I move: "That the Bill be now read a Second Time."
In August 1984 the Government announced as one of a number of measures aimed at reducing public expenditure the termination of the Malicious Injuries Scheme contained in the Malicious Injuries Act, 1981. The purpose of this Bill is to give effect to that decision by replacing the existing scheme with a new scheme under which compensation for malicious damage will be available in a limited number of circumstances only.
The Government have been concerned at the continuing rise in the cost of meeting claims for malicious damage and the consequential effect on the level of current public expenditure. In 1979 the total cost of malicious damage claims, including that portion of claims borne by local authorities, was £3.5 million. The cost of claims relating to 1985 was just under £20 million. Practically all claims relate to damage against which the claimant can be insured.
The Bill replaces the existing scheme of compensation for malicious damages with a new scheme which is designed to give protection in the limited number of cases, to which I will come in a moment, where insurance cover is normally excluded. Not to provide for compensation in these cases would mean that financial protection against loss occasioned by the type of damage in question would not be available. The Bill also provides for full recoupment by the Exchequer of compensation awards made against local authorities under the new scheme, including local authorities' own legal costs in connection with such awards. I will return to this aspect of the Bill later.
Section 2 of the Bill sets out the grounds on which compensation for malicious damage may be claimed under the new scheme. The section, which amends section 5 of the 1981 Act by substituting two new subsections for subsections (1) and (2) of the 1981 provision, will apply to claims in respect of damage caused after the passing of this legislation, leaving the existing law to apply in relation to damage caused up to that date. Under the new arrangements, damage to property will be compensatable in three circumstances: first, where the damage is caused during a riot; second, where it results from an act committed maliciously by an unlawful organisation as defined in the Offences Against the State Act, 1939, and, third, where it results from an act committed maliciously by an organisation from outside the State which is engaged in violence for purposes related to the conduct or administration of the affairs of the State or of Northern Ireland.
I am aware that concern has been expressed by some interested groups that, as a result of this legislation, insurance companies may refuse to give cover for malicious damage in some individual cases. Where difficulties arise, it is very likely that similar difficulties already exist in relation to other insurable risks, such as theft, so that the termination of the existing malicious injuries scheme should not alter the situation to any great extent. If a problem does arise in an individual case in obtaining cover for malicious damage then, as is the case where difficulties in obtaining cover in relation to other risks are referred to it, the Department of Industry and Commerce will be prepared to examine the matter to see what can be done. Of course, in the final analysis, no insurer can be compelled to underwrite a particular risk or underwrite it on particular terms, but advice may be available from the insurer which would enable the policyholder to improve the risk so as to enable it to be covered.
To return to the Bill, I should perhaps explain that riot is, of course, used in section 2 in its technical legal sense. It is in this sense also that it is used in exclusion clauses in insurance policies. To constitute a riot there must be at least three persons involved; they must have a common purpose; there must be an intent to help one another, by force if necessary against any person who may oppose them in the execution of their common purpose; and there must be force or violence not merely used in chieving their purpose, but displayed in such a manner as to alarm at least one person of reasonable firmness and courage. All of these elements must be present before the resulting damage can be compensated for. For example, if three people enter premises in the middle of the night, damage or set fire to them and run away, that alone would not constitute a riot.
Deputies will notice that the riot provision in the new section 5 (1) refers to damage caused unlawfully by "one or more of a number (exceeding two) of persons riotously assembled together" rather than damage caused unlawfully "by three or more persons...riotously ...assembled together" which is the formulation used in the 1981 Act. The drafting of the subsection in this way is simply to remove any doubt there might be as to whether damage caused by one or two persons in the course of a riot is compensatable.
The new subsection (1) also provides for damage caused by unlawful organisations as defined in the Offences Against the State Act, 1939, and by certain other organisations from outside the State. Damage caused by such organisations has always been covered, of course, by the general compensation provisions which have existed up to now. The need for a specific provision arises because of the termination of those general provisions. In order that damage caused by an organisation from outside the State will be compensatable the organisation must be such as uses or advocates violence in relation to the affairs of the State or Northern Ireland. To leave it at that, however, could give rise to the situation where the State could be put in the position of having to pay compensation for damage caused in the State in circumstances over which it had no control.
A common example of international terrorism, of which we are all, unfortunately, too well aware, is the hi-jacking of ships or aircraft, often for the purpose of trying to force a country to release persons lawfully detained in its prisons. In the absence of any qualification in the section, the possibility would exist of compensation claims being made against the State in respect of ships or aircraft which, having been hi-jacked outside the State, are blown up or damaged here. To prevent claims of this nature being made, the section contains, at paragraph (b) of subsection (1), a proviso the effect of which would be to ensure that no compensation would be payable where damage was caused to a ship or aircraft in the State as a result of an act—for example, the placing thereon of an explosive device—done outside the State or as a result of an act done in the State by a person or persons who travelled into the State on the ship or aircraft in question.
Section 3 provides for the issue of a certificate by a Chief Superintendent that he is of opinion that a specified act was committed maliciously by a person acting on behalf of one of the organisations mentioned in section 2. An injured party would not normally be able to prove in court that the damage he suffered was caused by a person acting on behalf of or in connection with such an organisation and, accordingly, so that the provisions in such cases may have effect, the Bill provides a role for the Garda Síochána. The Chief Superintendent's certificate would be issued to the person who proposes to make an application for compensation and it would constitute evidence that the act referred to in the certificate was committed maliciously by a person acting on behalf of or, in connection with one of the organisations in question. Of course, the refusal of a certificate would not prevent a claimant bringing forward other evidence to support his case.
In the normal course of events where such a certificate is given by the Chief Superintendent it will decide the central issue in the case and the main issue remaining will be the quantum of damages. It is unlikely, in view of the fact that a local authority by virtue of section 16 of the 1981 Act may settle claims brought against it, that any case in which a certificate is given will actually end up in court. As the information on which a certificate will be based may involve matters of national security, subsection (2) of the section provides that a Chief Superintendent will not be required to disclose that information, or its source, in any proceedings.
Section 6 of the 1981 Act introduced for the first time in our law provision for compensation for property taken from a building damaged during a riot and tumult. This provision is being continued in section 4 of the Bill but subject to drafting amendments so as to bring the section into line with the wording of section 2 of the Bill and two other amendments intended to remedy anomalies which came to light during the redrafting of the provision. It is to these later amendments that I now turn.
The 1981 provision, which is designed to cover compensation for property looted from a damaged building, is confined to cases where the damage to the building exceeds £100. This leads to the situation where payment of compensation could depend on whether, for example, the window broken to get at the property costs more or less than £100 to have repaired. The redrafted provision relates the "cut-off" point to the value of the property taken rather than to the value of the damage caused and this, I am sure Deputies will agree, is clearly the correct approach. The 1981 provision is also anomalous in that, while it would seem logical to make compensation conditional on whether the damage caused to the building or property within its curtilage facilitated the taking of the property, it is difficult to see why other damage, for example to a chimney stack or to an ornamental statue in a front garden, should enable compensation to be paid for property stolen from the building. Section 4 of the Bill amends the 1981 provision by providing that, in order for a claim for compensation for property taken to succeed, the damage caused to the building or property within its curtilage must facilitate the taking of the property or entry to the building for the purpose of such taking.
Before I leave this section I should like to emphasise the fact that in the case of compensation for property taken during a riot the provision requires the further ingredient of "tumult", that is, the persons must be "tumultuously" as well as "riotously" assembled together — in other words, a riot in the popular sense where looting normally occurs. This added element of tumult is not required for compensation for damage to property caused during a riot as it is damage caused by riot simpliciter that tends to be specified in insurance policies as being excluded for insurance cover.
Section 7 of the 1981 Act provides that it shall not be a defence to an application for compensation merely to show that the damage to which the application relates was caused by a person of unsound mind or by a child.
While, as I have already said, damage caused maliciously to property by such organisations as are mentioned in section 2 of the Bill was compensatable under the general provisions of the 1981 Act, the specific provisions in relation to that type of damage in this legislation has highlighted the fact that the damage may be caused by a person acting under duress. In such a case it could be argued that an act, while done intentionally, was not done maliciously. It is in order to meet this argument that section 5 of the Bill exends the provision in section 7 of the 1981 Act so as to ensure that damage caused by a person acting under duress will not be uncompensatable merely on that account.
As I mentioned at the beginning of my speech, the Bill provides for full recoupment by the Exchequer of the cost of compensation awards made against local authorities under the amended scheme including legal costs. The decision of the Government will, I have no doubt, be welcome news to all local authorities. Section 6 contains the substantive provision. Sections 7 and 8 are consequential amendments.
It might be argued that, since local authorities will no longer be liable for any portion of compensation awards made against them — they are liable at the moment to the extent of the produce of a rate of 20p in the pound in any local financial year — the whole burden of administering the scheme should be transferred to a central authority. This matter was debated at some length during the passage of the 1981 Act through the Oireachtas and valid arguments were presented both for and against local authority involvement. These arguments crossed party lines.
The Government favour the continued involvement of local authorities for very much the same reasons as were advanced in favour of such involvement during the debates on the 1981 Act. The involvement of local authorities means that the services of their professional and other staff can be used at minimal cost in processing malicious injuries claims and the contesting of claims in appropriate cases at court hearings. In fact, I envisage very few hearings arising under the amended scheme and any cases that do come to court will generally be confined, for the reasons I have already mentioned, to claims connected with riot damage. Overall the workload of local authorities in this area will be greatly reduced when the new scheme takes effect. On the other hand, to transfer the responsibility to the State would necessitate the setting up of a new and expensive organisation with legal and other specialist staff, which would greatly increase the cost of the scheme, while the removal of responsibility from local authorities in respect of the very restricted scheme now proposed would hardly effect significant savings to them.
Apart from the burden imposed on them by payment of compensation, local authorities have also been concerned at the burden imposed by payment of their own legal costs as a result of defending successful claims. No part of these legal costs is recoupable at present. The Bill gives total relief to local authorities as regards both compensation and these costs.
There is one further matter in the Bill to which I want to refer. I have already mentioned that the 1981 Act, as it stands at present, will apply to cases of damage occurring before the passing of this Bill. For this reason, the full extent of the savings to the Exchequer resulting from the enactment of this legislation will not become apparent for a year or two. The expected savings, when all claims made under the 1981 provisions have been dealt with, are estimated at over £20 million annually.
Before I conclude, I think it is important to point out that the amendments to the malicious injuries scheme proposed in this Bill will bring our law in this area more into line with equivalent legislation in England and Northern Ireland, where compensation for malicious damage is not available on the comprehensive level which obtains under our existing law. It seems to the Government that there are no special circumstances in our case which would warrant the continuance of a malicious injuries code which was more or less dismantled in Northern Ireland 30 years ago and which never existed to the same degree in England.
I commend the Bill to the House and ask that it be given a Second Reading.