Dáil Éireann debate -
Thursday, 6 Jun 1991

Vol. 409 No. 5

Liability for Defective Products Bill, 1991: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Flanagan

Prior to Question Time I was dealing with specific matters in the Bill which give rise to concern. Now that the Minister of State has returned I would ask him when replying to Second Stage to reflect on these matters with particular reference to section 3 and the introduction into Irish law of an excess provision. This is unprecedented. It is a practice that insurance companies have been carrying out with some effect in recent times, particularly as regards premiums. One may pay a lower premium which appears at first sight to be attractive, but when a claim is made one finds the excess is on a sliding scale. It could be from £250 to £1,000. It is regrettable that we should see the introduction of such a practice into Irish law. It is even more regrettable and scandalous that it should be introduced in an area of consumer legislation, having regard to the comments I made earlier on the absence of a small claims tribunal or a consumer court. One can look to what directors of consumer affairs and fair trade commissioners have said about the irrelevance of the legal system, on which I spoke at some length earlier. People are simply not bringing claims to court because they have lost faith in the courts system. The people who have lost faith in the system are those who seek a remedy for a claim of a couple of hundred pounds.

The Minister will, I am sure, be aware that this Bill is geared towards the consumer. The defective products could be anything from a washing machine to a hoover or any consumer goods which generally have a life span of between five and ten years. These cases make up a significant number of the 20,000 complaints which the Director of Consumer Affairs and Fair Trade deals with on an annual basis. It is sad that these people are not covered by the legislation. Is it a coincidence that the price of such goods as hoovers, washing machines and portable televisions is under £350? While this reforming legislation is a welcome change for the consumers, large numbers of consumers are totally neglected by the legislation, and that is sad. I would ask the Minister to expand in some detail on why this is the case. Will he say the reason is to minimise the number of claims or to obviate some deluge of spurious and frivolous claims? There are procedures in existence that could adequately deal with those problems without introducing this excess provision.

I note that the excess is even more stark with the introduction of a power under section 3 (3) which enables the Minister for Industry and Commerce to amend or revoke an order made under this section — in other words, it will be entirely within the power and jurisdiction of the Minister for Industry and Commerce to increase the scale as he or she from time to time may wish. At a time when we should be making the law more accessible to consumers, when we should be broadening the whole area of consumer rights, quality guarantees and value for money, it is regrettable that our law should reflect this excess or absence of provision for small claims, particularly when there is no tribunal in existence to deal with these matters.

Section 7 deserves some consideration. Subsection (1) of that section states that an action for the recovery of damages shall not be brought after the expiration of three years from the date on which the cause of action accrued or the date on which the plantiff became aware, or should reasonably have become aware, of the damage, the defect and the identity of the producer. I congratulate the Minister on that addendum to the standard limitation of actions. It is very important that not only should the three year rule exist but that the limitation should be extended to the date upon which the plantiff became aware, or should reasonably have become aware, of the defect in the product. That is in line with other legislation that is going through the House at present, the Statute of Limitations (Amendment) Bill. I certainly welcome section 7 (1) of this Bill.

Deputy Bernard Durkan mentioned specifically in the course of his address the question of house building and house building materials. That is a matter that will have to be addressed in the House by way of legislation. The national house-builders' guarantee scheme merely grants to the holder of a certificate a six year guarantee but a difficulty arises where the defect does not come to light within that period. That gives rise to significant hardship throughout the country. It is not a matter that can be immediately addressed in this legislation but I hope the Minister will address it by way of regulation or alternatively incorporate it in the Statute of Limitations (Amendment) Bill that is going through the House. If a person is selling a house, perhaps 15 or 20 years after buying it, it may be only when it is being surveyed that a latent defect such as a burst pipe under the concrete is brought to the notice of that person. This immediately represents a serious impediment on the sale and can give rise to considerable hardship. Unfortunately, in such a case there is no remedy in law. I congratulate the Minister on section 7 (1) and hope that provision is incorporated in future legislation.

While I welcome the Bill it is regrettable that the Minister has not seen fit to make a statement on the concept of a small claims court. We are not requesting a tribunal which would pay compensation but which would right the wrong that has been done. There is provision in this legislation for a minimum claim of £350. If we take the example of a defective matter such as a dead insect in a piece of apple pie, which is quite a common claim, or a foreign body in a tin of beans — again something that is a feature of many claims — the level of compensation awarded by the courts in such cases is less than £350. It is a pity this legislation, if enacted in its present form, will not provide for such defects. As a result the old negligence principles will still have to be applied, giving rise to delays, archaic practices and, perhaps more importantly, expense. This will mean that consumers will not claim because they will not regard themselves as having an effective remedy and ultimately the company producing the defective goods or product will not be brought to answer. Hence the standards of that company may not be as high or as quality orientated as they might otherwise be.

On Committee Stage I hope the Minister will consider several amendments in the interests of the consumer and, perhaps more important, provide the House and the general public with a long-awaited commitment towards the setting up of a forum, a court, a tribunal or whatever one might wish to call it, the hallmarks of which would be efficiency, lack of expense and informality. The chairman of the body could be any respected member of the community, and hearings could be held regionally where, for a fee of less than £5, a member of the public could have his or her grievance adjudicated on, not with a view towards granting compensation but with a view towards granting an amount equivalent to what the person lost on a defective item such as a hoover or a washing machine. The Minister must accept it is high time that such a structure be set up for the benefit of the consumer. When one considers that the Liability for Defective Products Bill comes from the European Community, we see Ireland as being almost a Cinderella state in so far as a small claims forum is concerned. There is little point in updating our consumer legislation with this type of window dressing unless we are prepared to bring forward the entire package. I do not have any objections in principle to the Bill, which is welcome and perhaps overdue.

Minister of State at the Department of Industry and Commerce (Mr. Leyden)

I express my appreciation to Deputies on all sides of the House for their constructive contributions to the Second Stage debate.

I shall try to deal with most, if not all, the queries raised. There will be an opportunity to deal with the various matters in detail on Committee Stage so I shall not give a Committee Stage type reply now.

Members are generally in favour of the main thrust of the Bill. Deputies Hogan, Taylor, McCartan, Flanagan and others mentioned the length of time that was taken to introduce this very important Bill. The Bill represents such a fundamental change in existing law that it was essential for the Government to get it absolutely right. The reasons for that were explained in reply to questions in June 1990 and April 1991. Other consumer directives have been implemented in the meantime by the Minister, including measures to deal with misleading advertising, doorstep selling and food labelling. Of the twelve member states, nine have introduced legislation, two — Spain and France — have not yet introduced legislation and we in Ireland have now brought forward this legislation. It was vital that full consultation was carried out with all interested parties because the Bill is of great significance. The so-called delay in introducing the provision to Irish law was caused by a number of unavoidable factors. The main reasons were a lengthy consultation process with a wide range of interested parties; the drafting of the legislation, which required much detailed and painstaking research, taking longer than expected; and the heavy workload of both the Department and the office of the Attorney General.

Deputies Flanagan and Hogan raised the issue of small claims. The commitment in the Programme for Economic and Social Progress to examine the existing procedures to deal with claims involving small amounts of money is being followed by my colleague, the Minister for Justice. Many issues need to be considered, including the issue of whether changes can be made in the existing legal procedures, including the court system, so as to make it easier for consumers to obtain redress in cases for which they are prevented from so doing because of the potential cost involved. The points made by Deputies Flanagan and Hogan and others on this issue will be taken into consideration by the Minister and by the Department of Justice.

In reply to comments made by Deputy Hogan, I advise that a sister directive to the present directive is under discussion in Brussels. That will provide for liability of providers of services. That is something that will be of great interest to consumers. Consumers would have many concerns and much dissatisfaction in relation to services and would like to have some form of redress.

The question of the exclusion of primary agricultural products was raised by Deputies Hogan, Barry, McCartan and Durkan. In my earlier speech I explained that primary agricultural producers were excluded as such produce could be difficult to monitor because of environment hazards outside of the control of the producer. I also explained that virtually all of the other member states had excluded such produce from the scope of their implementing legislation. For most of the time that the directive was under negotiation in Brussels, between 1975 and 1985, the main Opposition parties were in Government. When in power they were completely against the idea of the inclusion of primary agricultural products. That would not be a good reason for my Government to go along with that policy but we decided, in the interests of our farming community, who are under immense pressure at all times, and in the interests of a level playing pitch, that it would be unfair to include the Irish farmer in relation to primary agricultural products. I must point out, however, that for the processing of primary agricultural products the processor is liable.

The points made by Deputy Barry about the high standards attained by Ireland in the production of agricultural products are quite reasonable. Irish agricultural products are renowned throughout the world. The inclusion of agricultural products in the Bill would be a good, strong marketing point. Nevertheless, the liability of the processors of the product would cover occasions when any tampering with the primary product might occur. The companies involved in processing would have to take into account the liability of the producer. In the circumstances, I feel that it was a wise decision to exclude primary producers of agricultural products, including fish and poultry. I stand by that decision.

Deputy Hogan spoke about consultation with interested parties. In 1987, a detailed discussion document on the directive was sent to all interested parties, including the industry, farmers, the trade union movement and consumers. Seminars on the directive were held in all regions to acquaint people with the situation and to take their views into account when the legislation was drafted. My Department, together with the National Standards Authority of Ireland and the Confederation of Irish Industry, were involved in the seminars.

Deputies raised the subject of higher insurance costs. Experience in the United Kingdom, where the directive has had the force of law since 1987, has shown no discernible increase in insurance cover costs. It is likely that the same position will pertain here. Indeed, the point made by Deputy Cullimore explained the position very well. The directive will provide a powerful incentive to producers and manufacturers to provide better quality products. If that happens there can be no reason for an increase in insurance premiums.

As I explained in my speech, in the definition of defective products the Bill follows very closely the wording of the directive and its provisions. Because of the nature of the directive that course was necessary. In defining when a product is considered defective we have used the wording of the directive. That is the proper course of action, and it is to be recommended.

The points made by Deputy Taylor in relation to the difficulties experienced by haemophiliacs vis-á-vis the AIDS epidemic do not apply to this Bill. However, as the Deputy raised the matter in all sincerity, I shall comment on it. Even if this law had been enacted before now, the state of the art defence would still have been available to the importers or producers of the blood product in question. This matter is being considered at the moment. Indeed, when I was in the Department of Health I chaired a group preparing a report on the subject. Though I have great sympathy with the position in which haemophiliacs find themselves in this regard, quite frankly, I think that the Bill would not apply to haemophiliacs who contract the AIDS virus by way of blood transfusion. I will bear in mind the points made by Deputy Taylor but I presume he will have an opportunity to put them to my colleague the Minister for Health on another day. We are all aware this issue is causing great concern.

In relation to the involvement of the Director of Consumer Affairs and Fair Trade mentioned by my colleague, Deputy Roche, this Bill will be part of our civil law and it will essentially be a matter for the parties involved to resolve any problems arising in relation to a defective product. The director has a function as set down in the 1978 Consumer Information Act to publicise consumer protection legislation and he performs this function in various ways, such as the publication of leaflets and advising consumers of their rights. He will perform a similar function in relation to the measures in the Bill. Deputy Roche asked if a consumer can take a case here in respect of a product imported into the country. This Bill will be part of Irish law and a case can be initiated under it in an Irish court. I would point to the European Judgments Convention given effect to in law here in 1988. This provides for the enforcement in one country of the Community of a judgment issued by a court in another Community country.

Deputy McCartan mentioned difficulties in relation to the Council of Europe Convention and wondered why this had taken so long. While the Council of Europe Convention was adopted in 1976, discussion had already commenced on a draft EC Directive on the subject, and it was decided to await the outcome of these discussions before introducing changes in law here. This was a sensible decision as the likelihood was that, having given effect to the Council of Europe Convention, we would soon have had to change our law again to give effect to the directive.

Deputy McCartan also mentioned the reports of the joint committee. The first two reports were produced while the draft directive was still under discussion, well before the shape of the measure which finally emerged was known. The third report of the joint committee on the directive was one of the many documents and submissions considered by the Government in the preparation of this measure. Deputy McCartan described in detail the opposition to this measure as expressed to the committee by various representative bodies. The position now is that bodies representing trade and manufacturing interests are pressing strongly for the introduction of this measure as they are anxious to have clarified before 1992 the legal situation which will apply to all member states.

We had no option but to include the limit of £350. The directive imposes such a limit and member states have no choice but to include it. The lower limit included in the directive — 500 ECUs — has not been revised to date. As the Deputy pointed out, there is provision in Article 18 of the directive for revision of the amounts mentioned in the directive but this has not been used yet.

Section 12 was included for reasons of consistency in relation to the Courts Act, 1988. It seeks to ensure that the situation that applies to other proceedings will apply to proceedings taken under this Bill.

In relation to the ten year limit, section 7 (2) (a) relates to the defective product and in particular to the life expectancy of the product. The right of action in respect of any product expires ten years after that product has been placed on the market. Obviously, some products will have a much shorter safe working life while others would be expected to last much longer. During discussions on the directive, the ten year period was generally considered to be a good average standard safe working life. The principle of discoverability of damage is provided for in section 7 (1).

The rationale behind the principle of awareness of damage stems from the fact that many personal injuries or property damage caused by defective products are not immediately obvious, that is slow acting toxic substances inadvertently incorporated into some component of the product, whose effects may not be felt for some time after contact with the defective product. In the same way a defective product may cause damage to property over a period of time, possibly vibrations from an item of machinery might gradually weaken part of the structure of a building. Also, the connection between the personal injury or property damage and the defect may not be immediately apparent. If the three year time limit for recovery of damages set out in subsection 1 of this section were to run from the date on which the injury or damage was sustained rather than on the date on which the injury or damage was discovered, the right of action could have expired before the injured party became aware of any problem.

In addition, the question of awareness of injury provides the basis of the proposed amendment to the Statute of Limitations, 1957, which is currently before the Seanad. These measures, which incorporate the time limit and principles which I have already described, are being taken in response to the recommendations of the Law Reform Commission as set out in their Report on the Statute of Limitations: Claims in respect of Latent Personal Injuries.

I should like to quote the following in reply to the point about member states:

(b) Development Risks Defence: Included by the UK, Denmark, Netherlands, Belgium, Greece, Italy, Portugal and Germany (except for pharmaceuticals). Excluded by Luxembourg.

In relation to the wording of defences allowed, that is dealt with in section 6 (d). Deputy McCartan queried the position of the consumer damaged by what he called the inept application by the producer of the provisions of a European enactment. The question to be decided in such a case is whether the producer was or was not in compliance with the enactment in question. If he was complying with a legal requirement, he would not be liable under this new regime, but if his product did not so comply, the producer would not have this defence available to him.

A quality mark for Irish products was mentioned by Deputy Durkan. This concept is already recognised as is evidenced by the "Q" symbol and the "Guaranteed Irish" symbol which appears on many products. It is also the underlying concept behind the attainment by Irish manufacturers of the standard of quality necessary for the awarding of the ISO 9000 certificates. As I have indicated, an increasing number of Irish manufacturers are reaching the required level of excellence in production methods. I would encourage all manufacturing companies to seek to obtain the ISO 9000. We hope to have 400 by the end of 1991. There are over 2,500 manufacturing companies in the export field. They should aspire to achieving that excellence.

Deputy Flanagan referred to the £350 excess in section 3 (1) and I covered that earlier in replying to Deputy McCartan. It relates to damage to property but not to personal injury caused by the defective product.

From reading the Bill, Deputies will appreciate why it took some time to prepare it. It is very important legislation and is of great benefit to consumers and, ultimately, to our exporters. We must maintain the quality of our products internationally. I commend this Bill to the House.

Question put and agreed to.

An Leas-Cheann Comhairle

Could I have an indication as to when it is proposed to take Committee Stage?

Mr. Leyden

It is proposed to take Committee Stage on Tuesday, 18 June 1991, subject to agreement between the Whips.

Committee Stage ordered for Tuesday, 18 June 1991.