We resume on Item No. 9. Deputy McCartan reported Progress. Perhaps Deputy Taylor would like to resume on his amendment No. 3.
Liability for Defective Products Bill, 1991: Committee Stage (Resumed).
SECTION 1.
Debate resumed on amendment No. 3:
In page 2, subsection (1), line 27, after "consumption" to insert "or for a business occupation or profession".
—(Deputy Taylor.)
I wanted to make a few final comments on this amendment arising out of the Minister's reply. The Minister said that if he wanted to make any variation in the Bill he would have to revert to Brussels. Quite frankly that puzzles me. Certainly, if the Minister was proposing to do anything that would breach the minimal requirements of the Directive he might have to do that. What I am asking him to do in my amendment is to do everything we were asked to do by Brussels, and a bit more, to protect a certain category of consumers. I cannot see, if the House did that, that it would create any problem for the Minister in Brussels — far from it — I predict they would give him a pat on the shoulder and say that what he was doing was recognising the importance of the new principle being introduced by this Directive and in the provisions of the Bill.
The Minister said that acceptance of my amendment would counter the philosophy behind the Directive. With respect I want to take issue with him on that statement. I contend the reverse would be correct. What is the philosophy behind this Bill? The philosophy behind the Bill is that a new very important, worthwhile principle be written into our law, that of strict liability. What I seek to do is make that of more universal application than of the limited application given it by the provisions of the Bill, as at present drafted. It would be a logical extension of the position to say that people who are hurt, damaged or injured by a defective product should be entitled to recover the cost of such damage or injury whether they were using that product for private purposes or for the purpose of their business.
The Minister takes a very strong position in declining that request. I have to say I find that just a little puzzling when one thinks of it in this way; who would be adversely affected by extending the application of the provisions of the Bill to a small businessman who received injuries using the product in the course of his business? This provision is not something that would cost the Government one penny. This is not something that would cost the taxpayer one penny. There are, or would be if my amendment were accepted, winners and losers, that is true; the taxpayer would not be one of them; the taxpayer is not involved in this transaction except in so far as an individual taxpayer may also be a consumer. Therefore, who would be the winner and who would be the loser? The loser would be the unfortunate consumer who would not be able to make a claim under the provisions of this Bill because he had been using the product in the course of his business. The winner would be the producer or manufacturer who would, thereby, be able to pat himself on the back and say: I have got away with something here; I have sent out into the market a defective product; it has caused damage and injury but I am all right, I escaped. We must ask ourselves why. The answer is because it happened, through his good luck, that the item had been used in the course of a small business rather than for private use.
In effect what the Minister is doing here is protecting the producer, the large manufacturers, at whose expense? The answer is: at the expense of the consumer because the businessman who uses the product is a consumer just as is a private individual or consumer. The Minister is going out of his way to protect the large manufacturers, most of whom are multi-nationals, large pharmaceutical and engineering companies, enormous conglomerate, billion pound companies, internationally-based for the most part — at the expense of an Irish consumer. That is what it amounts to; that is the nub of the issue. The Minister's position is an anti-consumer one. He is taking a whole slice of consumers of products and refusing them the protection of the principle being established under the provisions of this Bill. He is doing all that to the benefit of the large manufacturers and producers, protecting them, notwithstanding the fact that they would be taken to account here for defective products; an essential prerequisite to any claim under the Bill being that the product be defective.
Why should the Minister and Government go out of their way to protect these large multi-national producers at the expense of an Irish consumer? I do not see the logic in that. By accepting my amendment, if I may say so, it would be logical, would make sense and would eliminate the strange anomaly obtaining, whereby when the producer sends out his defective piece of equipment, product or whatever — depending on the fortuitous chance of whether it be a private user who sustains the injury or a person in business who sustains the injury — will be the determinant as to whether he pays up. There is no sense or logic in that. Why protect the large manufacturer or producer? Why not protect the consumer? I reiterate: there is no cost involved for the taxpayer. This proposal is logical and would make good sense.
Deputy Taylor is exaggerating the importance of his own amendment. We have 5,000 manufacturers in Ireland, the majority of whom have small businesses employing fewer than 50 people. They are not multi-nationals. Deputy Taylor is overstating his point in an attempt to strengthen his argument. I am very much in favour of consumer rights, as the representative of the constituency of Roscommon-East Galway or possibly Roscommon-Longford. I make no apology for being in favour of the consumer.
Can I take a note of that?
I will be working very closely in relation to EC legislation. We will be in the forefront of the EC in relation to legislation in the area of consumer affairs.
I emphasise that I am not deviating from the Directive because I have no discretion to vary it. I made this clear at the commencement of Committee Stage. I did, however, undertake to consider amendment No. 1 before Report Stage. I am endeavouring to bring the EC Directive into Irish law on the basis negotiated by a previous Government of which Deputy Taylor's party were part. He would have had an opportunity to discuss EC directives at parliamentary party meetings. Perhaps he should have put forward amendments during the negotiations on the Directive rather than after agreement had been reached. The principle in the Directive is to switch the onus of proof in favour of the consumer. The EC define a small business as one having up to 500 employees; in Ireland many small businesses employ up to 50 people. I am not endeavouring to protect the multi-nationals. They are very capable of protecting their own position.
We have no leeway to change the wording of an EC Directive. Deputy Taylor's attitude is that we could extend the scope of the Bill beyond the Directive. That is not my intention. There will be other consumer legislation before the House where that might be more appropriate. I am endeavouring to ensure that this Bill is in keeping with the spirit and wording of the Directive. That is my responsibility and I will carry it out conscientiously. I reject Deputy Taylor's amendment.
Amendment put and declared lost.
I move amendment No. 4:
In page 2, subsection (1), between lines 27 and 28, to insert the following:
"(c) consequential loss or damage sustained by the injured person or such loss to be assessed in like manner as losses are calculated by law in cases of tort;".
This amendment is consequential on or connected with amendment No. 1. The Minister indicated this morning that he was sympathetic to amendment No. 1 and that he would consult the Attorney General's Office with a view to coming back on Report Stage. Amendment No. 4 is a possible alternative to amendment No. 1. Perhaps they should have been taken together. The best course is probably to withdraw this amendment pending the Minister's decision on amendment No. 1.
Amendment, by leave, withdrawn.
I move amendment No. 5.
In page 2, subsection (1), line 29, after "nature", to insert ", including any use of artificial additives, insecticides or fertilizers in the growth process,".
We are seeking an explanation from the Minister as to why the interpretation section "initial processing" is restricted to meaning the industrial process. Why is the agricultural process, for example, entirely excluded? If the Bill imposes liability on a producer for damage caused wholly or partly by a defect in a product, irrespective of whether the producer is negligent, why should that apply only to the industrial process? To restrict the definition of "initial processing" in so far as it relates to primary agricultural products to any processing of an industrial nature is insufficiently wide in its scope.
One can envisage a number of threats imposed by the use of artificial additives, insecticides and fertilisers in the agricultural context. Since, in certain circumstances, these pose a direct threat to the food chain, why should the consumer not have the same benefit as if that product was subjected to some limited industrial processing, for example, vegetables directly sold to the consumer that have the same effect as is envisaged elsewhere in the Bill, provided this element of industrial processing was present? However, without the industrial processing, it may have that same impact for the consumer, why then should the burden of proof not be shifted in that situation for the consumer as it is elsewhere in the Bill? I would like to hear from the Minister why there is this restrictive definition of initial processing.
It is appreciated that Deputy McCartan's amendment, moved by Deputy Rabbitte, would like to ensure that primary agricultural products are marketed in as pure a state as possible. His suggested amendment, however, goes beyond what is allowed in the Directive which, in Article 2, simply excludes such products which have undergone initial processing.
In an attempt to clarify what constitutes "initial processing" we have included a definition —"any processing of an industrial nature of those products which could cause a defect therein,". It must be accepted, however, that it will ultimately be a matter for a court to decide whether liability applies in any particular case. The activities mentioned by Deputy Rabbitte are unlikely to constitute initial processing of an industrial nature. The phrase "initial processing" used in the Bill related to primary agricultural products only. The phrase is not defined in the Directive but the Bill's definition is based on the intention conveyed in the recitals to the Directive. What constitues "initial processing" in any particular case in not always easy to define and in many cases may be a matter for the courts to interpret.
In section 1 "injured person" means a person who has suffered damage caused wholly or partly by a defect in a product or, if he has died, his personal representative (within the meaning of section 3 of the Succession Act, 1965) ... is defined as the executor or the administrator for the time being of a deceased person. An injured person may also be dependent within the meaning of section 47 (1) of the Civil Liability Act, 1961, i.e. in relation to a person whose death was caused by a wrongful act, it means any member of the family of the deceased who suffers injury or mental distress.
The motivation of Deputies McCartan and Rabbitte is understandable particularly when products like angel dust are used as growth promoters in cattle. Nevertheless, the Government have taken this line in the Directive. We have a discretion. Luxembourg is the only country in the Twelve that has included primary products and I am quite confident that Deputy Hogan will ensure that this amendment is not included. The Deputies would not have any farming constituents but I can assure them——
Deputy Taylor and I have a number of farming constituents.
They must not be voting for the Deputy. As an agricultural producer it is very important that we would not bring in a Directive which would be detrimental to our major industry. That is the reason we have not included primary processing. Though I sympathise with Deputy Rabbitte's concern, it must be remembered that there is adequate legislation in relation to substitutes and other areas where there is a danger to public health. Particularly there is legislation being introduced by the Minister for Agriculture and Food in regard to the use of angel dust and other products which would have an effect on the food chain. In the circumstances I cannot accept the amendment.
The Minister of State has actually tried to interpret what I might say. I am particularly grateful to Deputies McCartan and Rabbitte for raising this important issue because the fact that chemical substances and various ingredients are to be found in food products is very disturbing from the point of view of the consumer. We have to ensure through legislation that we have no truck whatsoever with producers or means of processing that will damage our food industry in any way or damage the export potential of our major industry.
Farmers are responsible for the production of primary agricultural produce and they are enjoying the benefit of an exemption under this regime, but it is questionable whether one could regard agricultural products as constituting secondary agricultural produce by virtue of spraying and the use of hormones or angel dust as growth promoters in cattle. If there was a case it could be taken through the factory responsible for processing a particular animal where harmful and illegal hormones were found to be in a particular meat product. However, the meat processing plant could pass the buck to the farmer which could cause a lot of political wrangling and discussion in the Department of Agriculture and Food and, indeed, could result in the setting up of another tribunal into the harmful effects they might have on some of our major exports like meat.
The Minister has a difficulty in relation to consumer legislation. He will have to be fearlessly on the side of the consumer and ensure that everything possible is done to protect the consumer in line with the spirit of the Directive and that as a Legislature we are not prepared to tolerate any activity on the part of the producer that would cause damage or injury to any person from the food industry, or any other industry.
I certainly would have an open mind on this amendment. I will be listening carefully to see if other speakers can convince me that the implementation of this Directive will not be found wanting, that the right signals will be given to the consumers that we are here to introduce legislation that is very much pro-consumer which will protect them from any damage or injury which might not be capable of being redressed under any other legislation.
I accept the Minister has other means at his disposal under the food standards and public health Acts to protect injured persons but under the product liability regime and this Directive there may be some doubt about whether this legislation is strong enough to deal with these matters and whether he could be more protective of consumer interests.
I support this very important amendment. While the Minister says he strongly supports the Directive and cannot derogate from it he is in fact derogating from it in the interpretative clause. That is a serious matter. If one looks at the Directive to which the Minister pays such great heed and which he says he cannot detract from either to the right or the left — I say he can detract from it by giving concessions to the consumer beyond what the Directive requires — one can see that the Minister has taken from the position of the consumer. Article 2 which deals with this matter only goes so far as excluding products which have undergone initial processing. The Minister could have left the expression "initial processing" alone, which is what we are talking about here. He did not have to bring in any interpretation clause. He could have left it to the courts to interpret what initial processing meant within the context of the Directive. The Minister, in his reply to Deputy Rabbitte, pointed out that the courts would interpret the expression if difficulties arose, and they will, but they will interpret it in accordance with the interpretation clause the Minister puts into the Bill.
What has the Minister done in his interpretation clause? He has put an entirely new element into the definition of the term "initial processing" which is not included in the Directive. He should not have done that. I submit he is not entitled to do so because it goes against the interests of the consumer whom the Directive seeks to protect. The Minister has introduced in his definition clause the words, "of an industrial nature". The Directive does not make any reference to the term "of an industrial nature"; it simply excludes products which have undergone initial processing. The term "initial processing" is a broad description and if it was left alone, as it should have been, it would include additives which Deputy Rabbittee's amendment seeks to address. For example, feeding angel dust to cattle or using damaging sprays which are not recommended, are known to be harmful or whatever would very likely be regarded as initial processing. However, the Minister did not leave this alone. He has introduced an entirely new dimension which is clearly outside the Directive by saying that the only exclusion will be processing of an industrial nature. That is a very serious and major restriction about which I am concerned.
I do not think the words "of an industrial nature" or the definition clause should be included in the Bill. If the definition clause has to be included we should at least go some way towards the Directive by making it clear that processes such as the feeding of angel dust to cattle and the use of damaging chemicals and sprays, although not of an industrial nature, constitute initial processing within the meaning of the Directive. The consumer will be worse off under the Minister's interpretation clause than he would have been if the position obtained as laid down in the Directive. The Minister, has said not once but many times today, that he cannot detract from the Directive, that he is bound by it, but he has changed very appreciably by introducing an entirely new element. In those circumstances, the amendment should be supported.
With regard to the points made by the Deputies, I should like to give a clearer explanation of the reasons for the exclusion. It is very important that Deputies appreciate the reasons behind it.
Of the nine member states which to date have implemented the Directive, only Luxembourg included primary agricultural products. Agriculture does not bulk large in Luxembourg's gross domestic product of 2.6 per cent, compared with 10.2 per cent in the case of Ireland. Equally, Luxembourg accounts for only 0.1 per cent of total Community production whereas for Ireland this figure is 2 per cent. Thus in the other eight markets, the UK, Germany, Italy, Belgium, Denmark, Holland, Greece and Portugal, primary agricultural products are excluded from the implementing legislation. If we were to include them, it could send the wrong signals to consumers in other European markets by unwittingly giving the impression that our primary agricultural produce was in some way suspect.
The principal reasons the Government decided to exclude them were that such products are particularly prone to hidden defects caused by environmental factors beyond the control of the producer. However, producers of primary agricultural products continue to be liable under tort and contract law. Under the law of tort the consumer has rights against the producer for damage caused if negligence can be proven. Under contract law goods are required to be of merchantable quality and fit for the purpose intended.
There is also in place a variety of legislation which controls various aspects of quality in agricultural production. Some examples of this type of legislation are the European Communities (Classification, Packaging and Labelling of Pesticides) Regulations, 1985, as amended. These regulations prescribe various conditions which must be complied with in relation to the placing on the market of pesticides; Animal Remedies Act, 1956, which regulates the import, manufacture, sale and advertisement of animal remedies and the European Communities (Veterinary Medicinal Products) Regulations, 1986. These regulations control the licensing and manufacture of veterinary medicinal products. In accordance with these regulations all such products sold must have an authorisation granted by the Minister for Agriculture and Food. These authorisations are granted on the recommendation of the National Drugs Advisory Board who test the preparations in question with particular regard to quality, safety and efficacy.
Regarding primary agricultural products which have been subject to initial processing, even in cases where a defect in these types of products was not caused by the processing operation itself, the onus is on the processor to discover any hidden defects, no matter how they were caused.
The Department of Agriculture and Food, the Irish Creamery Milk Suppliers' Association, the Irish Insurance Federation, the Confederation of Irish Industry and the Industrial Costs Monitoring Group concur with our thinking in respect of the exclusion of primary agricultural products. In the circumstances Deputy Hogan would be well advised to consult with his party before he makes an unwise decision to vote in favour of this amendment.
The Minister of State is very anxious about the way I vote.
I would be very concerned because I am aware of his party's connection — like my own — with the farming community. I am trying to save him from himself because this is a very serious matter indeed.
That is a dangerous statement.
I recommend that the Deputy seriously consider the matter——
It is all right to poison the rest of the population.
——particularly when the Irish Creamery Milk Suppliers Association and other organisations are so clear in their thinking, and their submissions are clear also. The main opposition to this exclusion is represented by the Consumers Association of Ireland, who feel there is no real relevance to the argument that primary agricultural products are subject to environmental factors beyond the control of the producer. Because of the extent to which fresh vegetables, for example, are sprayed with chemicals and the land in which they are produced is artificially fertilised, no valid distinction can be made between natural and processed products.
In view of the fact that the vast majority of other member states have excluded such products from their implementing legislation, it would be extremely inadvisable for Ireland to take any measures which would put our farmers at a disadvantage in respect of their community counterparts. By way of clarification so far as the Directive is concerned, we had the right of derogation in relation to this area and we have availed of that right. We are not changing the Directive as such; we are acting in accordance with its provisions. This is in the best interests of our farmers and the consumer is also well protected by existing legislation in that regard.
To include primary agricultural products in the scope of the Bill would mean that farmers would be obliged to carry product liability insurance — I am sure Deputy Hogan will be very interested in this section — a development which would add substantially to their production costs and, as a result, have a negative effect on their competitiveness in respect of other EC members. As someone who is directly involved in that area, I feel that, at this time, it would be a major blow to the agriculture industry which is under pressure in many regards in relation to prices.
And from the Minister of State's former colleague.
Farmers would not be in a position to carry product liability. We do not know what will happen in the future in relation to primary production, but at this stage I am pleased to be in a position to ensure derogation from the EC Directive. The cost would be prohibitive and would add substantially to their production costs. This would have a negative effect on their competitiveness with EC members. We would be putting our farmers at a major disadvantage compared with their counterparts in France, the UK, Germany and elsewhere in the Community. That is a situation I could not accept. Bearing in mind that Deputy Rabbitte's party may not have great support among the agricultural community, in the interests of Ireland Incorporated I recommend very strongly that it would be wise to withdraw the amendment. It would be most inadvisable to press this amendment at this stage. "Product", as defined in the Bill covers a very wide area. Any question of whether a particular product is covered by the legislation will ultimately be determined by the courts.
I have explained precisely why we sought the derogation; we received the derogation and I recommend all sides to accept it to ensure that our farmers will not be put at a disadvantage. I would like to say that 99.9 per cent of the farming community are very conscious of the need to produce high quality produce. We are highly regarded throughout the world for the quality of our produce, although we may have difficulties at a particular time. Action is being taken to ensure that we highlight those difficulties and take the appropriate action for the future. I stress that 99.9 per cent of the farmers are conscious of quality and the green image of Ireland and will not add insecticides or fertilisers which would present any danger for the consumer. In that regard I am pleased to be in a position to oppose this amendment and to recommend that we seek this derogation.
The last thing I had intended when coming to Deputy McCartan's amendment was to turn this into a farmers versus the rest debate or, indeed, to put Irish farmers at any competitive disadvantage with their French counterparts, but the Minister has very effectively done that. I do not want to look a gift horse in the mouth. If the Minister has returned to his normal cherubic happy disposition compared to his outlook on life last week, I am reluctant to introduce any note of acrimony, nonetheless, I am fascinated not so much by his formal script but by his constant interjections and lectures to Deputy Hogan that he had better come out behind the ICMSA position or else——
I am threatened.
That is the clear implication, the only inference one could take from the Minister's contribution. It is an extraordinary comment on Irish politics and on our approach to public affairs that we have this Bill designed to improve the position of the consumer but we must exclude a very large section of the community from it. If any other producer should inflict damage on the consumer, they would certainly have to pay for it, but if the farmer poisons someone or nearly poisons or cripples someone by reason of negligence, we dare not look at him because that would be attacking one of the sacred cows — forgive the pun — of Irish life. It is an extraordinary argument to threaten Deputy Hogan with the ICMSA. Look at the stance of the ICMSA over almost 30 years on the eradication of bovine tuberculosis. Almost £1 billion of taxpayers' money has been spent on the bovine tuberculosis. eradication scheme and, if anything, the position is worse now than it was in the sixties. The present ICMSA leadership are screaming to have Dr. Liam Downey removed from the chairmanship of ERAD. What would one expect the ICMSA or the IFA to say about the Products Liability Bill? It is a case of, they would say that, would they not? That is their job. To suggest that we ought not to broach this subject in the House because the farmers ought to be removed from liability — and it would be an enormous burden on their shoulders compared with other producers — is, I suggest, for the many hundreds of thousands of consumers outside this House, a bit difficult to understand. God knows, it is not as the Minister would have us believe — I wish it were — a situation where 99 per cent of our farmers have behaved responsibly, maintaining the standards we would wish.
Until recently, the Minister for Agriculture and Food denied in this House that we have a problem with the subject this Minister introduced into the debate — the use of angel dust. We know now that this is a serious problem, I support enthusiastically the Minister's belated conversion regarding more severe action for the wrong-doers concerned because they are criminals and ought to be treated as such but this, too, is another example of how that Minister has been converted belatedly on a number of other matters too. Those who use angel dust are doing much damage to a major industry.
Our record on the eradication of bovine tuberculosis would not indicate any reason for complacency. The Minister talks of sending the wrong signals to other countries but he does not seem to be concerned about sending the wrong signal to consumers. The Minister says that nine states have already implemented the Directive and that only Luxembourg has imposed the responsibility in question but we do not know how many of the other nine states have tampered with the Directive.
Deputy Taylor introduced a very important dimension into the argument for the amendment when he referred to Article 2 of the Directive as adopted. It is very clear in terms of the definition of primary agricultural products in that article that it excludes products which have undergone initial processing. The Minister as a result of that now tells us that a derogation was available to us and that he availed of it. I presume it did not happen just like that. Somebody presumably made an argument for a derogation and it seems to me that the Minister has gone out of his way to introduce a definition on initial processing that cannot be in the interests of the consumer. What does this phrase "of an industrial nature" mean? If a steer is bought off the land by a butcher and the subsequent interaction with the consumer takes place in the butcher's shop, for example, is that a process of an industrial nature? It seems to me that it is not.
The Minister is right. It is an attempt to ensure that primary agricultural products get to the consumer in the purest state possible. It seems to me that it is some sort of comment on Irish agriculture if it is suggested that somehow that objective is in conflict with the efficient and smooth running of the agricultural process. The Leas-Cheann Comhairle, as a long serving and distinguished Deputy for an urban constituency comprising many consumers, will agree that it is difficult to appreciate how the objective of transferring primary agricultural products in the purest possible state to the consumer is somehow in conflict with having a healthy and thriving agricultural sector. I cannot see where the conflict arises if we have confidence in the agricultural sector to produce in accordance with the highest standards. I do not see that the good sense behind the amendment has been argued down. In the part of the debate I heard on the monitor today, the Minister seems to be consistently saying it is his job to import the provisions of the Directive as closely as possible into Irish law and not to depart from them. Like Deputy Taylor I cannot understand what prevents the Minister, if he wishes, from improving on any of those provisions in any way he likes. In this case the Minister has chosen to derogate from one of the important provisions of the Directive and that is to the detriment of the consumer.
Deputy Philip Hogan, who will no doubt demonstrate that he has not wilted under the threat.
I did not intend saying any more, but the Minister has proceeded to lecture me on the attitude I should take on this amendment. I am surprised that any Fianna Fáil Minister should lecture any Fine Gael Deputy. We have minds of our own, thank God. The Minister tried to threaten me with a Kilkenny man, the President of the ICMSA, Mr. Tom O'Dwyer. Mr. O'Dwyer has a very forthright attitude on most issues; he is a man who likes to think he has neat answers to every problem. I assure the Minister that the President of the ICMSA will not formulate my views on the amendment.
The Department of Industry and Commerce had difficulty in relation to deciding what attitude the Minister should take on this matter. When the Minister presented his evidence to the Joint Committee on Secondary Legislation of the European Communities in 1987, the Department stated that it was an open question as to whether the derogation was desirable in respect of primary agricultural produce. The Minister's Department were not sure about what way to proceed with that matter. The Minister has now formed a definitive view that primary agricultural produce should remain outside the scope of the Directive. I do not accept that there will be any substantial increase in product liability insurance for farmers and I am surprised at the Minister suggesting that there will be any increase in product liability insurance costs for any sector in view of the fact that the Minister and the Department have gone out of their way to say that the costs to small businesses, self employed people and business generally would be minimal in relation to the implementation of this Directive. The level of liability insurance is far too high for businesses generally. To gain access to appropriate premia for liability insurance in the business sector is very difficult but the farming community already have access to liability insurance and they can, at a very small extra cost, add product liability insurance.
The Minister has not taken into account the fact that we are obliged under the EC regulations to comply with Directives in relation to conditions in milking parlours, in meat processing and so on. At producer level higher standards generally are expected of the farmers in producing agricultural products. It is in line with European Community thinking, and the implementation of that thinking by the Department of Agriculture, to assist farmers, through grant aid and other measures, in improving their standards in farming so as to ensure that we have a pollution free, pure, naturally based product that will meet the requirements of the consumer.
The CII and the Insurance Federation submissions were referred to. The report of the joint committee also indicated that there was unease and far from unanimity in respect of the views of these organisations on whether primary agricultural produce should be a part of this Directive. My primary consideration is the need to look at the position in relation to Irish agricultural exports. In Ireland today we need to enhance our image as a producer of agricultural goods to gain access to as much exporting potential as we can.
The director of the quality assurance research unit at University College, Galway in a report advanced the case for including primary agricultural produce in this Directive on the basis of our international standing as a food exporting country. He was of the view that the inclusion of primary agricultural produce in this Directive would send out the right signals to those countries with whom we are seeking to enhance our image as a country which produces pure and wholesome foodstuffs that we were prepared to back that statement up by including primary agricultural produce in this Directive. I am prepared to support this amendment for that reason.
I am anxious that the right signals are sent out to consumers, that we are serious about tackling this issue of additives in food products. We should signal that we want to stamp out this practice; that we are not nodding and winking at those with a vested interest; that we are prepared to stand up to them and say "enough is enough" in relation to the malpractices we have had to put up with for so long and that we are not satisfied that the existing legislation and regulations meet the rigid requirements of consumer protection. If everything is above board we have nothing to fear in ensuring that the producers of primary agricultural produce are subjected to rigorous scrutiny, like every other business.
For this reason the Minister of State should take another look at this amendment to see if we can devise an amendment on Report Stage which would meet the arguments being put forward and which would send out the right signals to enhance our image as a country which produces clean, wholesome and natural food without additives or insecticides. Only this week the Minister for Agriculture and Food had to apologise to the British market when it was discovered that in five cases angel dust had been used. That will prove damaging to our industry.
The least we should do to enhance and bolster our image is to tell the world, in particular the United Kingdom market, one of our major markets, at the first available opportunity that we are prepared to subject our food producing industry to the most rigorous scrutiny and include them in this Directive.
The position, under the Bill we are debating, is that people who manufacture or produce products which cause damage, death or personal injury will be held strictly liable for the damage caused by those products if those products are defective. Primary agricultural products are excluded but primary agricultural products which undergo initial processing of an industrial nature are not excluded.
While the initial producer may have nothing to do with a defect in a product which has undergone the industrial process which may cause damage, injury or loss he will be held liable. The damage may be the direct result of the industrial process carried out, yet the primary producer will be held liable. It seems that would be a dramatic extension of the law in so far as the initial producer is concerned.
I take Deputy Rabbitte's point on the definition of an industrial process because the strict liability regime will come in when the initial industrial process has taken place. Like Deputy Rabbitte, I seek clarification of what this term "initial processing" means, particularly in relation to the example he used, a butcher. It would be no harm if the Department considered between now and Report Stage including a further subsection to clarify the matter or produce a directive to guide Members on what is meant by the term "initial processing" in line 29, page 2 of the Bill. We have to know in relation to primary agricultural produce what is in and what is out from the point of view of strict liability.
Deputy Rabbitte went on to make the point that all farmers are not angels. We know that and no pun is intended. I do not have the figure for the number of people engaged in farming business here, it possibly runs into hundreds of thousands, but, naturally, some people will not obey all the rules and will deviate from the highest standards. That applies not just to the farming community but to organisations with a smaller membership than the farming community such as the police force, teachers and so on. To try to imply, as Deputy Rabbitte seemed to do — I am sorry if I am misconstruing his argument — that every farmer is blatantly disregarding the rules and is using illegal additives and angel dust is to totally misrepresent the situation.
That should not stay on the record of the House. I never said that and that should not be inferred. I do not believe that.
I accept the Deputy's assurance in that matter but that was my interpretation from the way the Deputy presented his argument. If my interpretation is wrong then I accept the Deputy's assurance. The question arises as to at what point we should move away from protecting primary agricultural produce and subject it to the strict liability regime. Despite the fact that it is the producer who will be held liable when an industrial process has been carried out the Minister, and the Government, are correct to subject primary agricultural produce which has undergone initial industrial processing to the strict liability regime subject of course to a proper explanation being given as to what constitutes "initial industrial processing".
Before we get carried too far away we have to bear in mind that the farming business, and Deputy Hogan probably knows more about this than I, is in a very bad state economically. It will be further affected by what is happening at European level over which we have very little control, despite protestations to the contrary. We have to think in terms of what a massive increase in product liability insurance would mean for an industry in such a state of crisis. I take Deputy Hogan's point that we must get our image right but we should rigorously prosecute those people who break the rules. In some cases they have been discovered. They will have to be made an example of. No one can seek to justify the unjustifiable and I do not seek to do so but if anybody in this House thinks that employment, economic growth and prosperity will be advanced by driving the farming community further into the ground and by further increasing costs at a time when the farming industry is on its knees, they are, sadly mistaken. We have to be very careful about this.
On a point of information, will the Minister of State indicate from where his information has emanated or what information he can give us in respect of an increase in product liability insurance?
May I take it that Deputy O'Dea has concluded his remarks?
I have.
I will deal with Deputy Hogan's question first. At present most farmers do not have insurance as far as product liability is concerned and they have to individually obtain that type of insurance. I know, from personal experience, that farmers are covered by public liability insurance. This is now necessary as people are becoming more litigation conscious and I know that Deputy Taylor and his professional colleagues are aware of the situation regarding litigation, even in regard to trespassing on a person's land. It is quite obvious that individual farmers would be required to have product liability insurance for their own protection. Only Luxembourg sought a change in Article 2 which was accepted by the EC. Another point regarding which Deputy Hogan should be aware is that his present — I emphasise "present"— leader Deputy John Bruton, was Minister at the time.
He will be there for a while.
It is strange that there has been a conversion because, as I said, Deputy Bruton was Minister when negotiations were taking place in the EC regarding the Directive.
The Directive provides for a derogation.
He certainly did not seek any derogation in the Department of Industry and Commerce to Article 2 of the Directive.
The Minister is now in charge.
I am satisfied that the Government have made a wise decision in the best interests of the farming community and the consumer. There was a question regarding the clear definition of "initial processing". It is quite clear the agricultural products which are processed through industrial use in a factory, the canning of vegetables and other processing of primary products are routinely processed and there should be no great difficulty in that regard as far as initial processing is concerned. The clearer definition is: "any processing of an industrial nature which could cause a defect", that is a broad definition and it is as well to have it that way as far as the courts are concerned.
What does it mean?
It is clear-cut and I do not need to go into it in much greater detail. It is quite obvious that if you bring a product into a meat farm factory it will be processed into canning or a finished product for the shelf. Indeed, in the past we relied too much on the export of cattle on the hoof, for instance.
Things have been happening in that regard too.
The aim of our food processing policy is to maximise value added products for export and such products are covered by the Bill. We have been endeavouring to move from the exports on the hoof and sales overseas of unprocessed products. Until now the practice has normally been to allow the courts to ultimately decide, which gives them a certain flexibility in relation to a particular Bill.
Does that apply in the case of the butcher to whom I referred?
I would not regard that as processing of a product because basically the butcher finishes preparing the meat and sells it. I would not regard that as processing, it would apply in industry where food is processed, packaged and then sold.
We should bear in mind that nine of the Twelve member states are not seeking derogation under this legislation, although Luxembourg applied in regard to this section. We must also remember that most of these countries are consumer orientated; this applies particularly to Germany. This Bill is not anti-consumer, it is a balanced response to the Directive——
The Minister was not sure about it.
It was given very careful consideration and we were quite clear where we stood on this issue. I would be very concerned if the initial process of a product was included in the Bill. As Deputy O'Dea said, it would be very difficult to bring in legislation of that kind. Product liability insurance for farmers would be——
How much would it cost?
Deputy Hogan said he had a vested interest——
I have knowledge of the subject.
I do not know about Deputy Hogan's business commitments——
Let us hear the Minister without interruption. Deputy Hogan will have time to air his point of view.
I should have to refer to The Workers' Party to get more details about the situation from their network of resources.
Now, now.
I would not be interested in delving into the Member's private affairs.
I declare my interests.
I accept that. It is not up to me to estimate the cost of product liability insurance for a farmer. However, as someone with experience of having public liability insurance on a farm, I can say that it is very expensive and if it can be avoided all the better. In this case we are ensuring that the farming community will not have to have product liability. I do not want to bring you, a Cheann Comhairle, into the debate but I know you have vast experience in this area. It is not appropriate at this stage but, if circumstances change, I do not rule out a future Minister deciding it is appropriate to consumer legislation and bringing it in. I am not seeking the derogation in relation to the Article but I am not accepting the amendment moved by Deputy Rabbitte and argued by Deputy McCartan. I respectfully suggest, in the circumstances, that they should withdraw the amendment.
The Minister and Deputy O'Dea implied that there was a massive increase in costs in relation to the implementation of this Directive, not only for farmers but for small businesses, about which I am very concerned. I do not see any tears being shed regarding compliance costs — if they are deemed to be high — on employment and the effect they will have on small businesses. That matter was not referred to but I heard about massive increases in insurance costs for product liability for the farming community. The Minister is well aware that it costs £80 per annum on average for public liability insurance. It depends on the size of the farm. To add employers' liability for casual labour, which is all a small farmer can afford with the way things are going under this Government, would cost £65 per annum, so we are talking about a gross premium of about £1,200 or thereabouts. Public liability insurance would cost £140 to £150 per annum and you could not farm if you did not have that insurance as it is the most important cover you can have. No business person, whether in farming or otherwise, could operate without it. Product liability is not deemed to be a high risk insurance, and for businesses it is certainly not exorbitant. I can assure the Minister that to add product liability to existing liability insurance, what is called in the business a tag on insurance to an existing policy, would cost very little per annum.
The Deputy is wrong.
Deputy O'Dea of course is an expert.
I am not an expert. We are talking about strict liability.
Yes, product liability insurance. We are talking about insuring, and big businesses take out this insurance all the time, as I am sure the Deputy is well aware. Farming is supposed to be a business also, and to extend this directive would result in massive compliance costs. I would be the last to talk in terms of what it would cost any member of the farming community to comply with this product liability directive if I did not have some knowledge of what I was talking about, but I accept that there will be massive compliance costs in the future if a huge number of claims is made against small businesses who can ill afford to meet them. If a number of such compensation claims is made, insurance companies will, the following day, find a mechanism by which they will increase premia for everybody else. We would then have a problem in relation to compliance with the Directive.
We should try to spread the risk evenly among the entire population. I am quite sure that the minimum compliance costs are very small at the moment. I say that as somebody working in the business, somebody who knows the precise premia being paid by the farming community in respect of employers' liability and public liability insurance.
Deputy Hogan seems to be confusing the matter. At present insurance is taken out against potential liability for negligence, but here we are talking about strict liability. I would imagine that the insurance cost of strict liability would be much greater. It is evident to me why that is the case and it should also be evident to Deputy Hogan.
I have listened to the debate and waited to see if any hard information might come from the Government benches, and indeed from the Minister of State, to support the contention advanced by him that an amendment of this sort would be too punitive and onerous on the farming community. I was a member of the joint Oireachtas committee which first considered this Directive in 1987. I spoke strongly against the proposal as contained in the legislation and insisted that the final report would carry the views of the people in the market, including the quality research unit in Galway University. They argued from the same point of view, that of the enhancement of agriculture in this country, and for Ireland seeking a derogation from this provision in the Directive.
The Minister apparently cannot quantify his argument. It is totally unacceptable in a debate in the national Parliament which is being asked to make important decisions with regard to legislative provisions that we cannot have quantified in real terms the reservations and concerns of the Minister. Instead he asks us to accept his word in blind faith. I do not accept that as a way of doing business in this House and I do not think we should be asked to do so.
The amendment I am proposing does not include all agricultural products. It recognises that there are two ways of growing food: the clean, wholesome, organic way, that of using the natural environment to produce wholesome, good, clean food, and the way, as is referred to in the amendment, of using artificial additives, insecticides or fertilisers which artifically enhance the quality of food so that it will have a longer life span and will be of better value when it comes onto the shelf. That is not an absolute inclusion of all agricultural products under strict liability process. The amendment refers to a farmer choosing to introduce artificial means to enhance the growth of the product, be it animal, vegetable or whatever. I am sorry that the Minister throws his hands in despair. It appears he is utterly unaware of the fact that there is a growing market for organically grown foods. If the Government do not appreciate that the future of competitive agriculture from the Irish point of view rests in a massive expansion in the organic food area, in the not too distant future we will be lost entirely in the whole EC market that is swamping us with its false markets, false incentives and false trade. I am very concerned in this regard. In proposing this amendment we are not including all agricultural produce in the strict liability net.
The third point that has to be made is that we must look at the rationale behind the Bill and the Directive. It is stated that primary agricultural products should be covered by strict liability where "it is subject to initial processing". I have to ask what is the difference between artificially interfering with the product when it is growing in the ground and when it is being canned, chopped or packaged in the factory? The thinking behind the operation of the Bill and the Directive is that if there is a farming lobby against a certain agricultural product we will not include that product, but we must act as soon as the farmer, manufacturer or producer begins to artifically interfere with it by introducing foreign bodies such as preservatives, in order to give it a long shelf life, or additives that will enhance its appearance on the shelf, or as soon as it is processed to form other foods or items.
The same idea can easily be applied to the growth process where a whole range of artificial additives, fertilisers, insecticides and pesticides are used to artificially influence growth mechanism. I cannot see the logic of introducing strict liability where a product has been processed one hour after it arrives at the factory while not introducing it when the product is growing in the earth. I do not see that there is a difference.
The next point I wish to make has been made extremely well by Deputy Hogan, and I am very appreciative of his support and that of his party for this amendment. I am particularly appreciative of his support as a Deputy representing a rural constituency and one who is prepared to stand up and say that farmers are supposed to be producers; farmers are supposed to be engaged in business. What is wrong with saying that if something is good and necessary in the area of small business, or indeed large business, it cannot be the same for the small or the big farmer? The only argument against that is the proposition that it would prove too onerous in, as Deputy O'Dea has said, hard and straitened times when it is difficult to make an income. Are we supposed to accept that argument without quantifiable figures being produced to support it? It seems a weak argument if the figures to back it up are not available. To put it another way, if the figures were available they would be produced here in black and white. Indeed, they were not produced at the committee when they were considering the Directive. The issue was raised then, it has been raised since, yet the figures have still not been produced. As we are dealing with consumer protection legislation we should approach it from the viewpoint of the consumer and ensure that we put in place legislation which is as comprehensive and as broad based, as possible. It will then be up to the producers, manufacturer, the processor and others as to how they deal with the legislation.
The farming community have very vocal and active national organisations which represent their interests — indeed one such organisation has a subsidiary insurance company. It seems ridiculous that the farming community are in a position to complain about high premia when they have their own insurance company. I would have thought it time for that insurance company and its parent farming organisation to get their act together and address the issues that have been so clearly articulated by Deputy Hogan, in terms of introducing national comprehensive insurance cover for all developments in farming.
The other point which deals with the problem Deputy Rabbitte raised — I do not think it needs repeating — has not been answered. I accept the Minister's interpretation of what amounts to initial processing and I accept his enlightening interpretation of it. Manufacturers have played about with the concept of manufacturing in order to avoid liability for tax in the export trade. Tax and legal consultants can show great ingenuity to aid industry and the same ingenuity would be brought to bear in dealing with the concept of initial processing.
I have no doubt that the Minister is right about butchering. There is an argument that the mere cleaning of muck from vegetables and putting it into a polythene bag does not amount to processing. It is packaging and, in my view, putting it into a can does not potentially add up to processing. Again, it is a form of packaging and distribution and not processing. The scope of the concept of initial processing will, in my mind, be very limited and watered down. The Minister says it is a broad proposition but I say it is as broad as it is vague and, in time, its broadness will be very poorly exposed and we will have a very restrictive operation of this Directive when the lawyers, consultants and advisers have finished with it.
I think we should work to broaden it. To answer the proposition advanced by the Government that in industry as well as farming you will always have the cowboy because of a few bad performers, the people who will break the law and use illegal devices, we should not visit penalties on the greater number.
However, when you look at the approach of the legislation to protect the consumer, you have to draft the legislation to cover all eventualities and to deal with the people who will break the law. In this regard I do not think there is a better example than the sorry history of successive Governments trying to eradicate bovine tuberculosis from our national herd. If one accepts the argument in favour of the few, in this case they have visited problems on the entire national herd and, as a result on industry.
I am not convinced by the arguments advanced by the Minister that what we are proposing is an attack on agriculture and imposes on that sector a serious onus they would have difficulty in carrying. We should legislate to protect Ireland's fine reputation — the point made by the Galway research unit — as one of the cleanest and best producers of agricultural produce in the European market. In seeking the derogation we should say that because of our standards we have nothing to fear from any liability, no matter how strict, and we would readily introduce into our law the regime of strict liability because our produce is better and we have nothing to worry about it. In my mind that would be the single most important signal by any Government that Irish produce is better than the rest.
In reply to Deputy McCartan, I do not know why the figures for returns were not produced. I would be happier if they were but it has been represented to me that the insurance costs would be very considerable. I would have preferred if we had the figures but I do not know how useful an initial quotation from the insurance companies would be because, as Deputy McCartan knows, the premium is decided year by year. Once the insurance company has the business within their grasp, the ball is in their court.
We have instances — this is not a debate on insurance and I do not want to get into that — of the insurance industry increasing premiums in one area in order to carry losses in another. We would have to be very careful because the initial insurance quotation may mean nothing. The matter will then be decided by the insurance companies, and it is very difficult to predict what will happen there.
In relation to Deputy McCartan's point on industrial processes, I agree that this is a grey area which needs to be clarified.
It seems to me that, to some extent, this debate is going off the rails. It seems to boil down to what the liability insurance premium for farmers might be. What about the interests of the consumers who may suffer very seriously and grievously as a result of defective produce? What about their interest? People can become seriously ill or die from defective or contaminated agricultural produce. Will there be insurance for them or their families? The idea that whether the insurance premium for farmers would be large or small should be the be all or end all as to whether we should bring in this derogation on the modest safeguard being put in place by Deputy McCartan, is going off the rails.
Let us not lose sight of one factor. The Minister and Government are availing of the derogation. Essentially speaking it is a derogation, and farmers — as producers — like any other producer would be responsible for defective products — it is only defective products we are talking about. The farmers are being given a very major concession that no other producer is being given. The Government are taking advantage of a derogation to exclude farmers from liability on the primary production side. That is a major concession and the only exception to it relates to processing of an industrial nature. It seems the Minister has gone beyond what is permitted in the Directive by introducing as being necessary a new element of an industrial nature, while under the Directive any processing is sufficient to make that producer liable. I am not impressed by the argument about whether it might cost a farmer £80, £160 or £260 for an insurance premium. What would the insurance premium be for, and for whose benefit would it be? The insurance cover is for the benefit of consumers — a person, a child or a family — who may be injured or killed as a result of the unwarranted use of chemicals or dangerous practices. Therefore, whether or not it is expensive to purchase the insurance is a matter to which we may pay a little concern but we should not get carried away with it. The basic principle we could all too easily lose sight of is the protection of the consumer.
While the protection of the farming industry is important, it could nonetheless be argued — and it has been argued — that perhaps the best way to protect it would be to tell the world that there is nothing to fear, that our products are safe; that our farmers say they do not want to make use of every available derogation because they know their product is A1 and will not cause injury or death. That would be a better and more open approach to the issue and it would put our agricultural products in a better standing in the outside world. They need an improvement in their standing, having regard to recent events that I do not need to go into now.
Deputy McCartan's amendment is modest compared to what one might have looked for. One might have looked for a removal of the derogation or the deletion of the expression "of an industrial nature", and to have the provision apply to any processing. The Deputy does not go to any of those lengths, he merely seeks that additives, dangerous insecticides and so on be included. It is a very reasonable amendment and, in my view, the House should support it.
Is the amendment being pressed?
I wish to elaborate a little further. We could be taking two directions in this regard. We could have an interesting debate on the agricultural industry and, indeed, we could have an interesting debate on the insurance industry.
However, I am sure Deputy McCartan is conscious of the effect his amendment would have. He wants to include any use of artificial additives, insecticides or fertilisers in the growth process. He should be well aware — Deputy Hogan is aware, as Deputy O'Dea, who has urban and rural areas in his constituency is aware, that fertiliser, nitrogen for instance, properly used is absolutely essential for agricultural production.
Yes.
There is nothing to worry about; no liability would arise.
I hasten to inform Deputies that without the advent of nitrogen and other artificial fertilisers agriculture would be in a very difficult state.
We are anxious to promote the new concept of organic food, and such food does attract a premium price because less is produced by organic means than would be produced by the use of artificial fertilisers. There is now a great emphasis on organic farming. The Government have a very enlightened approach towards such production. That is true of the Minister for Agriculture and Food, who, guided by the Taoiseach, has a particular interest in organic horticultural production. We are giving support to organic growers.
The exclusion of primary producers does not mean that the Government are in any sense encouraging the unnecessary use of insecticides. The production of potatoes, for instance, requires the use of a spray to prevent blight. Surely we should not exclude that. The use of that spray would be excluded if the amendment was agreed to by the House.
The amendment would have enormous repercussions for the important agricultural industry. Deputy McCartan's amendment would be detrimental to the best interests of this country and our farming community. I do not wish to point to Deputy Hogan again, but I should be surprised, to say the least, if he supports this amendment. I am in a position to provide guidance and advice more than anything else. It is in order for me to encourage Deputy Hogan, a very reasonable Deputy with a great interest in the agricultural industry — I come from that area of activity — to consider the effect of Deputy McCartan's amendment, which should not be accepted by the House.
I oppose the amendment absolutely, without any apology to Deputy McCartan. Deputy McCartan does not know what effect his amendment would have on the agricultural community if it was accepted. The Deputy cannot be completely aloof from the farming industry, and he stated there are farmers in his constituency, particularly those engaged in horticultural farming.
I come from farming stock.
For a person who comes from that background, the Deputy certainly changed his views. Perhaps the Deputy has to follow new ideology due to his membership of a party who could have no great grá——
I advise the Minister of State to stay out of that deep water.
I have no intention of staying out of that deep water. I shall refer to that issue again and again, if I so wish because I have certain views——
The Minister should bring a rubber duck with him.
The amendment has been well debated. I wish to refer to the matter of quantifying the cost. The views put forward by Deputy Hogan in relation to public liability, is that the cost to insure against product liability would be quite expensive. For calculation purposes, it would average out at about £100 — that is a minor estimate of the cost — and would add more than £750,000 in cost to the farmers of my constituency alone. That would be the net cost of the amendment to farmers in my constituency.
The amendment is unnecessary because, the majority of farmers are producing in total accordance with the highest standards and that is what is required.
The Government will encourage organic farming in the future, but for the moment they will not be in a position to provide the employment required in the processing sector. The added-value, and the additional jobs created in the industrial sector as a result of the production of primary produce will, of course, be of benefit to all Members.
I oppose the amendment, and I would appreciate it if the Chair put the amendment to the House.
Amendment put and declared lost.
Amendment No. 6 not moved.
I move amendment No. 7:
In page 3, subsection (1), line 18, after "electricity" to insert "including electricity generated by nuclear energy".
The purpose of this amendment is to address a provision in the Directive about which I am extremely disturbed. Here I will be joining the Minister of State if he wishes to visit criticism on a previous Minister responsible for negotiating, finalising and drawing up the Directive.
Article 14 of the Directive says:
This Directive shall not apply to injury or damage arising from nuclear accidents and covered by international conventions ratified by the Member States.
I do not understand why damage arising from nuclear accidents was included in this Directive at all. It may well be that the drafters of the day felt that the EURATOM Treaty, as drafted then and as it obtains, constituted an adequate and comprehensive programme of international convention at European level to deal with all matters relating to the nuclear industry.
We in this House and country are very conscious of the inadequacies of that Convention, as a device, or as a means to be employed by Government, to avoid taking any action against Britain with regard to Sellafield and the other nuclear related installations that present a daily threat to our citizens and environment.
On reading through the Bill and the definition of "product" I see that it is said:
"product" means all movables with the exception of primary agricultural products which have not undergone initial processing, and includes—
(a) movables even though incorporated into another product or into an immovable, whether by virtue of being a component part or raw material or otherwise,
(b) electricity where damage is caused as a result of a failure in the process of generation of electricity.
I do not think any of us should have any particular difficulty about definitions. Nonetheless, I was alerted that electricity was specifically included in the definition of a "product". Why that should be I am not too sure. If one then associates that with the body of the Directive which says that injury or damage caused by nuclear accidents are not covered by the Directive, one begins to worry even more about what was meant by subparagraph (b) of the definitions section where it is said:
(b) electricity where damage is caused as a result of a failure in the process of generation of electricity.
The purpose of my amendment is to further clarify that definition, to be certain that it includes electricity where it is generated by nuclear process as well. That is what I am suggesting by the insertion of the words "including electricity generated by nuclear energy". The plant at Sellafield includes, probably as a minor component, an electricity generating facility. Nonetheless the second stage of utilisation of that plant — the reprocessing of nuclear waste — is an integral part of the overall nuclear energy facilities in Great Britain. Without Sellafield Britain would not have any nuclear energy output producing electricity. For that reason I consider it to be an integral part of the electricity generating process in Great Britain. It constitutes a very serious threat, a very real, potential source of danger, of accident and damage to our citizens and environment.
In the future should any accident take place, or should the damage being done to our environment by the processing procedures being carried on at Sellafield continue I do not want any Minister or Government telling me that in litigation, we cannot have recourse to this Directive at a private, public or international level on the basis that Article 14 says that accident or damage caused by nuclear accidents are excluded. I want it specifically included in our legislation that a person who suffers damage from a defective product, including electricity generated by a nuclear installation, will reap the full benefits of the provisions of this Bill and be entitled to take action on the basis of strict liability standards.
It may well be the Minister will reply that that is covered already, that there is not need for me to press my amendment. If he can give me that assurance I shall be more than happy to withdraw it. But I want to avail of this opportunity to highlight how inadequate international conventions, particularly the EURATOM Treaty, appear in the hands of this Government who have failed singularly to initiate any legal action against Britain for the continued damage that Sellafield presents to our citizens and environment. I want to ensure that, when this Bill will have been enacted, our citizens will reap the full benefit of its provisions, being enabled to take action for damage caused by anything relating to Sellafield or the generation of electricity by nuclear energy.
I have no particular objection to this amendment. I can see the reason the term electricity was specifically included in the definitions section. The Bill deals with liability for defective products. To the mind of the ordinary layman, a product is something which has a tangible quality to it. When one looks at the first part of the definition of "product" one sees it refers to movables. It is not immediately apparent that electricity would be included as a "movable" because it is not immediately apparent that electricity is a tangible, movable product. Therefore, I compliment the Minister on specifically including electricity; it is necessary that it be included.
I contend that Deputy McCartan's fears and misgivings are somewhat misplaced because electricity is covered. It seems to me that if electricity is a product which can give rise to strict liability under the provisions of this Bill, it does not matter how it is generated, that electricity, however generated is covered.
I reiterate that I have no great objection to the amendment. Its acceptance might give a signal of our attitude to the nuclear industry but, apart from that, I do not see any tangible benefit to be gained therefrom. In the definitions section we do not go into the manner in which electricity is generated. I presume that what the definition means is that electricity, however generated, is covered.
Except for Article 14; that is my worry.
The reference to electricity in section 1 is intended to refer to electricity in general, no matter how it is generated. Therefore it is felt that the inclusion of Deputy McCartan's amendment would be unnecessary.
However, I was impressed by Deputy McCartan's argument and what Deputy O'Dea said in relation to sending out a clearer signal about out attitude to the nuclear energy industry. It is more than likely that we will never have a nuclear energy plant in Ireland. Certainly it is not the intention of the Government to get involved in that area.
Article 14 of the Directive states that the Directive shall not apply to injury or damage arising from nuclear accidents which are covered by international conventions ratified by member states. Ireland has no nuclear installation and its not a party to such conventions. Therefore, it was not considered appropriate to include this provision in the Bill.
In accordance with the definition in section 1(1), a "product" includes all movables, with the exception of unprocessed primary agricultural products. Therefore, a nuclear installation cannot be classified as a product. However, movable components installed in a nuclear plant are classified as products to which the provisions of the Bill apply and, if it can be proved that a nuclear accident was caused by a defect in such a component, an injured person would have a case against the manufacturer, or the importer into the EC, of the component. Nevertheless, it would be worthwhile considering Deputy McCartan's amendment further. We have a very strong view in relation to Sellafield. Certainly it will not affect the Bill in any way and will not take from it. I do not want to get into the area of specifying all the different methods of producing electricity — natural gas, oil, peat and coal. I will come back on Report Stage with a considered view on this matter and I will take account of the views put forward by Deputy McCartan. If the Deputy will withdraw his amendment and resubmit it on Report Stage, we can have a further discussion.
I will be happy to do that and I thank the Minister of State for being prepared to look at the matter again.
Amendment, by leave, withdrawn.
I move amendment No. 8:
In page 3, subsection (1), between lines 18 and 19, to insert the following:
"(c) a service.".
This further clarifies the definition of "product" to include a service. The links between goods and services are very close and always have been so in our law. This is typified in the Sale of Goods and Supply of Services Act, where these two concepts are joined and dealt with in like manner. The debate on the previous amendment is also relevant to what I have to say here.
In this instance we have again not followed the wording of the Directive. Article 2 of the Directive states that "product includes electricity." That is clear enough, but the Government and the Minister have not accepted it. They have sought to cut back and reduce that definition by confining it to a failure in the process of generating electricity. The Minister has departed from the Directive to the detriment of the consumer. He has cut back on the broad, all-inclusive definition of "electricity" in Article 2 of the Directive. He has particularised it, whereas the definition in the Directive is all-embracing and covers all aspects of electricity. If something goes wrong with the supply of electricity rather than the process of generation, then the consumer affected would be deprived of a remedy under the Bill. He or she should have a remedy under the terms of the Directive. To give full effect to the intent of the Directive it would be necessary to clarify the definition of "product" to include a service, as is done in the Sale of Goods and Supply of Services Act. It is not acceptable to cut back on the definition in the Directive.
The Council Directive 85/374/EEC does not concern liability in respect of services. The European Commission circulated to member states in January 1919 a proposal on the liability of suppliers of services which envisages the application of rules, parallel to the provisions of this Bill, to the services area. It is at an early stage of discussion in the EC. On this basis I cannot accept the amendment.
One of the definitions of "product" under section 1 (1) (b) of the Bill relates to damage caused as a result of a failure in the process of generation of electricity.
Failure in the process of generation of electricity is intended to refer to defects such as surges in current which could occur during the production process, but not power cuts.
Section 4 (2) of the UK Act refers to the relevant time, in so far as it refers to electricity, as being the time at which it was generated, being the time before it was transmitted or distributed. This type of wording in its entirety may not be relevant to Irish conditions as it is understood that three different types of company are involved in networking electricity in the UK, i.e. a generating company, a transmission company and a distribution company. In Ireland all these functions are carried out by the ESB.
The points raised by Deputy Taylor are adequately covered in this clarification. Surges of power occurred in my own village some time ago and the ESB accepted full liability. Deputy Taylor has made a very clear point about electricity down the line and I have clarified that. Power cuts are another problem. I have clarified the position regarding services. A Bill dealing with that matter will come before the House at a later stage. It is being discussed by the EC at present. The provisions will be parallel to those contained in this Bill but will relate to the services area.
The Minister has the advantage in that he can talk about parallel Bills which may come before us in the future. I only know about the Bill before the House and about the Directive which it is supposed to put into force. The Minister has told us many times that he must follow the Directive slavishly. When putting in the reference to electricity in the definition section, why does he not follow the Directive by simply stating that "product" includes electricity? Why does he cut back the service element by qualifying it very substantially? There could be a serious defect, not in the process of generation but in sending the supply of electricity downstream. For example, the generation process may be working perfectly with no problems at all and a person may be operating a very expensive piece of equipment that relies on the range of 220 to 240 volts, or whatever the acceptable range is. However, because of some defect in the system downstream — not at the generation end where the turbines are turning — there is a drop to 100 volts momentarily and as a result a valuable piece of equipment is damaged or blows or even injures somebody, if the Minister followed the Directive which says that the "product" includes electricity, that person would be covered and is entitled to be covered under the terms of the Directive.
I ask no more on this issue than that the Minister follow the wording of the Directive, something which he says he has to do. In the type of case I have outlined the person would be deprived of a claim because the definition of electricity is limited to damage caused as a result of a failure in the process of generation and that damage may not be caused by anything in the process of generation but in the service element in the process of delivery downstream.
Will the Minister, therefore, reconsider the matter and agree to let us get back to the directive and define electricity simply as is given there or, alternatively, allow this amendment by including the service element?
We are dealing with amendment No. 8 and, with respect, the Deputy has deviated from that amendment.
No, because the service element would cover the point.
The Deputy is making a separate point in relation to an amendment which would have been dealt with earlier. Nevertheless he has made a point and I have clarified it. Under the clarification I would be prepared to look at that. I have made it clear all along that I am anxious to ensure that the wording of the Bill is as close as possible to the Directive. I am more than anxious to ensure that there is no deviation whatsoever from the Directive. I am prepared to look at it before Report Stage but I am not giving any commitment that I will bring forward an amendment. I am prepared to assess the point of view the Deputy has put forward. That is the advantage of having a Report Stage separate from the Committee Stage; it gives me and my officials an opportunity to look at these areas.
I have first hand experience of this problem of a surge of electricity, where two lines connect up into one in my area, where a television might explode and products, apparatus and appliances totally destroyed. It was quite clear who was responsible. The Electricity Supply Board accepted full liability for damage to products in my area and I made it quite clear that we would hold them liable because there was a danger not only to apparatus but to life and limb as a result of the power surge which brought it up to about 400 volts instead of 230 volts.
The points raised by Deputy Taylor are covered under the product liability legislation but, nevertheless, to ensure that this Bill complies strictly with the Directive and will be of benefit to consumers, I am prepared to come back on Report Stage with my views and if it requires amendment I will put that amendment down.
Amendment, by leave, withdrawn.
Section 1 agreed to.
SECTION 2.
Amendment No. 9 not moved.
Amendments Nos. 10 and 11 are related and I propose that, for discussion purposes, they are taken together. Is that agreed? Agreed.
I move amendment No. 10:
In page 4, subsection (3), lines 9 and 10, to delete ",where the producer of the product cannot by taking reasonable steps be identified,".
This is the charging clause of the Bill. What I am seeking to do is put in simpler terms what the position will be when there has been a defective product and an injury has been caused. In a Bill of this nature we should be very careful to have the matters as clear as possible to avoid all unnecessary court disputes and appeals on technical points. It seems that the section as it stands now is wide open in a number of respects. Subsection (3) at present reads:
... where damage is caused wholly or partly by a defect in a product, any person who supplied the product (whether to the person who suffered the damage, ...) shall, where the producer of the product cannot by taking reasonable steps be identified, be liable, as the producer,...
That will be a fertile source of argument. What would "reasonable steps" be that an injured party is supposed to take to try to ascertain the identity of the producer? How far does he have to go? How far can the injured party go? There is no limit to it. One could start retaining researchers to try to ascertain when the product came, who produced it, who manufactured it. Many of these products do not have the information on them that they ought to have. It is never that simple even now. When one tries to find out who is the producer one finds trade names and "care of" addresses, to say nothing of offshore companies and hidden situations which are used all the time. Why insist then that the unfortunate injured party — who may very likely be a person of no means and not in a position to undertake the expense of research and detailed inquiries, goodness knows to what extent — should have to do so?
If they receive an injury they should be in the position, subject to the further requirements later in the section, to be able to proceed against the supplier. I am providing that they can ask the supplier to tell them who the producer is and that we get away from this expression "a reasonable time" and fix the time. I have suggested 21 days but that may be too long or too short. I do not know. However, this should be well defined otherwise the whole thrust of this important Bill will be negatived to some extent by having an unfortunate claimant trying to satisfy a court that he took reasonable steps to try to identify the producer.
We could have him being asked what he did, where he went, if he made inquiries at the Companies Office, if he phoned the newspapers, if he went around the area to see where they were, etc. There might be no end to it. Why should all that be necessary? Should it not be sufficient if the injured party simply sends the supplier a letter asking who is the manufacturer, who is the producer and giving the supplier 21 days to tell him. If he is told, well and good; if not, the preliminary point is set up. Why put in "where the producer cannot, by taking reasonable steps be identified"? There is an obligation on the injured person there "to take reasonable steps" whatever they might be, and whatever they might cost. He could spend quite a bit of money making inquiries. How much is one supposed to spend? How much can the unfortunate person who has been hit by a defective product spend? That is my concern and I think it would be better if that proviso was left out altogether.
The Minister has no directive to hide behind now.
Section 2 (3) (b) states that the person who supplied the product shall be liable for the damage if "that request is made within a reasonable time after the damage occurs and at a time when it is not reasonably practicable for the injured person to identify all those persons." Would it not be sufficient to provide that the request for the information as to who is the producer should be made within a reasonable time after the damage occurs? That would be sufficient. Why qualify that provision further?
A person who is supplied with a defective product and injured by it should have a right of claim under this Bill against the manufacturer or producer. If he wants to avail of that right why should he be asked to do more than this? He should be able to go to the supplier and say, "I hereby require you to furnish me within 21 days with the name and address of the producer". I do not mind whether it is 21 days or 28 days but I do not like the term "reasonable time" which is open to argument and dispute. If he gets an answer to his 21-day notice, he will have the information he wants and if he does not get an answer he should be able to proceed against the supplier as producer. We should keep the procedure simple, seek to avoid unnecessary argument in court as to what is a reasonable time and not place unnecessary burdens on people. The supplier is the person who got the goods and he knows from whom he got them. He should come up with the information from his invoices within 21 or 28 days and discharge his responsibility rather than putting the unfortunate injured party into a legal tangle in trying to justify that the steps he took were reasonable and were taken within a reasonable time.
I support these two reasoned and well considered amendments which would improve the legislation. They are in keeping with the strictness and tenor, so to speak, of the code of law we are now working on, that of strict liability, getting out of the area of the test of the reasonable man and saying when one is at fault one is strictly at fault and there should be no other play acting around on what is reasonable. That is the whole purpose and direction of the legislation.
While Deputy Taylor was collecting his thoughts in relation to amendment No. 11 I made the point that this was not an area where the Minister could pick up the Directive and say: "I have said I am sticking strictly to what is in the Directive, and this is not covered". I suspect that what has happened is that the producers' association and lobby said: "As this is an area we will be able to get our feet into we should try to minimise our liability, particularly for those involved in the supply side of the retail trade; let us try to work this out by putting some of the work and responsibility onto the shoulders of the consumer". I do not think this should be allowed to happen.
Amendment No. 10 proposes the deletion of the words, "where the producer of the product cannot by taking reasonable steps be identified," from subsection (3). The deletion of those words would put the onus solidly on the shoulders of the supplier because it would be in his or her interest to say to the consumer who bought a defective product, "I only supplied you with the goods, here is the name of the producer of the goods". If a supplier of goods does not keep that information then the responsibility should immediately fall on his or her shoulders. That would be an eminently fair regime in this instance.
Recently I had the opportunity to look at a paper on this Bill delivered at a conference in Dublin by a lecturer in law at one of the universities. One of the strongest points he made throughout his dissertation was to warn suppliers and retailers to keep comprehensive and strict records of every article supplied to them from whatever source and to maintain them on a current basis so that whenever an inquiry is made they can immediately deflect responsibility from themselves and say, "I supplied you with the item but I was not the producer; this is the name of the producer of the goods".
I do not think the proposal in Deputy Taylor's amendment No. 10 would harm the legislation. Rather it would improve it and help things to move along at a faster pace so that when a consumer visits a retailer in the high street to complain about bum goods the retailer will be able to immediately go to his records and give the name of the producer. That would be a clean way of dealing with such issues. My worry — I think Deputy Taylor and others share this worry — is that there could be links either through company codes, personal association or financial incentives, for example, commissions, between the producer and the retailer-supplier. In such instances it might seem to be in the better interests of the supplier to try to protect a producer's identity in the hope — as often happens in the consumer area — that the customer will get fed up trying to pursue his or her legal remedy. Decisions in this area will vary from judge to judge, from court to court and from day to day and it would be better to take out the reference to "reasonable steps" in section 2 (3). Section 2 (3) (b) should merely provide that a request be made within a reasonable time after the damage occurs and the words, "and at a time when it was not reasonably practicable for the injured person to identify all those persons", be deleted. This would help to tighten the legislation and would be in keeping with its overall tenor, which is strictness of liability and answerability. I hope the Minister can see his way to accepting these amendments.
Before I comment on the detailed contributions by Deputies McCartan and Taylor I should like to elaborate on the reasoning behind the section. I will then comment on the proposals put forward in the amendments.
Section 2 (2) defines the term "producer" as any one of the following: (a) the producer of a finished product; (b) the producer of any raw material or of a component part of a product — raw material, in this instance, is taken to mean any substance used in the manufacture or assembly of a product or component part of a product, i.e. wood used in furniture manufacturing or metal used in the manufacture of a circuit board intended for incorporation into a finished product; (c) in the case of primary agricultural products which have undergone initial processing, the person who carried out such processing; (d) any person who, by putting his name, trade mark or other distinguishing feature on the product, has held himself out to be the producer of the product — under this provision companies selling "own brand" products will be liable as producers, even if the product was manufactured and packed by another company; and (e) any person who has imported the product into a member state from a place outside the European Communities in order, in the course of any business of his, to supply it to another.
As the terms of the Directive apply only within the EC, the Community importers must be ultimately responsible for any defect in an imported product. An important aspect of this provision is the purpose for which the product was imported. Article 3.2 of the Directive states:
.... any person who imports into the Community a product for sale, hire, leasing or any other form of distribution in the course of his business shall be deemed to be a producer...;
Section 2 (2) (f) states:
any person who is liable as the producer of the product pursuant to subsection (3) of this section.
As a result of amendments Nos. 10 and 11, in the spirit of the discussions which have taken place, I am prepared to look at this matter on Report Stage. Because of Deputy Taylor's submission, followed by Deputy McCartan's comments I would not regard it as being as fundamental as the primary producer, which we discussed earlier. A good point is being made by both Deputies who have experience in this field.
Perhaps Deputy Taylor would resubmit his amendments on Report Stage, and, in the meantime, we will have a further look at them after consulting further with the Attorney General, to see if we can improve the legislation, which is the objective of all of us. I have no hangup about any particular wording provided the legislation can be improved. In this case there is good reason to consider the wording carefully. I am not saying that in order to have this stage passed before 7 o'clock, but there are important issues in this very important Bill.
I am happy with that.
The views put forward by the Deputies are worthy of consideration. I can assure them I will give their views very careful consideration.
Amendment, by leave, withdrawn.
Amendment No. 11 not moved.
I move amendment No. 12:
In page 4, subsection (3) (c), line 20, to delete "a reasonable time" and substitute "twenty-one days".
This amendment is even clearer. Subsection (3) (c) in relation to the question of liability, states:
the supplier fails, within a reasonable time after receiving the request....
I am very anxious that we get away from this description of "a reasonable time". It is too uncertain and is capable of a whole legal argument in itself as to what was reasonable and what was not. I do not mind what the time is so long as it is definite. In my amendment I suggested 21 days but if other people suggest 14 days or 28 days I do not mind so long as it is fixed, otherwise nobody knows where they are.
When the supplier gets a notice he can put off making a decision and saying a couple of months would be reasonable. The unfortunate injured party who wants to get on with his claim does not know how long he is expected to wait. A definition in this regard would be most important. If anybody has any comment on my suggestion of 21 days, I would like to hear it because my main object is that the time should be definite.
I wish to support the amendment. The reason it was put forward attracts me, particularly when it is taken in conjunction with the previous amendments. I understand the supplier will have to be informed and will get an opportunity to come back after a reasonable time — as stated in the Bill but that wording is too loose. I hope the Minister will take on board Deputy Taylor's amendment to ensure that the supplier reacts within a certain time and that at least he communicates with the authorities on receipt of the request for information. Only in that way could he ensure that the statutory authorities are treated fairly, are not being ignored and that the supplier is being given a reasonable amount of time. The time suggested in which to make the initial contact to the authorities in relation to the complaint received is not unreasonable.
I support the thrust of what Deputy Taylor is attempting to achieve but I would prefer if the amendment said 21 hours. I do not understand why we should give three weeks to anyone to say where he or she got a particular defective item.
Professor Schuster — to whom I referred earlier — in a paper discoursing on the Bill had the following to say:
This extension of the parameters of liability carries important implications for all the major players in the distributive process. It will encourage the keeping of comprehensive records to enable both the wholesale and retail industry to pass the burden of liability to the manufacturers of dangerously defective products.
He makes the point correctly in advice to the retail and distributive industries, that the onus is now on them to keep records so that when somebody asks where this defective product originated, they can immediately pass the liability by identifying the producer and imparting that information.
My experience of consumer defects is that every small claimant who comes into the shops to complain is told to come back next week, the manager is not here, the man dealing with that is not available or the accountants are checking the records. Any number of different excuses are used. For the reasons I have already advanced in relation to the other amendments, I am not happy with the concept of "a reasonable time" because the bigger the concern, the bigger the consortium, the bigger the shop, the bigger the retail outlet the longer the "reasonable time" element can be played around with as to what is a reasonable time in which to respond to a particular request.
Given modern day communications, and the capacity to keep records on computer or in proper filing systems where a person presents himself at a counter in a retail outlet or at a distributive outlet and asks where an item originated, I cannot understand why, within 24 hours, the person should not have a response orally over the counter, the post or by telephone. I am not arguing for 21 hours, but I suggest that something nearer to 24 hours or thereabouts, would be far more reasonable than allowing people to lay around for three weeks before they make up their minds. I support what Deputy Taylor is seeking to achieve but I suggest on reflection that a much shorter period can often be more effective in seeing a speedy resolution to these matters.
The section complies with Article 3.3 of the Directive. Having looked at the situation earlier today and the amendment by Deputy Taylor, and having the benefit of the views of Deputies Hogan and McCartan, the word "reasonable" could be abused. What is reasonable to me may not be reasonable to Members opposite. In any consumer legislation we are leaving too much flexibility to producers and manufacturers in a situation where "reasonable" is not defined clearly enough. Having looked at it I was hoping to hear the views I have heard from the Deputies opposite. Whether it is 21 days or 31 days is a matter of numbers. I, too, want to be reasonable so far as the information is concerned and I want to give the producer an opportunity to provide the information. The word "reasonable" could lead to a very long convoluted series of inquiries before there would be finality. In the circumstances I am agreeable to defining the number of days but I would like further clarification from my Department to see if we can agree to 21 days. Certainly four weeks or there abouts would be enough. We will see what is the general line in legislation with regard to what would be a reasonable time to respond.
In the circumstances, I could agree to the amendment but I would like to have another look at it between now and Report Stage. At this stage I would be agreeable to including a date, unless a very good argument to the contrary is put forward. Certainly the views put forward by Deputy McCartan and the amendment by Deputy Taylor will add to the effectiveness of his Bill when passed.
I am glad the Minister has taken this line. I fully support the principle of the amendment. However, I would not want to see suppliers being caught on a technicality. A very busy supplier might not get the information out in the requisite period of days. Perhaps 21 days is a little short. I would be inclined to think in terms of 28 days. However, I fully support the amendment which will represent a genuine improvement to the Bill.
I am grateful for the Minister's very constructive response and for other Deputy' comments. I do not have any hang up on the time period as long as it is definite. It could not reasonably be less than 14 days but it could be 21 or 28 days. However, I will leave that in the Minister's hands and I withdraw the amendment.
Amendment, by leave, withdrawn.
Section 2 agreed to.
SECTION 3.
I move amendment No. 13:
In page 4, subsection (1), line 23, to delete "£350" and substitute "£50".
I note Deputy Taylor's intention to oppose the section. I sympathise with that position. I am advancing the amendment simply because I anticipate the Minister's line of argument — that this is a provision in the Directive which must be included in the Bill. Under the Directive the Minister is entitled to introduce regulations in the domestic scene to vary the amount. While the Directive indicates an amount of £350 or 500 ECU it clearly states that it is a matter for individual states to fix the amounts. It can be argued that the Directive is primarily designed to keep in line with inflation and the cost of living in different states. The figures laid down in the Directive are not written in stone.
If this provision is to impact on the poorer consumer this figure of £350 must be brought down to a more realistic level. To help those who must use credit resources or finance companies to equip their homes with basic items, such as washing machines, cookers, fridges and so on, this figure must be reduced. If the Minister allows the figure in the legislation to stand, such consumers will be virtually excluded. It is not a coincidence that the figure £350 is approximately what it costs to buy the average domestic appliance. The standard fridge or cooker would cost about £350 or less. All those things will be excluded under this Bill. The electrical appliances market is one of the most contentious in the consumer market.
The Minister's proposal is wrong and the House should take the opportunity to outline the proper threshold upon which the section should come into play and for which there should be a saving threshold for compensation. What the Minister is saying in the legislation is that any damage amounting to £350 or under will not be covered and if the damage costs more than £350, only the excess will be allowed. That is much too high considering what I have said.
If Deputy Taylor feels as strongly as he indicates — that he is not prepared to get into the area of thresholds and the section must be opposed — I have no difficulty supporting him. However, given the strictures in the Directive, I would like to hear from the Minister, and I hope he will see that what I am arguing for is equity for the small man.
I sympathise with the approach adopted by Deputies Taylor and McCartan on this section. I do not know whether the Minister is obliged to leave the figure at £350 in view of the terms of the Directive and I do not see any power of derogation in relation to that figure. I do not know if the Minister could get around the situation by giving a commitment to the House that he will immediately introduce regulations which will reduce the amount.
Deputy McCartan referred to various household appliances but he seemed to overlook the fact that the Bill deals with liability for damage caused by those products and not with liability in relation to the products themselves. However, I take the point, for instance, that if a faulty television set sets a house on fire somebody will have a claim under this legislation. A faulty washing machine could damage a carpet for which an individual could not claim if the carpet was worth only £350 or less. Even though we are only talking about consequential damage, £350 is a little high in view of our commitment and our intention to introduce a small claims court. If we are proceeding in that direction, due regard will have to be taken of that in this legislation. The Minister might clarify that point. I do not know if the Minister is caught by the terms of the Directive in relation to the threshold figure here.
I take the point Deputy O'Dea is making.
This is one of the most appalling sections in the Bill. It is utterly repugnant. I do not go along with any figure, be it £350 or £50. If we are establishing a principle of liability, to say that the unfortunate person who is caught for a sum up to £300 gets nothing is quite outrageous and utterly unacceptable. It is completely reprehensible. The Minister does not have to put in that figure unless he wants to. He is not obliged to do it.
I am not sure whether my interpretation of this section is correct and I would be interested to hear comments from other Deputies on it, but the way the section is worded, it talks about the £350 as the minimum figure for damage to other property. Where only £300 damage to other property was sustained, but a person sustained a serious injury, on my reading of the way the section is worded, it looks as though there must be more than £350 damage to other property before one can bring a claim for anything.
The section states: "Where, but for this section, damages not exceeding £350 in respect of loss of or damage to ... would fall to be awarded by virtue of this Act, no damages shall be awarded...". It does not state that no damages shall be awarded "under this heading" or in respect of the heading of "other property", it just states that no damages shall be awarded. I can well imagine some judge saying that there is a qualification, that unless damages to other property hit the figure of £350 or more he must not award any damages.
Article 9 of the Directive which covers this matter distinguishes between the two categories when dealing with the definition of "damage". It refers in paragraph (a) to damage caused by death or by personal injuries and in paragraph (b) to damage to other property. At that point it brings in the threshold of 500 ECU in respect of that category of damage. I am fearful, given the way the section is worded at present, that it would even cut out a personal injuries award. I am sure that is not what is intended but it seems there is a serious danger that this could happen because it states unless one hits that qualification no damages shall be awarded.
I can well see a judge saying because damages do not exceed £350 no damages can be awarded. It does not state that no damages shall be awarded under the heading of "other property" but they can be awarded in respect of the other category of personal injuries. This is in stark contrast with the two separate categories in Article 9 of the Directive. I am concerned about that.
Apart from this, on broad general principles, this Bill will be emasculated completely if we allow the proviso that unless damages exceed £350 one can forget about their claim or their rights under this Bill. They are not capable of enforcement and that remains. Even if the figure is £400 one will only get £50. Those who will seek to rely on this will be people with little or no money. The overwhelming bulk of claims will not be for enormous amounts. They will not be for thousands of pounds or even hundreds of pounds. As Deputy McCartan said, quite rightly, they will be for £100, £200 or £250 but this represents a major investment for a person who goes out to buy a washing machine, a fridge or a television. We are taking away from them the right to claim in respect of that item. They will only be able to claim in respect of damage to something else. How much can we hedge this? One will not be able to claim for the television as one will only be allowed to claim for something other than the television which has been damaged. This is becoming laughable; we should cop ourselves on. If we want to make a major breakthrough on a principle of law we should either do it properly or scrap the whole operation.
I support the amendment. It is the stated intention of the Minister for Justice to introduce a small claims court which will be in conflict with what we are trying to achieve here, the right of a consumer to seek redress, if claims are to be restricted to a figure of £350 or more. In view of the expense of going to court from the point of view of the consumer, the need to ensure access to justice in respect of all matters, irrespective of means, and the fact that a small claims court is to be established by the end of this year, the Minister should accept this amendment or reduce the figure. Otherwise he will rule out a considerable number of small claims by consumers who do not have the means to replace the product damaged or rectify the damage caused. I ask the Minister of State to consider this argument very carefully and to see to it, in the light of the fact that a Government decision is pending in relation to a small claims court, that greater access is given to consumers with small claims.
I have listened with great interest to the points put forward in support of the amendments by Deputy McCartan. The Deputy's amendments conflict with the provisions of Article 9 of the Directive which sets the lowest threshold in respect of damage to or destruction of property in any amount approximately equivalent to £350. Member states have no option but to apply this lower threshold. Article 18 (2) states that every five years the Council, acting on a proposal from the Commission, shall examine the situation and may revise the amounts but I think they will revise them upwards as opposed to lowering them. I would like to point out to Deputy Hogan that this Directive was agreed to by his present Leader in 1985. Three hundred and fifty pounds was far more valuable then than it is now.
Let me give the House the philosophy behind the idea of having the lower limit. In order to discourage litigation in an excessive number of cases this section provides that individual items of property worth less than £350 are excluded from the provisions of the Bill. Where damage exceeds this amount only the amount in excess of £350 shall be awarded. There is no upper limit on the amount of damages which may be awarded arising from a claim under the Bill. Article 16 of the Directive allows member states to provide for a limit on the total liability of a producer resulting from a death or injury caused by identical items with the same defect. If any member state decides to set such a limit the amount cannot be less than 70 ECU million which is approximately £53 million. This Bill does not include such a limit.
A great deal of debate took place at EC level as to whether a financial limit should be set. Most member states considered the idea of a ceiling on liability as unjust as it could lead to situations whereby early claimants could achieve full compensation for their injuries with later claimants unable to claim adequate compensation. It could also lead to lengthy delays in reaching settlements where there is a possibility of further claims against the same product. There would also be the possibility that the inclusion of the limit set down in the Council Directive might act as an inducement to put forward grossly inflated claims for compensation. Some member states favoured the imposition of a limit as either their existing national laws on product liability provided for such a limit or they felt it would be an advantage for industry to know the upper limit on any claims which would reflect itself in lower insurance costs.
The majority view, including Ireland's, however was that the financial limits were at such a high level there would be no material difference from an unlimited liability system. There would therefore be no significant difference in the level of insurance premiums and consequently little, if any, difference in the competition position of industry. Accordingly, while there would be no disadvantages there was no discernible benefit to anyone, including industry, in setting a limit.
The Irish Insurance Federation in their observations on the matter have stated that relatively few companies hold product liability cover with a limit of indemnity higher than £5 million to £10 million with the great majority of policies having an upper limit of £1 million or less. In these circumstances the imposition of an upper limit of not less than £53 million would be of little relevance to the insurance market and unlimited liability for defective products will not materially affect the availability of cover.
I accept that the amendment relates to the lower limit and what I have said is not that relevant given that the Deputies are quite happy with the position in relation to an upper limit. The points put forward by the Deputies are excellent but I have no discretion in this matter. If I had I would be more flexible because I accept £350 is a considerable amount of money for a person who might be affected. Nevertheless in view of the lack of a small claims court, if this amendment was accepted it would would lead to the system being clogged up. The legislation is worthwhile. Deputy Taylor expressed his reservations about this being one of the basic principles of the Bill.
Personal injuries would not be affected by the lower limit but I am not in a position to vary the amount. It was an agreed decision taken at EC level among the 12 member states and I must comply with the Directive in this regard. Otherwise, I would not be complying with its spirit. It is a provision of the legislation that £350 is the lower limit and I must adhere to that. Therefore, I cannot accept the amendment tabled by Deputy McCartan.
Deputy Taylor would like to see the section deleted. I should like to be more flexible in this area but I am unable to be. I do not want to keep reminding Deputy Hogan that his leader, Deputy John Bruton, was involved in negotiating this Directive and that Deputy Taylor's party were also in Government at the time. I appreciate that he was not at the EC meetings at which the Directive was agreed and I doubt if it was put forward at any parliamentary party meeting. As Deputies will appreciate, a consensus had to be reached at EC level and the Directive was the result. I cannot, in any circumstances, accept the amendment nor can I put forward any variation of this amount on Report Stage.
I lament this incredible capitulation of national sovereignty, that we cannot, even in our own Parliament, discuss figures as minuscule as the difference between £50 and £350. How does the Minister propose to operate section 2(2) if his hands are so tied as he says in terms of the initial figure? Subsection (2), as the Minister of State is aware, allows the Minister, by regulation, to vary the figure. By implication, the Minister of State is saying that if ever the Minister exercises his power in this regard, the sum will never be below the figure of £350 which was originally negotiated.
The Deputy has interpreted my remarks correctly in regard to increasing the lower limit as there is no discretion in this regard. The idea was that he might increase it allowing for changes in income and the economy but that it would not be decreased.
In view of the fact that the Government contemplate introducing a small claims court one would have thought that the scenario would have been changed as a court of that kind is an inexpensive procedure. I am glad the Minister of State spoke glowingly about Deputy John Bruton who was Minister for Industry and Commerce when the Directive was agreed. However, I cannot understand why it took so long to introduce this legislation in the House, I am not surprised that the Minister was convinced in July because of its non-implementation. In the light of the Government decision to introduce a small claims court I hope that, under subsection (2), the Minister will be able to vary the amount downwards to incorporate the spirit of the Deputies' remarks. I do not have evidence of a lower limit being agreed by all member states and I do not know if any member state has deviated from the lower limit. If that is the case we could do the same and we should research that area before Report Stage to see whether it is possible to reduce it.
In relation to the small claims court, I know the Minister is trying to eliminate frivolous claims by keeping the lower limit at £350 and I can understand the administrative reasons for that. Nevertheless, it will deprive an enormous number of consumers of their basic right to seek redress if they feel they have been wronged.
We must bear in mind that the injured consumer will still have the usual common law right to proceed if he can establish negligence. We are trying to establish a system of strict liability in this instance. What exactly is the authority for the proposition that the Minister cannot reduce the amount? The subsection says that the Minister may, by order, vary the amount. If the amount can be varied upwards, why can it not be varied downwards?
This Directive was negotiated at EC level and took about ten years to become a reality. Even though it would have been discussed and debated with officials of all the member states for a period of time, it ultimately came to the Council of Ministers where it was minutely examined; the consensus was that £350 or 500 ECU was the minimum amount applicable under this Bill.
Deputy O'Dea is correct in relation to the other legal resources available to anyone to take a case. The small claims court, mentioned by Deputy Hogan, is a different, separate issue which will be dealt with in due course. However, we are dealing with this Bill and the variation of the amount is not at the discretion of the Minister. I have no intention of varying the subsection to specify that the Minister can vary it downwards. After carefully considering the matter, that is the position, it can be reviewed in the future but I am sure it will be reviewed upwards. If I had been negotiating this matter in Brussels I might have held a different view regarding the amount of £350 because I accept that Deputy Taylor made a relevant point. Deputy McCartan's amendment that the amount should be completely dispensed with is also relevant. There is unlimited liability at the upper limit but, of course, in many insurance company claims the first £500 is excluded to avoid frivolous claims.
We will have an opportunity of discussing the other issues raised by the Deputy when we come to Report Stage.
Question, "That the sections undisposed of, that the Schedule and the Title are hereby agreed to in Committee and that the Bill accordingly is reported to the House without amendment", put and agreed to.
When is it proposed to take the Fourth Stage of this Bill?
Next week, subject to agreement with the Whips.
Would the Minister ensure that a reasonable time is made available in view of the sections we did not reach and the number of issues that have to be dealt with?
I am anxious that a reasonable time be made available for Report Stage but that is a matter of agreement between the Whips — I presume Deputy McCartan is one of the Whips.
I should like the Minister to mention a provisional date.
Wednesday next, subject to agreement.
Report Stage ordered for Wednesday, 30 October 1991.