is the dilemma that if this were to be acceded to in his terms, the whole basis of incorporation would be seriously, possibly fatally, damaged. There are still theoretical arguments to justify incorporation. But I would strongly urge the Minister to consider the abuse which this amendment pinpoints of people who use the device of incorporation to evade what should be personal liability. There has been more and more of that in recent times. It is difficult to deal with such people without infringing the principle of incorporation and the fact that it obviates any personal liability. But it is something that we have to look at. There is a dilemma in the way the use of incorporation has developed in recent times. There is a problem that we have to try to solve and at the same time escape from the dilemma.
There are further considerations arising out of this amendment. One must have total sympathy with it and for the type of person that the amendment seeks to protect. But we must not lose sight of the plight of the general creditors of a company that is in difficulty, the people who provide the wherewithal for the company to trade, the people who sell goods in good faith and who could have a substantial amount of business and who now because of the emergence of more and more preferential creditors find themselves further and further down the field and possibly out of court altogether. We are inclined to lose sympathy for the commercial creditors. If there were not people prepared to give commercial credit trade just could not carry on and more and more people are now giving credit on the basis of this retention of title clause and that will also affect winding up.
I just make the plea that while we are right to show preference for all the people that the Bill provides for and that the amendment provides for, let us not forget the poor unfortunate trade creditor who gives the means of trading to the company in the first instance.
As a matter of general information I would preface my remarks on these four amendments by pointing out that the question of preferential payments normally arises only where the asset position of the company being wound up is precarious and the company are unable to meet their debts and obligations in full. In this situation it is clear that employees are best protected by keeping the list of preferential aims as short as possible. If one were to include, for example, as suggested in amendment No. 2, a deposit on a house, there would appear to be no valid reason why deposits on various other goods and services should not be included and the preferential list would then be endless. As a general rule the preferential payments in a winding up are confined to employees and the State.
Could we exclude the State?
I do not think we can ever exclude the State; it impinges more than ever as time passes.
On amendment No. 3 the argument against the previous amendment — that is, keeping the preferential payments list short as to the advantage of employees — holds with equal force against this amendment. Moreover, there is the difficulty inherent in this amendment of trying to get preferential status for indeterminate amounts at indeterminate times. For example, the winding up of a building company, which is involved here, could properly take place after, say, two years of a five year guarantee. At that time no defect might appear in the house and the other problems referred to in the amendment might not have arisen.
Amendment No. 4 would represent an extremely long extension of the preferential list because the Sale of Goods and Supply of Services Act embraces everybody who buys goods or services for private use and consumption. This would be extremely disadvantageous to employees, whom section 285 in many respects seeks to protect.
Amendment No. 10 must be rejected because section 297 of the Principal Act already provides that the court, on the application of the liquidator or any creditor, may declare that any persons who were knowingly parties to the carrying on of the business in a manner intended to defraud creditors shall be personally responsible without any limitation of liability for all or any of the debts or other liabilities of the company. That section, which I had not adverted to when Deputy Cooney made the point on an earlier section, may cover the point he made about non-disclosure by a former sole trader of his transformation into an incorporated company. It appears that under section 297 if he failed to disclose the fact of his incorporation he would continue to be liable on a personal basis. This amendment raises the general question of limited liability. While I understand clearly the reasons which gave rise to it, I suggest it is inappropriate to deal with such a fundamental matter by way of an amendment to this short Bill.
I am only too well aware that there have been abuses by certain companies, but it is necessary to take a broad view and to recognise that entities with limited liability have been the means by which considerable economic and commercial development and social progress have taken place and whereby much employment has been provided. This progress and employment would not have been provided without the concept and benefit of limited liability. In general the good outweighs the bad. As I indicated, I will be trying hard to introduce as soon as possible a Bill dealing with such issues — measures designed to prevent or eliminate abuses and evasion of responsibility in the general operation of companies.
I support these amendments, particularly amendment No. 2. Time and again I have met many constituents who paid deposits to construction companies for new dwellings and their lives have been destroyed because the company went into liquidation and there was no way their deposits could be returned. It is not anti-industrial, anti-economic or anti-social development to suggest that anybody who establishes a company and takes a deposit, which nowadays can be for a substantial amount, should do all in his power to ensure that if his company goes into liquidation people will have their deposits refunded. Very often these people have very little hope of starting again once they have lost their deposits. It is possible that the wife may have started to work a number of years to help save the deposit. They may then have started a family and if they lose their deposits they will not have any hope of saving such a substantial sum a second time.
In my view this simple amendment is of major social importance. It should have not just the understanding and sympathy of the Minister, he should bite the bullet and accept it. If construction and development companies find it excessively penal, it could be subsequently amended. At this time we should give this matter a priority rating and ensure that when companies, or their legal advisers, accept deposits they know exactly what they are doing and the extent to which they will be liable. In this way basic protection will be given to the people who pay these deposits.
The Minister referred to the good outweighing the bad. I do not think it is a case where we have to choose between the good and the bad: in my view it is a case where we take the good, tone it down a bit and restrict the blanket immunity of limited liability.
The Minister referred to the section dealing with fraud but, as he rightly pointed out on Second Stage, it is extremely difficult to prove fraud and it only in very exceptional cases that that could be done. What we are doing here is making a small inroad into the overall principle of limited liability, but the time has come to do that. The law is a developing process and attitudes to it change. The whole idea of limited liability as I said on Second Stage culminating at the turn of the century in the Companies Act of 1908, has operated on a more or less blanket basis up to now. Now is the time for some evolution in the existing blanket limited liability. In many cases a person having dealt with a company loses money as a result of having paid a deposit on a new house. The company then goes into liquidation but in six or nine months time or a year the directors who, as far as he is concerned, took his money are back in business, still carrying on millionaire transactions. The Minister referred to examples in his contribution on Second Stage. It is very annoying and happens all the time. That blanket freedom of liability of directors should be curtailed. Where they have substantial personal assets, in many cases amounting to huge sums of money, those assets should be used to pay back casual members of the public who have deposited money with them for a new house, or for whose house these directors are liable regarding defects in the sale. It is entirely wrong, inequitable and unjust that such directors, having put their company into liquidation, thereby causing members of the public to lose their savings in this way should then be in a position, as a result of using their personal assets which will have come, in most cases, from the company being put into liquidation, to set up very substantial businesses in a relatively short space of time. It is time something was done about that affront and insult and the opportunity presents itself in this Bill. The three cases isolated here as being appropriate warrant such care, consideration and protection of people in those weak situations. Firstly, there is the young couple who have put down a deposit on a new house, having struggled hard for many years to amass that deposit. There is a responsibility on the Oireachtas to ensure their maximum possible protection in the event of a company being liquidated; they should be considered preferential and there should be a carry-over of a personal responsibility on the part of directors to make good their financial loss. Likewise, people who bought a new house and find it defective should be similarly protected.
This highlights the situation prevailing in company groups. One company make good profits and formulate groups of companies. At their discretion, they liquidate one company and carry on another. The person having dealings with the liquidated company may suffer heavy financial losses and be affronted by seeing other companies in the same groups carrying on a booming business. People who have been employees of the liquidated company will also suffer very considerably. A matter which should be considered at some stage is that of inter-liability for companies in a group. This is not touched on in the present amendments. The time has come to cut back on the blanket absolution, the immunity which directors have had up to now. These are three classic cases of people in a weak financial position who need protection on a preferential basis and the right to claim against the personal assets of directors who were involved with the company which took their money.
The difficulty with Deputy Taylor, with great respect, is that he makes speeches rather than takes part in a debate. It is unreal for him to talk without making reference to my comments under section 297. If he wishes to get to grips with the root of the problem, I advise him to consider that section.
I have considered it. The Minister's comments on it on Second Stage were well founded and I agree with him. He highlighted the difficulties in implementing that section, giving that as the reason for the section being inadequate, with which I agree. That is why I am proposing an amendment which would improve the situation.
The section to which the Deputy is now referring is section 184, not section 297. I dealt for five or ten minutes with some aspects of section 297. One can only get a Committee Stage to work if there is interplay. There is no point in making speeches which do not take account of what has just been said. Basically, because Deputy Taylor made essentially the same speech on Committee Stage as on Second Stage, all I can do is repeat what I said the first time, which is rather pointless. The Deputy is very hung up on builders and I can quite see why. There have been tremendous abuses in the past and they are still going on. There is no doubt about that.
There are recent examples.
However, this proposed remedy will not cure the malady. If the Deputy will listen, I will go over the matter again.
I have been listening to the Minister.
One reason is that the amendments relate to a winding-up situation, meaning that the company is wound up for reasons of insolvency. The builders, to whom the Deputy properly objects — and I equally vehemently object to their actions — in the meantime, having handed the company over to the liquidators, have gone into the next field to build more houses under a new name. It is immaterial to the builders in what order the creditors should be paid, or if they are ever to be paid. The particular point I wish to make to Mr. Taylor, which he does not realise, is that if those amendments were accepted, it would enormously increase the length of preferential creditors under section 285. The main losers by lengthening that list are the employees. These four amendments would very seriously damage the interests of the employees. I ask Deputy Taylor to accept that, in the interests of the employees, I will have to resist these amendments, if for no other reason than that. That is, as I have tried to explain, the supervening reason. If there are going to be virtually endless preferential creditors, the existing preferential creditors under the 1963 Act will have their position considerably weakened. They will stand pari passu with all those on the new list of preferential creditors introduced under these amendments.
The other point I wish to make is, in simple terms, that there has been a lot of emphasis on guarantees and indemnities by builders for improvements to sewers, footpaths and the like. I believe it is not uncommon to have an indemnity of that kind lasting for five years. If a building company is being wound up it will not be possible for the liquidator to wind it up and make preferential payments, let alone non-preferential payments, in under five years. He will have to wait to see whether indemnities are called in at the end of the indemnity period. If he were to make payment before he had ascertained his liability under these amendments, at the end of the indemnity period he would be in default and the liquidator would become personally liable to reimburse the preferential creditors. The effect of that would be that he would not pay employees' wages due to them until at least five years had expired. This is another example of the damage that would be done to employees by this series of amendments.
I take the Deputy's point fully, but the point I am trying to make to him is that you do not make amendments of this kind to a section dealing with preferential creditors. It has to be done in a more fundamental way in relation to the control of the abuses of limited liability. I accept fully that there are the abuses he talks about, but this is not the way to deal with them. You do not cure those abuses by damaging seriously the interests of the employees or former employees of a wound-up company. That would be the practical effect here.
As drafted, his amendments are loose in practical terms. It would be possible, for example, for a company going into liquidation deliberately to put down an enormous deposit on one of their own houses with their own money, and become a preferential creditor for that amount, and ensure that all the ordinary creditors got nothing. In particular the Deputy will have to look also at the provisions of section 297 which get round more of the problem he talks about than he realises. I do not think section 297 is not workable. It is not worked enough. Sufficient applications are not made to he courts under it. Perhaps that is the greatest difficulty.
I fully appreciate the Deputy's anxiety and concern. I have been looking in some depth at activities in a certain part of suburban Dublin in the past week or two. I noticed, for example, that in some suburbs of Dublin the same people who built houses on one road are building a new set of houses up the road but as a different company. There is no indication that they necessarily have gone into liquidation on the first stage but, strangely enough, the second stage of the development is being carried out by the same company with a different name. I ask myself why. It may be done for tax reasons. It may be done for some technical reasons which do not appear obvious to me at first sight. Basically people like Deputy Taylor and myself are entitled to be suspicious about why they are doing that.
Normally somebody who is trading, if he is trading reasonably successfully, will and should continue to trade as the same company. One is entitled to ask why they do that type of thing. Undoubtedly, it must be enormously aggravating for people who have paid a deposit and lost their money to see the same builders abusing the privilege of limited liability. This House will cure that, but we cannot cure it by way of amendments to a section which set out lists of preferential creditors. We can do it only by a more fundamental approach, particularly as we would seriously damage the existing preferential creditors, primarily the employees, if we did it this way.
The Minister referred to defects in indemnities existing for five years. That may be, although I have never come across one which existed for as long as that. The longest such indemnity I have ever come across in the course of my experience lasted for two years. The whole effort of builders and developers in this day and age is to cut down the period as far as possible. It is very rare today to get one for as long as two years. An 18 months or 12 months period is more the order of the day now. I have never come across one of five years in length. I do not think that point holds water because liquidations are not the quickest things either. In the normal course they run on for some years before the companies are wound up. In his last contribution, the Minister did not advert to amendment No. 10 which we are also discussing.
I discussed it at great length.
That is the amendment which would put personal liability in these limited cases on to the directors. I take his point about adding on a deposit on a new house to the list of the amount owed to preferential creditors. I have no wish in any way to make inroads into wages or salaries owing to employees, or to affect what their rights should be, or what they should get out of that company. The question of personal liability of directors for those wages and salaries could be considered at a later stage.
It is reasonable that the person who has paid the deposit should rank as preferential. In most cases that money would have been put into the company fairly recently before the company went into liquidation. There would not have been a long gap in most cases between the paying of the deposit and the liquidation. They paid that money into the company and, therefore, the position of the employees would not be altered that much, or at all indeed, from what it would have been before the deposit was paid in.
The whole concept of a perferential claim is that there are certain specialised cases which require special treatment or consideration over and above the general body of creditors. Employees are regarded as preferential. They are in a special situation. The purport of the amendments is that there are certain other limited categories which, by reason of the weakness of the position in setting about their dealings with the company, should likewise be regarded as preferential. Where their money went into the company in most cases in recent times, as I have said, the fact that that money was put in and would come back to them on a preferential basis would not reduce to any appreciable extent the money the employees would get on the distribution dealing with their wages. Nonetheless they are a special case by reason of their weakness, and they require preferential treatment. Therefore I have to ask that the amendment be put.
I want to say a couple of words on the section. We will be taking it after the amendments.
Amendment put: "That the words proposed to be deleted stand".
The Committee divided: Tá, 64; Níl, 41.
Tá
- Ahern, Bertie.
- Ahern, Michael.
- Allen, Lorcan.
- Andrews. Niall
- Aylward, Liam.
- Barrett, Michael.
- Barrett, Sylvester.
- Bellew, Tom.
- Brady, Gerard. (Dublin South-East)
- Brady, Gerry. (Kildare)
- Brennan, Matty.
- Brennan, Ned.
- Briscoe, Ben.
- Brown, Seán.
- Burke, Raphael P.
- Byrne, Hugh.
- Byrne, Seán.
- Callanan, John.
- Colley, George.
- Collins, Gerard.
- Conaghan, Hugh.
- Coughlan, Clement.
- Cowen, Bernard.
- Daly, Brendan.
- Doherty, Seán
- Ellis, John.
- Fahey, Francis.
- Faulkner, Pádraig.
- Filgate, Eddie.
- Fitzgerald, Gene.
- Fitzpatrick, Tom. (Dublin South-Central).
- Fitzsimons, Jim.
- Flynn, Pádraig.
- Foley, Denis.
- French, Seán.
- Gallagher, Denis.
- Gallagher, Pat Cope.
- Geoghegan-Quinn, Máire.
- Haughey, Charles J.
- Hilliard, Colm.
- Hyland, Liam.
- Kitt, Michael P.
- Leonard, Jimmy.
- Loughnane, Bill.
- Lynch, Michael.
- Lyons, Denis.
- McCarthy, Seán.
- McEllistrim, Tom.
- MacSharry, Ray.
- Meaney, Tom.
- Morley, P.J.
- Murphy, Ciarán P.
- Noonan, Michael J. (Limerick West).
- O'Dea, William G.
- O'Donoghue, Martin.
- O'Hanlon, Rory.
- O'Leary, John.
- O'Malley, Desmond
- Power, Paddy.
- Tunney, Jim.
- Walsh, Joe.
- Walsh, Seán.
- Woods, Michael.
- Wyse, Pearse.
Níl
- Allen, Bernard.
- Barry, Myra.
- Barry, Peter.
- Begley, Michael.
- Bermingham, Joe.
- Bruton, John.
- Bruton, Richard.
- Connaughton, Paul.
- Corr, James.
- Cosgrave, Liam T.
- Creed, Donal.
- Crowley, Frank.
- Desmond, Barry.
- Desmond, Eileen.
- Donnellan, John.
- Dukes, Alan.
- Farrelly, John V.
- FitzGerald, Garret.
- Fitzpatrick, Tom. (Cavan-Monaghan).
- Flaherty, Mary.
- Fleming, Brian.
- Governey, Des.
- Griffin, Brendan.
- Higgins, Michael D.
- Kelly, John
- L'Estrange, Gerry.
- McGinley, Denis.
- McMahon, Larry.
- Manning, Maurice.
- Mitchell, Gay.
- Moynihan, Michael.
- Naughten, Liam.
- Nealon, Ted.
- O'Brien, William.
- O'Keeffe, Jim.
- O'Leary, Michael.
- O'Sullivan, Toddy.
- Quinn, Ruairi.
- Sherlock, Joe.
- Taylor, Mervyn.
- Yates, Ivan.
Tellers: Tá, Deputies B. Ahern and Briscoe; Níl, Deputies L'Estrange and Taylor.
Question declared carried.
Amendment declared lost.
Amendments Nos. 3 and 4, by leave, withdrawn.
Amendments Nos. 5, 6 and 7 are related and may be discussed together.
I move amendment No. 5:
In page 9, line 18, to delete paragraph (b) and substitute the following:
"(b) by the deletion of subsection (3);".
I am glad that amendments Nos. 5, 6 and 7 are being taken together. I am strongly of the view that section 10 (b) should be amended because it is totally inadequate. I am also strongly of the view that section 10 does not provide any real additional protection for employees because the proposed amendment of the ceiling for payment of employees' outstanding claims from £300 to £1,500 is, in current money values, unrealistic.
To protect employees adequately in the event of winding up a company, the Bill should provide that all claims owing to employees in the form of wages, salaries, holiday pay and superannuation should be paid in full and should rank above all other creditors. I am concerned that the figure is only £1,500. The Minister said here the other day that that figure represented 11 weeks' wages but one must bear in mind that an amendment of this nature is going to stand for quite a number of years. Current average earnings are between £140 and £150 a week and, inevitably, within a matter of three or four years the figure of £1,500 is going to be substantially diluted by inflation and wage increases. The figure should be at least £4,000 because we have a situation where companies go into receivership and liquidation and workers are left waiting for many months until, finally, they may get back payment of wages. In the construction industry, for example, when a company runs into trouble, workers may be paid £80 or £90 a week when they may well be due £140 or £150 a week. There is an accumulated deficit owing to workers and that can quite easily grow substantially over a period of months, especially when you consider holiday pay amounting to three or four weeks wages. The amount of money due to workers can be quite substantial when the shutters come down.
If the figure of £1,500 is not increased to £4,000 we will be back here in about four or five years to adjust this figure again. It is equally arguable that the figure should have an aspect of reasonable inflation indexation, which is the purport of amendment No. 8, that an order should be made periodically whereby the Minister should take into account any changes in average earnings of workers in the transportable goods industries sector as recorded by the CSO, and then the amount of moneys could be appropriately adjusted upwards.
I urge the Minister to accept the amendment, which would make a fundamental change in the Bill. Because of the interesting discussion we had on this matter during Second Stage I will not press my arguments further on this occasion, but we could have a discussion across the floor of the House and perhaps reach agreement to increase substantially the £1,500 to at least £4,000.
Amendment No. 5 seeks to remove the limit on the amount which qualifies for preferential payment on winding up in respect of wages and salaries in the four months before winding up. Opposition amendment No. 7 seeks to increase the £1,500 proposed in the Bill to £4,000. There must be serious doubt about the effect of that proposal because nobody these days is likely to go without pay for as long as four months. In any event, in a winding up situation involving preferential payments, the actual position is likely to be precarious. As well as that, an EEC directive has been adopted and is due for implementation here by the Minister for Labour in 1983 about the position of employees in the event of insolvency of their employers, and further development of ideas about the position of preferential payment in respect of wages and salaries should be left until that stage. However, if the figure of £1,500 were to be settled on the basis of the CPI when the Bill was being prepared in 1980, it is now possible to go some way to meet the amount specified in Opposition amendment No. 7. The figure of £2,500 which I now propose in amendment No. 6 is generous because it represents an eight-fold increase on the figure in the Principal Act and because it exceeds the CPI increase since 1980.
I would point out to the Deputy, who did not refer to my amendment No. 6, that my amendment No. 11 has the effect of enabling further increases to be made by order, if the necessity should arise for it. There are two reasons why I do not think this is of great practical importance. The first, and most important, is that nobody will work for any substantial period if he does not get paid. It might happen in very unusual circumstances, perhaps at managerial level, but not lower down. Secondly, the whole thing will be superseded by the implementation of the directive from Europe on this point. That will not be implemented as part of company law but as part of employer-employee law.
We are discussing amendments Nos. 5, 6, 7, 8 and 11 together.
I appreciate the decision of the Minister to increase the £1,500 to £2,500 in amendment No. 6. That is a step in the right direction. I also appreciate the insertion of a new subsection through amendment No. 11, which indicates that he has authority by order to vary the amount. They are welcome amendments, but I am sceptical about the reference to the EEC directive. I do not know what has happened in recent years but there was a time when if we said we would implement a directive within a month or two we did so. At the moment nothing happens and the House has deteriorated into an appalling logjam in regard to implementing even the simplest legislative reforms. I hope the Minister for Labour, who will be responsible, will implement this directive without further delay because there is considerable criticism in relation to the non-implementation of a number of EEC directives on company law. During Second Stage the Minister told us we are in good company with other EEC states who also have not implemented many directives.
One of the reasons we have not implemented some of the directives is because we have decided to do it by legislation. I could make an order implementing them but they could not come before the House, and I wonder would the House consider that that should be done rather than have long delays.
We remember the lengthy debate the House engaged in about the establishment of the Joint Committee on the Secondary Legislation of the European Communities and the tremendous anxiety of Deputies on all sides that that committee would scrutinise European legislation. I get the impression that very few Deputies now pay the slightest attention to the scrutiny process or to detailed debate in the House on these matters. That could well be the subject of all-party discussion. Certainly we should not be sluggish in implementing directives. I accept the good faith of the Minister in bringing forward the amendment to increase the £1,500 to £2,500 and introducing a mechanism whereby by order he can vary the sum specified. That is a progressive decision and it is generally welcomed.
I am puzzled by what the Minister said in regard to delays in implementing directives because of a policy decision to incorporate this work in legislation. The Minister seemed to say that he could save a lot of time and short circuit the process by way of ministerial order. Surely a ministerial order which would become part of the law would require as careful drafting as would a piece of legislation. I do not see how it would make for greater speed.
I accept the order will have to be drafted just as carefully as a Bill but I would draw the attention of the House to the time this little Bill has taken. This is a tiny and minor document. The next Bill will be published in about a week and it will be an appallingly large document. I draw the attention of the House to how long this little Bill has been before us. I think this is the third Dáil before which this Bill was discussed Unhappily, Bills of this nature in regard to which there is not much political interest usually tend to be put at the bottom of the heap. This one has been around for a long time. I remember finalising the draft of it in the second last Government.
It was a shortage of parliamentary time rather than lack of political interest.
Before indicating what I intend to do with the amendment, can the Minister say if we are including superannuation payments? The amount of money proposed relates to wages, salaries and holiday pay. Does it include arrears of pension and superannuation payments? A refund of superannuation payments might amount to £1,200 or £1,300.
If the Deputy looks at section 285 he will see that these are set aside separately. The sum of £2,500 applied to wages simpliciter. Superannuation, redundancy, sick pay and so on are separate. They are preferential debts. They are accumulative on the £2,500, or additional to it.
It is solely arrears of wages and holiday pay.
No, just wages. Holiday pay is already there as a separate category of preference.
Amendment No. 5, by leave, withdrawn.
I move amendment No. 6:
In page 9, paragraph (b), line 18, to delete "£1,500", and substitute "2,500".
Amendment agreed to.
Amendments Nos. 7 and 8 not moved.
I move amendment No. 9:
In page 9, between lines 26 and 27, to insert the following:
"( ) in subsection (7) by the substitution for paragraph (a) of the following:—
`(a) (i) in respect of sums due under paragraphs (b) and (c) of subsection (2) be given priority and ranked over all other debts due under subsection (2) and be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportion;
(ii) in respect of sums due other than under paragraphs (b) and (c) of subsection (2), rank equally among themselves and be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions; and' ".
I am interested to know the Minister's reaction to this amendment. Deputy Taylor and I discussed the general approach but in the light of statements made by the Minister we would be interested in his reaction.
I do not think there is any point in accepting this amendment. I have no objection to doing so but I do not see any value in it. The reality is that no employee will work for four months for nothing. Generally speaking, if someone is not paid his wages at the end of the week he will walk out. That is accepted as quite normal.
The Minister as a country solicitor must remember cases where farm workers were unpaid for days on end.
That was before the joint labour committee for farm employees. There is a statutory right to payment. I remember suing farmers who were in the habit of not paying. They used to pay every October but nobody will work now without a weekly income.
Amendment, by leave, withdrawn.
Amendment No. 10 not moved.
I move amendment No. 11:
In page 9, between lines 29 and 30, to insert the following:
"(e) the insertion after subsection (12) of the following subsection—
`(13) The Minister may by order made under this subsection vary the sum of money specified in subsection (3) of this section.'.".
Amendment agreed to.
Section 10, as amended, agreed to.
SECTION 11.
Question proposed: "That section 11 stand part of the Bill."
There is a small drafting point on this section. The Minister will see that there is reference to a registered letter. It is stated in subsection (1): "if an answer is not received within one month from the date of that letter, a notice will be published in Irish Oifigiúil”. In subsection (2), which is part of the same mechanism, the date referred to is one month after sending the letter. It is a small point which might not arise in 999 out of 1,000 cases. A letter may easily carry a date but that may not be the date on which it is sent. As the Minister knows, sometimes a letter will hang around on a desk for a day or two before it is posted and before the date of registration will appear. It does not make much difference which formula the Minister uses but he should use the same one in both subsections.
There is no significance in the difference as far as I know. I will have a look at it to see if it would be appropriate to make them both the same.
Question put and agreed to.
SECTION 12.
Question proposed: "That section 12 stand part of the Bill."
Perhaps the Minister will be able to reassure me on this point. In subsection (6) there is an expression in the first line:
If a company or any member or creditor thereof feels aggrieved by the company having been struck off the register,...
Does that phrase occur in the parent legislation?
In what subsection?
Subsection (6). Is that a recognised expression in relation to a company?
It appears in section 311 (8) of the Principal Act.
Is the term of 20 years a realistic and reasonable one? It states:
If a company or any member or creditor thereof feels aggrieved by the company having been struck off the register, the court, on application made (on notice to the registrar) by the company or member or creditor before the expiration of 20 years from the publication in Irish Oifigiúil of the notice aforesaid,...
Is that not an enormous length of time to leave this open to challenge?
It is repeating the period that is mentioned in section 311.
Is it not a very long period?
It seems inordinately long.
What it really means is that the registrar does not know he is safe for 20 years. In 20 years two or three registrars may have moved through the office.
I do not want to react too quickly just now in case there is some catch in it. We could shorten it in the next Bill.
There may be some reason for it but it seems a long time. The last point is a typographical error. There should be a comma after "registered" in the third line of subsection (7).
Yes, there should be and I thank the Deputy. Can that be done without a formal amendment?
Yes. We can discuss it with the Clerk and the office.
I do not want to have to bring the Bill back to the House over a comma. Perhaps I should move an amendment.
Perhaps that would be the safer thing to do.
I move: amendment No. 11a:
In page 10, line 48, to insert a comma after the word "registered".
Amendment agreed to.
Section 12, as amended, agreed to.
SECTION 13.
I move amendment No. 12:
In page 11, lines 5 to 7, to delete subsection (2) and substitute the following:
"(2) The Minister may by an order made under this section declare that the provisions of section 376 of the Principal Act shall not apply to the formation of a partnership of a description, and which is formed for a purpose, specified in the order.
(3) Every order made under subsection (2) of this section shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the order is passed by either House within the next 21 days on which that House has sat after the order is laid before it, the order shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.
(4) The Minister may revoke or amend an order made under this section, including this subsection.
(5) The provisions of section 4(2) of the Limited Partnerships Act, 1907 shall not apply to a partnership specified in subsection (1) of this section nor to a partnership specified in an order made pursuant to subsection (2) of this section.".
After this Bill was circulated representations were received from members of the veterinary, actuarial and stockbroking professions to the effect that they felt that the provisions of the section which applied to the solicitors' and accountancy professions might be extended to them. I accept that the arguments in relation to accountants and solicitors apply with equal force to certain other professions. Accordingly this amendment is to enable the Minister to extend by order the reliefs from the restrictions imposed by section 376 of the Principal Act and section 4 of the Limited Partnerships Act, 1907. I thought it better not to specify the additional ones as things which are not a profession today have a habit of becoming a profession tomorrow.
Amendment agreed to.
Section 13, as amended, agreed to.
Sections 14 and 15 agreed to.
SECTION 16.
The Minister to move amendment No. 13. Amendment No. 14 is related and, by agreement, they are being discussed together.
I move amendment No. 13:
In page 11, line 35, after "227." to insert "234,".
The sections of the Principal Act listed in this section refer to failures by liquidators and receivers to comply with the provisions of the Act. It transpires that section 234 has been omitted from the list and the amendment is simply to put right that omission.
Amendment agreed to.
I move amendment No. 14:
In page 11, line 36, after "252," to insert "262,".
Amendment agreed to.
Section 16, as amended, agreed to.
Section 17 agreed to.
NEW SECTION.
By agreement amendments Nos. 15 and 16 may be discussed together.
I move amendment No. 15:
In page 11, before section 18, to insert the following section:
"18.—Section 19(2) of the Principal Act is hereby amended by the substitution for `a person named in the articles as a director or secretary of the company' of `a person named as director or secretary of the company in the statement delivered pursuant to section 3 of the Companies (Amendment) Act, 1982'.".
It was decided, notwithstanding a repeal of section 19 of the Principal Act envisaged in the next Companies Bill which we shall describe as the No. 2 Bill which is now just finalised, and notwithstanding the probability of its being introduced shortly after this Bill that it would only be right to amend section 19(2) to cover any transitional period between the two Bills. This amendment provides accordingly.
Amendment agreed to.
Sections 18 and 19 agreed to.
NEW SECTION.
I move amendment No. 16:
In page 11, before section 20, to insert the following section: "20.—The First Schedule to the Principal Act is hereby amended by— (a) the insertion in Regulation 113 in Part I of Table A before `The secretary' of `Subject to section 3 of the Companies (Amendment) Act, 1982,', (b) the insertion in Rialachan 113 in Cuid I of Tábla A after `a cheapadh' of `, faoi réir alt 3 d'Acht na gCuideachtaí (Leasú), 1982,', and (c) the insertion in Article 59 of Table C before `The secretary' of `Subject to section 3 of the Companies (Amendment) Act, 1982,'.”.
This amendment has been discussed already with amendment No. 15.
Amendment agreed to.
Section 20 agreed to.
NEW SECTION.
I move amendment No. 17:
In page 11, before section 21, to insert the following section:
21. —Sections 29 and 30 of the Industrial Research and Standards Act, 1961, are hereby repealed.".
This amendment should be read in conjunction with the related amendment; anyway the other amendment related to the Schedule. Section 21 of the Bill, as at present drafted, repeals portion of certain Acts which are mentioned in the Second Schedule. The Acts affected are the Industrial and Provident Societies Act, 1893, the Friendly Societies Act, 1896 and the Industrial Research and Standards Act, 1961. The portions of the 1893 and 1896 Acts which it was proposed to repeal refer to the Minister's power to appoint public auditors. These proposed repeals arose out of the provisions of section 6 of the Bill which laid down the qualifications for appointment as a public auditor. The Attorney General's Office have reconsidered the proposed repeals. That office feels that doubt might be cast on the validity of the appointment of public auditors were the repeals to be proceeded with and, accordingly, have advised that the repeals be deleted. This amendment provides accordingly.
Amendment agreed to.
It is appreciated that acceptance of this amendment involves the deletion of section 21 of, and the Second Schedule to, the Bill.
Section 21 deleted.
SECTION 22.
I move amendment No. 18:
In page 12, subsection (2), line 3, after "1977," to insert "shall be construed together as one Act and".
While the courts, in interpreting the provisions of this Bill, would be likely to construe the Bill and the Companies Acts, 1963 to 1977, as one this amendment is proposed in order to remove any doubt in the matter. Each of the minor Companies Acts which were passed since the foundation of the State — the 1924 Act and the 1959 Act — have had similar provisions. It is vitally important that the words and phrases of this Bill be deemed — unless the context otherwise requires — to have the same meaning as those in the Principal Act. The amendment so provides.
I must admit I had not focused on this until now. But would it not have been a good idea to have brought in the notion which the Minister has just explained at the very outset of the Bill, the section which is labelled "Interpretation" in the side note? Alternatively the side note to the section about which we are talking should be changed so as to include the word "construction". As the section stands it does not say so. When one is running one's eye down the index to the final Act and the index to the statues it will not tell one either that this section contains a construction rule and not merely a citation one.
That is a consequential matter arising out of this amendment. I think the position is that the Clerk has authority to amend the side notes himself——
I think so, yes.
——if I am not mistaken, under Standing Orders. I would suggest to the Clerk that the word "construction" should be inserted after the words "Short title" in the side note.
I do not wish to delay the House but, off the top of my head, I seem to remember that there are statutes in which the interpretations section, in a case like the one with which we are dealing — says that is the Principal Act and goes on to say "and that Act and this shall be construed together." I do not want to create difficulties but perhaps the Minister's advisers could examine that. It might be more in keeping with the usual practice.
That is where the Principal Act stands on its own but the Principal Act here is cited collectively with the 1977 Act.
I have no preference one way or the other. It is just that if there is a pattern in these matters, and if I am right in my recollection off the top of my head that the interpretation section tends, in some Acts, to include the rule of construction we are talking about, then it might be best to adhere to it. Perhaps the Minister could look at it.
Yes, I shall.
Amendment agreed to.
Section 22, as amended, agreed to.
FIRST SCHEDULE.
I move amendment No. 19: In page 12, at column (2), opposite Reference Number 3, to delete "23(1)" and substitute "23(2)".
In following the Schedule the last time the Bill was before the House I was struck by quite unrealistically exquisite differentiation which it imported into a range of offences, a differentiation reflected in the tariff of penalties. I am not sure, listening to discussions about this on various Bills, if we ought not in an age of inflation have a single statute bearing on penalties which will free us from the ludicrous situation that we are changing a £1 fine to a £5 fine, such as is now proposed. I am looking at the extreme case, where there is only a single offence of this kind under section 143(6) of the Principal Act. It might be well to have a kind of blanket Act which would apply to all statutes with a criminal dimension which impose monetary penalties and which would entitle the court to review those statutory penalties without specific enactment on their behalf.
I feel I am right in saying that the penalties attached to the offences incurred now, imposing a £5 fine and a £25 fine, will not be worth prosecuting. A few weeks ago, when the Litter Bill was before the House, I raised the point that we were really only erecting scarecrows by intensifying penalties for dropping litter when the existing law, which has been there for 20 years, is never enforced. I may have been wrong when I said that I thought no prosecution for dropping litter was ever taken anywhere in the country. As I was on my way out of the Chamber one of my colleagues sitting behind me who is a member of a local authority stopped me and said what I said was not literally true, that the prosecutions were not often brought because the cost of bringing a prosecution far outweighed the very trivial inconvenience to the offender represented by a fine of £5 or £10 or whatever it is.
The same may be true with regard to the offences in categories 7 and 8 of the First Schedule. While I do not want to hold the House up about it, I believe it would be worthwhile having the Attorney General's Office consider and advise the Government about whether we ought to have a unitary statute bearing on all Acts which purport to inflict monetary penalties, and which would empower courts, within the limits of some mechanism which the Act would prescribe, to vary the ceilings of the penalties to have regard to the progress of inflation.
In Victorian times, when the pound was worth as much at the end of the century as in the year 1837 and in which there were long periods when the value of money rose rather than fell, it was fair enough to impose a penalty of 40 shillings. It meant the same at the end of Victoria's reign as it did at the beginning. The same might be said about long periods of the present century in the years between the two wars when there was virtually no inflation and at some points in that period the value of money rose because the price of commodities fell. It was in that context, when the real value of the benefit had increased, that Ernest Blythe produced his famous reduction of the old age pension. That was done in a year in which the value of money had perceptively increased because the price of commodities fell. I still think it was a niggling thing to do, but he felt that he would be conferring the same real benefit on the old age pensioners by giving them nine shillings as they had got in the previous year by receiving ten shillings. It was a politically illjudged millstone he carved for his party but those were the circumstances in which he designed this and put it around our necks.
In stable periods like that there is no necessity to worry about the level of those fines, but here we have a situation that within 20 years fines have to be quintupled and I suspect ought to be more than quintupled in some instances. It might be worth using this absurd list of exquisitely calibrated penalties here to put under the nose of the Attorney General and invite him to consider if there is not some more rational way of doing the State's business in this kind of context.
Amendment agreed to.
First Schedule, as amended, agreed to.
SECOND SCHEDULE.
Acceptance of amendment No. 17 involves the deletion of this Schedule.
Second Schedule deleted.
Title agreed to.
Bill reported with amendments.
Report Stage?
Now.
I do not mind that, but there are one or two things which I would like the Minister to look at. If he would look at them between now and the time the Bill goes before the Seanad, I have no objection to the final Stages now.
Question "That the Bill do now pass" put and agreed to.