Transport (No. 2) Bill, 1944—Committee (Resumed).

Debate resumed on amendment No. 10.

Mr. Kyle

I do not know whether it is the intention of the Minister to accept the amendment that is down in my name. I rather gathered that it was not his intention to do so. Senators who are present will remember that I proposed to substitute 4 per cent. for 6 per cent., in Section 20. I think I said sufficient at the outset to warrant that substitution, and I do not intend to say any more now, but I do intend to press the amendment to a division if I can get sufficient support.

Mr. Lemass

I intimated last evening that I was not prepared to accept this amendment and that, in fact, I would strongly urge upon the Seanad that it should be rejected.

Mr. Sweetman

Would the Minister just explain one thing, which arises both on the amendment and the section? The section states that the dividend on the common stock in respect of any year shall be payable only out of the profits of the company applicable to the payment of dividends in that year. Supposing that in 1945 there was sufficient to pay a dividend, say, of 2 per cent. on the common stock and that the directors decided to pay only one per cent.; and that then, in the following year, there was not a profit which would be sufficient to pay a dividend: can the directors pay, so to speak, the 1 per cent. that they have over from the previous year?

Mr. Lemass

The provisions of the Companies Clauses Consolidation Act, 1845, in relation to that matter, say that previously to every ordinary meeting at which a dividend is intended to be declared the directors shall cause a scheme to be prepared, showing the profits, if any, of the company for the period current since the preceding ordinary meeting at which a dividend was declared, and apportioning the same, or so much thereof as they may consider applicable to the purposes of dividend among the shareholders, and so forth. Then it goes on to say: "and shall exhibit such scheme at such ordinary meeting, and at such meeting a dividend may be declared according to such scheme."

It is for the directors of the company to prepare a scheme showing the amount that is available for the declaration of a dividend, and in accordance with that scheme, submitted by the directors to the shareholders, the shareholders may direct a dividend.

Question—"That the amendment be agreed to"—put and negatived. Senators Kyle and Duffy dissenting.

Sections 20 and 21 put and agreed to.

SECTION 22.

Cathaoirleach

Amendments Nos. 11 and 12, I think, could be discussed together, if the House agrees.

Agreed.

Mr. Duffy

I move amendment No. 11:—

In sub-section (2), page 14, to delete paragraph (b) and substitute the following new paragraph:—

(b) such other securities as a Department of State may for the time being lawfully invest money.

You will observe, Sir, that in sub-section (2) of the section provision is made for the investment of surplus moneys lying to the credit of the company, and that in paragraph (a) it is provided that the investment may be made in such securities for the time being authorised by law for the investment of trust funds as the company, after consultation with the Minister for Finance, thinks proper; and then, in paragraph (b) provision is made that investment may be made in such other securities for the time being approved of in that behalf by the Minister for Finance as the company thinks proper. The proposal here is that that latter provision be taken out, and by the amendment I am submitting I want to limit the freedom of the company to make investments in such other securities as a Department of State may for the time being lawfully require. I think that this is a matter in which the public at large is interested, because the public, as taxpayers, will be responsible for making good any losses following on any deficit in the company's accounts. It seems to me reasonable that moneys available to the company for investment should be invested only in such securities as are open for investment to a Department of State.

Mr. Sweetman

Section 22 is necessary to enable the company legally to provide for the establishment of a redemption fund. It is not proposed, as I told the Seanad before, to require the company to build up a redemption fund by appropriating a fixed sum for that purpose every year or every half-year. The £540,000 mentioned by Senator Sir John Keane, and which has perturbed Senator Counihan, is a notional figure which has nothing to do with the scheme in the Bill. It is the amount which the company would require to put aside every year on the basis of an estimated half-yearly allocation for the purpose of building up this fund, on the assumption that no debenture stock is redeemed before the 30th June, 1960. It is on the basis that that fund will earn 2 per cent. interest in the intervening period, allowing for taxation, but it is obvious that the figure has no real relationship to fact, because we do not contemplate proceeding on that basis at all.

We are empowering the company to buy in its debenture stock and to cancel it at any time it can acquire it on the market at or below par. We are empowering it to call in its debenture stock for cancellation on payment in cash at par at any time from 1955 on. The intention is that the company may make such allocations for the purpose of this fund from its revenue as it thinks fit. It allows for the various devices that may be adopted to decrease the obligation that falls on the company. I might give an illustration. In the present year the Great Southern Railways Company redeemed, for cash, £1,000,000 worth of capital liabilities associated with the City of Dublin Junction Railways, the North Wall extension line and the New Ross and Waterford line. It utilised for the purpose of that redemption reserve funds which had been built up and which may have to be reimbursed at some future time, but it was obviously good business for the company to utilise money which was earning 3 per cent. to wipe out capital liabilities on which interest at 4 per cent. and over was payable. The interest paid upon the capital in the North Wall extension line would work out in excess of 5 per cent, I think, depending on the earnings of the line in any year.

The railway company have never made appropriations to depreciation in the past under an arrangement made with the Revenue Commissioners for appropriating from revenue sums to maintenance and renewals. I understand, however, that the Great Southern Railways Company have altered their arrangements with the Revenue Commissioners in a manner which requires appropriation to depreciation fund and which saves the company substantial sums in taxation. In consequence of that arrangement they made an appropriation out of the revenue available in the present year— the revenue arising out of last year's working—of over £500,000 to depreciation fund. It is quite clear, therefore, that the revenue available for the purposes of the company to which Senator Sir John Keane referred would not be required for maintenance and renewal purposes. The Depreciation Fund is there and for ordinary depreciation could be utilised.

We are dealing with an abnormal situation here. It is contemplated that a large part of the equipment of this company is unsuitable to modern conditions and it will have to be replaced with more up-to-date equipment. In the provision of that up-to-date equipment the company may find itself obliged to embark upon new capital expenditure. We are, in this Bill, providing them with the facilities for getting the capital, and we suggest that it is a suitable financial arrangement that the capital liabilities represented by the discarded equipment should be liquidated simultaneously with the acquisition of new liabilities in respect of equipment that is going to replace it.

I do not want to suggest, because I do not believe, that the railways are going to disappear, but let us contemplate the possibility that they may. In such circumstances it is clear that the capital represented by the railways should at some stage be amortised, that public transport in this country should not have to carry indefinitely the interest liabilities attaching to capital which is no longer capable of earning revenue. If one examines the case of the Dublin United Transport Company, there is a perfect illustration. A large part of the total capital expenditure which that company, since its inception, undertook was represented by tramways, and while the company may be producing more revenue than in the past, it would be wrong to saddle public transport services in the City of Dublin with the interest arising out of capital expenditure on tram lines, overhead wires, tram stations, etc., which were no longer capable of contributing to the company's revenue.

It was on that account that the management of the Dublin United Transport Company proposed to wipe out loan capital in a period of ten years in the manner suggested to the Transport Tribunal, and which was adversely commented upon by the tribunal. I think the Transport Tribunal were wrong in their views and, clearly, if in the case of the Great Southern Railways system as a whole there is going to be a discarding of part of its capital, because it is no longer suitable for use, there must also be some process for getting rid of the financial liabilities associated with it.

If a branch line is closed—if the line from Galway to Clifden is abandoned— are the public transport services, as a whole, or the public transport service of Connemara to be required indefinitely to pay the interest on the capital represented by that abandoned line? It is for that reason we believe it is sound policy to require the company to amortise the substituted debenture stock within a period of 15 years—the period during which this process of reorganisation will be going on. Before that time will have elapsed, it may be that the company will have to undertake capital expenditure involving the issue of new debenture stock, in which case it will not find itself merely with £4,000,000 worth of common stock and no other capital liability. It will have, in addition to that capital liability, the new debenture stock issued in the intervening period. By then, the substituted debenture stock should have gone, because some part of the permanent way and fixed assets of the company, upon which that money had been spent, will have been replaced by new equipment on which new capital was expended.

I do not know whether or not one could regard the financial experience of these two companies in 1943 as any indication of their future earning capacity. The Great Southern Company had a net revenue, available for the payment of interest and similar charges, amounting to £642,000 in 1943. The Dublin United Transport Company had a profit, after providing for taxation, of £280,000. That revenue would be sufficient to permit of the payment of the reduced debenture-interest charge which will now arise, the payment of some dividend upon the common stock—not necessarily 6 per cent.—and a substantial appropriation for the redemption of the substituted debenture stock.

I agree that it would be preferable for the company's management to utilise current revenue for the replacing of rolling-stock and similar expenditure rather than incur new capital liabilities but, if it is to incur new capital liabilities, then not merely do we contemplate their doing so but we facilitate them in doing so by giving them the advantage of a State guarantee which will enable them to get that additional capital more easily and more cheaply than they might otherwise be able to do. There is, however, in the remarks of Senator Counihan the idea that the only possible method of reducing transport charges is by the reduction of the revenue of the company. I want completely to dispute that idea. I think that we can not merely contemplate a progressive reduction in transport charges but that we can contemplate that progressive reduction taking place concurrently with an expansion of the company's revenue. The whole purpose of good management is to endeavour to ensure that the services will be provided at the lowest possible cost but, nevertheless, on a basis which will secure for the company a revenue capable of enabling it to meet all the obligations falling upon it. Again, I want to remind the House that we are proposing that this company should acquire a new obligation in respect of a superannuation fund for its workers. That will represent an expenditure of, roughly, £175,000 a year. We believe that there is, in the organisation of public transport in the part of Ireland served by the Great Southern Railways Company, such scope for better management, more efficient working and elimination of unnecessary costs in the purchase and use of materials, as will permit of a substantial improvement in the revenue secured without any increase in charges and even side by side with a decrease in charges.

The charges which the company will have to make operative will very largely depend on the volume of business which it can attract. It could be said that the volume of business will be determined by the charges and that would also be true, in part. But if the company can provide efficient service —by that, I mean the type of service which the public want; fast service, safe conveyance of goods and elimination of the incompetence and inefficiency which were a feature of railway management in the past when the railways had an absolute monopoly of transport—I think it will be possible for it to attract a volume of business which will not merely enable it to earn the revenue which it will require to meet its obligations but also to effect a progressive reduction in charges.

I have already had many examples which show the scope there is for economy and it is by economies in working that the financial position of this organisation will be improved. I am aware that, shortly after the change of management of the Great Southern Railways Company, by an alteration of the methods of purchasing and supervising the use of coal alone, an economy of £1,500 per week was effected. That was a real economy— the elimination of waste—which did not prejudicially affect anybody and which secured for the company a substantial new revenue which, I think, can be duplicated by the application of equally efficient methods to other parts of the company's business.

To deal with the points raised, this section is necessary to enable the company legally to establish a redemption fund. Funds appropriated to such a redemption fund escape taxation. It is, therefore, desirable that the company should be legally empowered to establish such a fund. The intention is that the company will allocate to that fund revenue available for distribution as it thinks fit, bearing in mind the obligation that the substituted debenture stocks must be redeemed for cash, at latest, by 1960. We empower the company to redeem these debenture stocks at any time they can acquire them voluntarily at or below par up to 1955 and compulsorily after 1955. We believe that it will be possible for this company, through efficient management, reduction of operation costs, provision of new equipment less costly to operate, and expansion of the traffic available to it, so to increase its revenue that it will be able to make that appropriation to the redemption fund while, at the same time, providing the money required for the superannuation fund, which will have priority over all its charges, the interest upon the debentures, which will be a lower figure in future than in the past, as well as having surplus revenue available for the distribution of dividends to the ordinary shareholders.

Sir John Keane

I would say that it would be much better to have it in the form "recommended by the board" instead of in this antiquated way. However, I am satisfied that they cannot do it, but the Minister, in his last remarks, gave me the impression that he wished to give that power to them.

Mr. Lemass

I will say this: that the common stockholders in this company will have, in relation to the declaration of a dividend, exactly the same rights as the common stockholders of the Great Southern Railways Company had in the past.

Liam O Buachalla

I think it might help Senator Sir John Keane if he were to get a reference to the sections involved in this. They are Sections 108 to 143 and 145. With regard to Senator Douglas's difficulty in interpreting these sections, I feel that one of the main reasons for placing on the directors the responsibility to prepare a scheme is in order that the shareholders may not vote themselves dividends out of capital: in other words, that the capital must be secured.

Sir John Keane

Is not that what was said?

Mr. Douglas

I did not say that both should be provided out of capital, but if Senator O Buachalla will read the 1845 Act he will find that under no circumstances can dividend be voted out of capital.

Liam O Buachalla

My point is that the reason the responsibility of preparing a scheme was placed on the directors was that the shareholders may not vote themselves a profit out of the capital.

Yes, I have been so advised.

Section 22 agreed to.

SECTION 23.

Sections 24 to 26, inclusive, agreed to.

SECTION 27.

Mr. Kyle

I put down amendment No. 14 to this section, but in view of the fact that the Minister has refused to accept similar amendments at an earlier stage, I will not move the first amendment, but I will proceed to move amendment No. 15:—

At the end of the section, to insert the following new sub-section:—

( ) It shall be competent for either House of the Oireachtas before which such audited accounts and the report thereon have been laid within the next 30 days on which that House has sat to consider and determine any motion relating to such accounts and report as may be submitted to such House.

Mr. Lemass

It is quite competent for either House of the Oireachtas to debate such a report. If it is not, you cannot give the Oireachtas power by an amendment to this Bill.

Mr. Kyle

I can see the point the Minister has made, and I am aware that he can have a matter discussed by direct motion, but if the auditor's report is laid before the House in this form I think it would be better from the Minister's point of view. However, he does not agree with that, but I submit that it should not be left with either House of the Oireachtas to initiate a discussion on railway policy. If, however, the Minister is not prepared to accept the amendment, I do not wish to press it to a division.

Mr. Lemass

I do not think it is appropriate to this Bill—it may affect the powers of the Oireachtas. So far as the Standing Orders of the Oireachtas are concerned, any question of public policy can be raised by way of motion.

Amendment No. 15, by leave, withdrawn.

Section 27 agreed to.

Mr. Sweetman

If this is passed the law will be the law which the Minister is taking out of the 1845 Act.

Mr. Lemass

No. So far as the presentation of returns and accounts to shareholders is concerned...

Mr. Sweetman

But the Minister was talking about the necessity to send out notices and so forth——

Mr. Lemass

That is the obligation under the Railway Companies (Accounts and Returns) Act, 1911. It seems that that is a reasonable legal obligation to impose and we should not, I think, impose on this company a greater obligation than is imposed on other companies.

Mr. O'Reilly

I take it that there are two sets of accounts that will be available. One will be of a summarised type and that type will be available for any shareholder who applies for it, but the second is a more detailed account and it would appear that the objection to the circulation of that detailed account is a question of expense. I was going to make the suggestion that, if the Minister was influenced by the idea of expense, then if the detailed account was available on the payment of a certain sum calculated to cover whatever expenses are involved, it might meet the case.

Mr. Lemass

No. The idea of prescribing accounts in ordinary commercial form is not merely to give shareholders and the public better information as to the affairs of the company but to require the company to conduct its business in relation to accounts which are prepared in proper commercial form. Under the 1911 Act the company, in addition to the various other matters it has to provide, has to make returns relating to the number of ton miles run, the traffic on every branch line, the number of wagons in use and the amount received per ton mile. Behind all that information is the desire to see that statistical reports concerning transport generally may be prepared. These, however, are of no interest whatever to people other than those concerned with the preparation of returns and they do not really concern the ordinary shareholder. The ordinary shareholder will get these accounts in a better form than he ever got them before.

Question put.

The Committee divided: Tá, 19; Níl, 18.

Tá

Baxter, Patrick F.
Butler, John.
Counihan, John J.
Crosbie, James.
Douglas, James G.
Kyle, Sam.
McGee, James T.
Moore, T.C. Kingsmill.
O'Donovan, Timothy J.
O'Reilly, Patrick John.
Duffy, Luke J.
Hayden, Thomas.
Hayes, Michael.
Johnston, Joseph.
Keane, Sir John.
Parkinson, James J.
Ruane, Seán T.
Sweetman, Gerard.
Tunney, James.

Níl

Clarkin, Andrew S.
Concannon, Helena.
Corkery, Daniel.
Healy, Denis D.
Hearne, Michael.
Hogan, Daniel.
Johnston, Séamus.
Keane, John Thomas.
Kehoe, Patrick.
Kennedy, Margaret L.
Lynch, Peter T.
O Buachalla, Liam.
O'Callaghan, William.
O'Dea, Louis E.
O Máille, Pádraic.
Nic Phiarais, Maighréad M.
Quirke, William.
Ryan, Michael J.

Tellers:—Tá: Senators Kyle and Sir John Keane; Níl: Senators Corkery and Hearne.

Amendment declared carried.

Amendment No. 17 not moved.

Section 28, as amended, ordered to stand part of the Bill.

NEW SECTION.

Sir John Keane

I move amendment No. 18:—

Before Section 29 to insert a new section as follows:—

29.—(1) During the year 1948 and during every third year thereafter the Minister shall cause to be made by an independent and acknowledged authority on transport matters an investigation and report on the affairs and management of the company in order to ascertain inter alia whether in the opinion of the reporting authority the rates and services afforded by the company are such as, under all circumstances, the public is reasonably entitled to expect.

(2) Any such report made to the Minister under the foregoing sub-section shall be laid with all convenient speed before each House of the Oireachtas.

On the Second Reading of the Bill, I made this proposal in principle. The more I think of it the more I think it is necessary that, in the new state of affairs, we should adopt new methods to secure safeguards to the public and also to stimulate interest on the part of the public. It is very difficult for many of us to realise that the whole of our social system is at the parting of the ways and that we are facing a new order, whether we like it or not. We are facing a new order in which, undoubtedly, more and more matters will be placed in public control. The public will lack the safeguards that they possessed, for good or ill, under a free and unrestricted capitalist system. I am quite prepared to admit that, in the case of the railways in this country, that free capitalist system operated to a very slight extent, if at all. I am not prepared to defend the condition into which the railways got in later years. I agree with the Minister that the management became lax and I think that the public got increasingly bad service. But I do think that we should recognise that, in any institution which is the subject of monopoly, when the first enthusiasm has passed, the outlook tends to get more and more routine and crystallised. New ideas appeal less and less to established authority.

Now, I see that at first, especially with the personality of the chairman, there will undoubtedly be vigour, initiative and enthusiasm displayed in the administration of the affairs of the company, but I equally see, following what is almost a well-known psychological process in corporations like this, that as things get older, as people get more accustomed to the systems they have set up and what they have always been doing, there will arise a certain deadness in that monopolistic concern. It is to provide against that sort of deadness and routine attitude that I framed this amendment. All I ask in the amendment is that periodically we should have a completely fresh outlook on the affairs of the company from somebody totally dissociated from it, who is yet an authority on the general principles of transport.

It may be asked: "What can anybody coming in from outside know, or what opinion of any value can any outsider give, about the management of a business with which he is not continually associated?" I say that the man I have in view is a recognised authority, well able to appreciate the circumstances of the case he examines. A consulting engineer comes in; a consulting engineer goes to a new country. By the nature of his job he is mentally fitted to appreciate the conditions which obtain in every problem with which he is confronted. He says: "This is totally different from what I had to do in the last job, but I claim to be able to appreciate the circumstances of the problem I have to examine." I am perfectly satisfied that you can always get a sensible person, a recognised authority, to come along periodically and examine the affairs of this monopoly, to see is it or is it not being managed in the best interests of the public—and I have specially in mind those who are using the railway. I think some form of examination of that kind is essential to counteract the deadness and the routine outlook that will increasingly prevail in the affairs of this company.

You may say that this is a novel proposal, but we shall have to face many novel things in the world to come. It may be a little strange to some of us; it may be a little in advance of our time, but I am perfectly certain that if any monopoly is going to be kept alive in the interests of the public such a periodical examination as I visualise will be necessary. We have, of course, a periodical financial audit. That is a certain safeguard against dishonesty and so on, but I would place far more reliance on an efficiency audit and that is the principle I am trying to put forward in this amendment. I have not, perhaps, drafted it in the best legal form. I have simply put down the principle, and I would ask the House to give it its support.

Mr. Lemass

The proposal here is that we should have a public inquiry into the administration of this company every three years. I think that would be an impossible burden to put on any administration. Apart from the time that would necessarily be spent by the company's officials in preparing data and information for the person conducting this inquiry every three years, the mere fact that such an inquiry must automatically take place would affect the whole system of management. It would mean that the management of the company would have to be conducted on precisely the same lines as a Government Department. It is because there is a continuing public inquiry into the administration of public departments that elaborate records have to be kept. Every idea that is considered, every action that is taken, has to be fully documented and the Departmental file assumes the importance it has in public administration. If we are going to have a public inquiry into the administration of this company every three years then the management of the company must be conducted precisely in the same way as a Government Department is conducted. There will have to be the same maintenance of records, the same elaborate documentation in regard to every aspect of the company's business so that the person conducting the inquiry can get all the information that he needs. Apart from that, we could not get an independent and acknowledged authority on transport to conduct an inquiry of this kind except we go outside the country. I do not know whether even outside the country we could get a person who, everybody would agree, was an independent and acknowledged authority on transport matters. Assuming we could get such a person, it is not by any means clear that a person whose transport experience was acquired in circumstances different from those obtaining in this country would in fact be of any value in inquiring into the circumstances under which transport will be conducted in this country.

The Great Southern Railways Company tried an experiment of this kind before. They brought in here, and put on the board, a person who had very extensive railway experience in another country with results that were calamitous for the Great Southern Railways Company. Economies were enforced by that director that have proved to be very false. Many of them have had to be undone and a great deal of discontent was created amongst the staff of the company. To this day, the workers in the employment of the Great Southern Railways feel that this Bill may lead to a repetition of their experience under the administration of the director to which I have referred. I do not say that that individual was not trying to do his best. He came to an organisation which was vastly different from the organisation which he had controlled before, because the whole transport problem of the country was different. He could easily calculate that the number of persons employed in relation to tonnage carried was too high. Consequently he got an improved statistical position without regard to the effect upon the company's business of the loyalty, and the enthusiasm of the staff in the company's interest.

In my view it would be undesirable to impose such an obligation on the company. The company will probably almost certainly seek to obtain expert advice, and expert advice from outside the country, upon particular aspects of its work and upon the technical problems of planning and equipment and the utilisation of new equipment. Just as I told the Seanad on Second Reading the Electricity Supply Board have frequently on occasion brought in acknowledged experts upon various aspects of electricity generation and distribution to advise them on their problems, to overhaul their administration, and to suggest new systems of administration, this company will probably do the same but that is an affair of management and if done by the management in discharge of their responsibility, it cannot, and will not, have the same effect as if done in the manner suggested here, in the form of a public inquiry designed to produce a report that will be presented to the Dáil and to the public. I think that type of inquiry imposed on a public organisation such as this would make its operation impossible. I am quite sure that Senator Sir John Keane, who is associated with a number of commercial undertakings, would agree that the effect on the administration of these concerns would be very serious if there had to be a public inquiry into their administration followed by a public report every three years. I am quite sure he would agree with me that any of the concerns he is familiar with could not operate effectively in such circumstances, and I do not think it would be fair to impose this on this company.

Sir John Keane

I think the Minister is taking me up wrongly in speaking of wanting a public inquiry. Anything might be called a public inquiry, but this is not a public inquiry in the same sense as there would be a public inquiry into the affairs of a local authority or some such body. It is merely a question where an expert comes along, sees the line, and examines the accounts, and I think that it would be very useful to have some expert come along and say whether, on general principles, he is satisfied that the management of the company is efficient. Such a man might be very valuable in dealing with questions such as the redundancy of transport.

However, I shall not elaborate that matter now, because the Minister realises that one of the great difficulties in the whole transport policy is that there is more both of public and private transport than there are goods to carry. That is the whole problem, but I think it would be very valuable to get someone to examine and report on matters of the kind to which I have referred. I must confess, however, that at this stage of public education I did not have much hope that this amendment would be accepted, but I do feel that something of this kind will have to come if we are going to keep State monopolies in the future in a good position and in such a position as will be adequate to safeguard public interests. I shall say no more.

Leas-Chathaoirleach

Is the Senator pressing the amendment?

Sir John Keane

I wish to challenge a division, as I want to go on record in this matter. I am not sure of what the procedure is, and although it may appear to be a matter of personal vanity, I still wish to go on record as pressing for this.

Question put and declared negatived —Senator Sir John Keane dissenting.

Sections 29, 30, 31 and 32 agreed to.

SECTION 33.

Mr. Hayes

I understand, Sir, that Senator Douglas does not propose to move amendment No. 19, standing in his name, to Section 33, as the matter has already been discussed.

Amendment No. 19 not moved.

Section 33 agreed to.

SECTION 34.

Mr. Kyle

I move amendment No. 20, standing in Senator Duffy's name:—

In sub-section (1), page 16, line 17, before the word "registered" to insert the word "are" and in line 23 to delete the word "the" and substitute the word "such".

This is merely a drafting amendment which, I am sure, will appeal to the Minister.

Mr. Lemass

Well, I have consulted the Parliamentary draftsman, and he feels that it is not necessary to insert this amendment and that, in fact, the sub-section is better worded as it is.

Question put and negatived.

Section 34 put and agreed to.

SECTION 35.

Mr. Kyle

I move amendment No. 21, standing in Senator Duffy's name:—

In sub-section (1), page 16, line 30, to delete the words "or a common stockbroker".

The intention Senator Duffy had in this matter, and with which I agree, is in some way to prevent the common stockholder handing over his proxy in such a way as would mean that the banks would really be the people who would be voting instead of the ordinary shareholders in the company. It might occur that at an ordinary general meeting of the company the shareholders would not be properly represented, and this section provides for the attendance of corporate bodies by proxy. Under the section, any common stockholder may appoint a proxy—being, in case that common stockholder is a body corporate, a member of that body corporate or any holder of common stock. The purpose of the amendment is to secure that if a bank issues a proxy it may do so only to one of its directors or shareholders; in other words, that it must come out into the open and not do what, as I am informed, has happened in the past. I may say that I have had no experience of attending these directors' meetings at all, but I understand from my friend, Senator Duffy, that it is a practice that banks have of seeing that their interests are protected, rather than the interests of the company concerned.

Mr. Lemass

The Companies Clauses Consolidation Act, 1845, which we have incorporated with the Bill, provides for proxy voting, and the only question that arises here is the making of a provision, in relation to this company, similar to that which applies to all companies under the Companies Clauses Consolidation Act of 1908. That Act is not incorporated with the Bill. The Companies Clauses Consolidation Act of 1908 provides for proxies under power of attorney, and this section deals only with proxies under power of attorney. It provides that the attorney of any common stockholder may appoint a proxy, and in case that common stockholder is a body corporate, the proxy may be a member of that body corporate or a common stockholder. Senator Duffy, however, is trying to secure that in the circumstances envisaged in this section a body corporate can only exercise its proxy through a member of that body. I see no reason why a member of a body corporate should be treated in any other way than any other common stockholder. One must remember that there might be other corporate bodies besides banking concerns. Various trusts, insurance companies, business concerns of one kind or another may be concerned in this matter as well as banks, and the effect of the Senator's amendment would be to require that if these bodies desired representation at the annual meeting of the company they would have to be represented by one of their number rather than by proxy. I see no reason why a body corporate should be treated differently from any other stockholder. I think it would be wrong, and I shall resist this amendment firmly.

Mr. Duffy

I think that what is usually meant by a body corporate would be a bank, and the suggestion in the amendment is that a member of that body corporate can hold a proxy and that it should not be possible for one or two people, who may be directors, to carry proxies.

Mr. Lemass

I do not know whether Senator Duffy appreciates that this section relates only to proxies under power of attorney. The full provision for proxy voting is contained in the Act of 1845, which is incorporated with this Bill. It is only this one thing of proxy under power of attorney that was not covered.

Amendment, by leave, withdrawn.

Sections 35 and 36 agreed to.

SECTION 37.

Mr. Duffy

I move amendment No. 22:—

In page 17, to delete sub-section (3).

This section deals with the constitution of the board of directors, and sub-section (3), which it is proposed should be deleted, provides that the chairman shall constitute a quorum of the board. I think that while considerable power must be conferred on the chairman, in view of the fact that he is the nominee of the Minister, and will be expected to implement Government policy, he ought to have a considerable amount of authority in the board but I think it is a bad thing to write into our legislation that a particular person in a board of six or seven or eight is a quorum. In the beginning, it may be a board of seven or eight but it will eventually come down to a smaller number.

I do not expect it at all. I should have imagined that the Labour members would have expected it far more readily than I would.

Mr. Kyle

When you are making provision for a situation of that kind, it seems to me that you are putting these gentlemen who constitute the board of directors in an invidious position. I am not at all sure that I do not agree with the Minister about the general mentality of the directors, speaking by and large, but I am at a bit of a loss to understand the Minister and this House agreeing that a chairman alone shall form a quorum at a meeting.

I find myself in entire agreement with Senator Duffy in suggesting that this sub-section (3) should be eliminated. Of course this sub-section has been very much discussed outside as well as inside, and it seems rather difficult to convince the Minister that it is undesirable that the chairman of the board should constitute a quorum at a meeting. Apparently he has made up his mind that this should be done. I want to be taken as dissenting from the view that one man alone should be in charge of affairs.

Professor Johnston

I take it that our Labour friends deny to the directors of railway companies the right to strike?

Mr. Kyle

They have the right if they wish to avail of it.

Mr. Duffy

I remind Senator Johnston that of course this would be unlike the ordinary strike he has in his mind, because even if the directors were to strike I think they would still draw their full pay.

Professor Johnston

Apparently there is a difference between the railway workers striking against the public interest and the directors striking against the public interest.

Mr. Kennedy

If the directors strike, the railways would go on and the public would not be inconvenienced.

Sir John Keane

I intended to put down an amendment to this section, but I omitted it. It was an amendment which I felt would secure, in a much better manner, what the Government are after. I do feel it is rather undignified to put a number of people around a table and to give all of them the feeling that the chairman can stop anything they want to do. That constitutes a barrier against goodwill and friendly action. Surely it would meet the whole case if the law gave power to the chairman to refer to the Minister any decision with which he was not in agreement. The chairman could say: "Well, I am afraid I cannot accept that. We will postpone action on it until I consult the Minister." I think that would be far better than merely to give the chairman the power of veto, and run the risk of precipitating a good deal of personal unpleasantness in the heat of the moment, while the thing might be looked at differently in a calmer atmosphere. I feel it would be much better simply to suspend any decision with which the chairman is not in agreement until the matter has been considered by the Minister. It may not arise very often, but I think that would be a much more successful way of dealing with it.

On the point I mentioned before, I see a great possibility of differences of opinion which should properly be referred to the Minister, and on which it would be wrong to give the chairman the power of veto. I refer to the question of priorities of profits. If the shareholder directors urge that the common stock dividend should have priority over the redemption fund, I think it would be very wrong that there and then the chairman should have power to say: "No: I veto that". I think that is eminently a case where the Minister might act almost as an arbitrator. He might send for the directors and say: "I should like to talk this over with you." As I see it at present, the chairman says "No" and there the matter rests. I am not altogether against this new method, this novel method of making nationalisation effective in the management of a company. In some ways I think it is rather ingenious. It is probably better than having a larger board, with a majority of Government nominees on it, but I do think we should consider the personal relations around the table, and I feel that those relations would be far more pleasant if matters were so arranged that there could be no overriding of the majority there and then. I think it would be far better if the chairman had to suspend decision until the Minister had been brought into the dispute.

Mr. Counihan

I entirely disagree with Senator Sir John Keane that the board should have any power of interference with the management at all.

As Senator Hayes has mentioned, you could have Dáil questions and other references of a similar kind. On those affairs of management, I think the board should be the final authority, and the success of their administration judged by the results. If at any stage the Government is not satisfied that they are getting the service that is necessary from the board, or that the chairman is not directing the affairs in accordance with the lines that they think best, then they will have to deal with the chairman.

Mr. Foran

As this section is drafted in the Bill it looks very bad and it certainly has created a very bad impression abroad. If there was something done on the lines just indicated by the Minister it would allay a lot of suspicion abroad that this is an absolute dictatorship. It would, as he said himself, be possible for the chairman to have a meeting at his lunch and declare it a meeting of the board. That is the impression that the public have. Whether it is right or wrong I do not know but it is possible under that section of the Bill to have a meeting of that kind. Therefore, I suggest to the Minister that his intention in this matter ought to be included in the Bill.

I do not at all agree with Senator Sir John Keane's view on the matter. We know that a good many of the industries of the country are run by guinea pig directors—in other words, directors of the financial interests of the country and their ability to help the industry is very little. The feature that stands out in this Bill to my mind is this, that it is easier for the board of directors to put the onus of responsibility on the chairman for conducting the affairs of the new Transport Company. It will be very difficult to deal with the board of directors who will have power to do wrong, and yet it would not be within the power of the Oireachtas to remove them from office. If the Minister would go some distance to meet the objection which I have made and to clear the public mind, to show that this is not a dictatorship in the full sense; if he provided that the chairman can only act after reasonable notice has been served on the directors of the company, it would be a good thing. If it were included in the Bill that the chairman could only then act as a board, after this notice had been given, I think it would remove a good deal of the suspicion that is abroad in the country.

Mr. O'Dea

I think it may be overlooked that the ordinary meeting of shareholders can overrule any decision of any of the directors. That is provided for in Section 90 of the Act of 1845 and it is still the law under this Bill.

Amendment, by leave, withdrawn.

Mr. Duffy

I move amendment No. 23.

I did not say that I did not like this amendment because it requires a two-thirds majority. I said I did not like the circumstances in which you could have a meeting with about 20 items to deal with and if you had the two-third majority proposal in operation you could not do any business at all.

Amendment, by leave, withdrawn.

Section 37 agreed to.

SECTION 38.

Mr. Duffy

I move amendment No. 24:—

In page 17, line 10, after the word "sums" to insert the words and figures "not exceeding £7,000".

In this section provision is made to pay the directors out of the funds of the company but I think there should be a limit to the amount that they can vote themselves. The figure of £7,000 related to previous amendments which are not now acceptable because at that time it was thought that probably the directors would have imposed upon them certain obligations and responsibilities. Very largely, however, they have no responsibilities at all. Their powers under the Bill are very limited—almost nil—and I think a total figure of £7,000 to cover the salaries, fees and remuneration of directors is adequate.

I understand that the chairman of the company is now paid £2,500. That was stated in the Dáil on the 4th March, 1942. Actually a question was put down as to whether it was a fact that this man would get £2,500 per annum for a part-time job. The Minister replied: "For discharging one of the most responsible positions in the country." The Minister's view was that £2,500 a year was not inadequate remuneration for a man when he was discharging one of the most responsible positions in the country. If that is so, it seems to me that what you have left after taking £2,500 from £7,000 should be adequate for distribution among the remaining directors. I would ask the Minister to accept some figure as a maximum distribution in the form of remuneration for directors.

Mr. Lemass

I do not want to say that any figure is too much or too little to provide for directors' fees. What I do say is that we should not decide that at all ourselves. It is a matter for decision by the company. Nobody will pay the fees except the shareholders of the company—the ordinary shareholders—and to the extent that they provide for the fees of the directors they are diminishing the fund available for the payment of dividends to themselves. This matter is the concern of the shareholders of the company only and I do not think we should interfere with the rights of these shareholders in that regard any more than we interfere with the rights of shareholders in any other company, either in respect of directors' fees or with the extent to which they may decide to provide them out of the funds available for that purpose.

I think it would be very wrong to assume that the directors of this company will be merely figureheads with no duties or responsibilities to perform. Actually the reverse is the case. The management of a very big undertaking of this kind involves a very considerable amount of work on the part of the directors. I remember that when the 1924 Act was going through it provided for a board of 12 for the Great Southern Railways and amendments to reduce the size of that board were resisted by the then Minister on the grounds that a smaller board would not be able to discharge all the work devolving on it. Subsequently the board was reduced but the reduction in the numbers meant that the members had to give considerably more time and carry more responsibility. Ordinary routine work alone involves a great deal of time and committees of the board are set up to discharge it apart from the work which must be discharged under statute by the full board. I think it would create a wrong impression if it were to be stated that these men had to come along merely to listen to the chairman putting forward propositions. They have a great deal of duty to do and so far as their remuneration is concerned I propose that we do not interfere with that matter but leave it to the company as the Bill proposes. I think the House can be assured that shareholders will not be concerned to inflate that remuneration unduly because the fund out of which it will be paid is the fund available for the payment of dividends.

Mr. Duffy

That is perfectly all right if one could visualise a shareholders' meeting at which six, seven or eight shareholders would be present —holders of common stock—but it is not the position that provision is made here that one person may be a shareholders' meeting if he carries sufficient proxies? What happens in many instances is that a shareholders' meeting of a big concern may be held in the company's office into which you can only fit 20 people. These people at such meetings will carry proxies sufficient to put through any motion. If there is a motion, for instance, suggesting that the shareholders should increase the remuneration of directors by 50 per cent. proxies can be taken out to implement that resolution.

Mr. Lemass

The Senator assumes that shareholders give out proxies automatically. A shareholder gives a proxy to another shareholder to represent him if he is satisfied with the way that shareholder will represent him or with the management of the company up to date. The extent to which directors can get proxies is the extent of the confidence of the shareholders in them and if they abuse that confidence they will not get any proxy.

Mr. Duffy

If a bank holds £1,000 of common stock in the company and the director of the bank is also a director in this company that director carries £1,000 proxies.

Mr. Lemass

If such a situation exists.

Mr. Sweetman

The circumstances of the bank in that case are governed by a cestui que trust. The beneficiary has the “say” if he wants to.

Amendment, by leave, withdrawn.

Section 38 agreed to.

SECTION 39.

Mr. Duffy

I move amendment No. 25:—

In sub-section (3), page 17, line 23, after the word "conditions" to insert the words "as to remuneration, emoluments and other conditions of service".

That is not the procedure. Before any remuneration can be paid, the company must meet and vote a sum for the remuneration of the board. Out of that sum, all the members of the board are remunerated, in accordance with the decision of the directors, but the total remuneration of all the members cannot exceed the sum voted by the company.

Amendment, by leave, withdrawn.

Mr. Kyle

I move amendment No. 26:—

In sub-section (7), page 17, line 37, after the word "shall" to insert the words "as soon as may be".

No time limit is provided in the sub-section as it stands. I hope the Minister will accept the amendment in the spirit in which it is proposed. I do not propose to tie the Minister down to any particular date, but I suggest that the words "as soon as may be" be inserted.

Mr. Lemass

I do not think that the words proposed are necessary. If circumstances were to arise in which the chairman had to be removed by the Minister, the Minister would, certainly, be concerned to get a new chairman appointed as quickly as possible, so that the business of the company could be carried on, and it is extremely improbable that any Minister would take that step before notice of the removal of the old chairman had been laid before the Oireachtas.

Amendment, by leave, withdrawn.

Mr. Sweetman

I move amendment No. 27:—

To delete sub-section (9) and in lieu thereof to insert the following sub-section:—

(9) The Minister shall by Order remove the chairman from office if:—

(a) the chairman or his wife (if any) shall within three months from the date of the appointment of such chairman, fail absolutely to sell or otherwise dispose of all common stock or any interest in any trust fund which includes common stock and which either of them may own or be interested in for their own benefit;

(b) if the chairman or his wife (if any) shall within three months of any common stock or any interest in any trust fund which includes common stock becoming vested in either of them by will or succession for their own benefit fail absolutely to sell or otherwise dispose of it or their interest therein or in such trust fund;

I do not think the matter is of much importance but the section is not watertight in the way it stands.

Mr. Lemass

A provision of that kind could not be completely watertight.

Amendment, by leave, withdrawn.

Section 39 agreed to.

Business suspended at 6.05 p.m. and resumed at 7 p.m.

SECTION 40.

Mr. Duffy

I move amendment No. 28:—

In sub-section (1), page 18, line 24, after the word "board" to insert the words "with the sanction of the Minister".

This section deals with the appointment of a managing director. It is contemplated that the board may appoint one of their number to be a managing director, and they fix his salary and appoint his duties. The question seems to me to be one of some importance because it is conceivable and, I think, contemplated that many of the functions of the board would be transferred to the managing director. Having regard to the constitution of the company, I think it is only fair to suggest that there ought to be some consultation with the Minister regarding the appointment. The only provision that is being suggested here is that the appointment will be made with the sanction of the Minister. It is not suggested that the Minister will sanction the actual appointment itself or the person to be appointed. All that is provided is that the Minister will be consulted before the decision to appoint a managing director is taken. One of the things that can arise here, of course, is that a managing director might be appointed at a salary far and away beyond anything that is contemplated so far. While the shareholders have, at least technically, the right to apportion a lump sum for the payment of directors' remuneration, no question at all arises, so far as the shareholders are concerned, regarding the remuneration of the managing director, and, I think, therefore, that the provision suggested here is not an unreasonable one.

Mr. Lemass

I think the Senator may take it that in practice the Minister for Industry and Commerce will be consulted by the board before they propose to exercise their power in this regard, but in so far as the appointment of a managing director is an affair of management, I doubt if it is wise that they should be required to receive the sanction of the Minister. I have endeavoured to frame the Bill in such a way as to ensure that the Minister would not interfere at all in affairs of management except where those affairs overlapped matters of policy. I think it is extremely improbable that circumstances would arise in which the board would not discuss with the Minister for Industry and Commerce any proposal to appoint a managing director, but I should not like to have it a legal responsibility on the Minister to sanction such an appointment. It could be held and, possibly, would be argued that in so far as the Minister sanctioned such action by the board, he accepted some responsibility for the actions of the managing director subsequently.

Mr. Duffy

Would the Minister be satisfied to incorporate the words "after consultation"?

Mr. Lemass

I think they will be entirely unnecessary because, while that is almost certain to be the practice, nevertheless I think we should endeavour to maintain the theoretical position, at least, that this is a function of the board and that the board, including a chairman appointed by the Government, are entitled to make the arrangements they think best to ensure the efficient administration of the company's business. That is why I should prefer that there should not be an obligation on the Minister in that regard, realising that, in practice, he is likely to be consulted.

Amendment, by leave, withdrawn.

Mr. Sweetman

On behalf of Senator Douglas I move amendment No. 29:—

To delete sub-section (2).

We do not understand the sub-section in question. It seems to us to be saying what is obviously a fact anyway: that if a managing director ceases to be a member of the board he immediately ceases to be a director. In addition to that, we were not quite happy in that, possibly, there might be a conflict with Section 86 of the 1845 Act, which the Minister has brought in, and the other clause which he has not brought in. The Minister has brought in Section 86, and there is just a possibility that this appointment of a managing director might be considered an office of profit, which would automatically exclude him from the board under Section 86.

Mr. Lemass

I think it is correct that the managing director automatically ceases to be a director if he ceases to be a member of the board. I assume that there must be some legal reason for saying that if he ceases to be a managing director he ceases to be a member of the board.

Mr. Sweetman

I agree that it is correct, but we were wondering why it was put in.

Mr. Lemass

I am not quite clear as to that myself, but I gather that the legal people considered that it was necessary to provide for it.

Mr. Sweetman

Perhaps the Minister would look at it in relation to the other section I have mentioned.

Amendment, by leave, withdrawn.

Mr. Kingsmill Moore

May I suggest to the Minister that the introduction of outworn Latin tags does not look well in a Bill of this Kind? He used the word "automatically" himself automatically.

Section 40 agreed to.

Section 41 agreed to.

SECTION 42.

Mr. Duffy

I move amendment No. 30:—

To delete sub-section (2).

The section deals with the compensation payable to certain stockholders' directors, and provision is made in the first sub-section for the payment of compensation on the basis of two years' remuneration to members of the board of the dissolved company who do not take office in the new company. Sub-section (2), with which this amendment deals, provides for the payment of compensation equivalent to two years' remuneration, to those who do take office in the new company, but it also provides for the payment of double compensation, that is to say, if a director concerned in sub-section (2) of the Great Southern Railways was also a director of the Dublin United Transport Company, the basis of his compensation would be the equivalent of the fees and remuneration he drew for a period of two years from the two companies.

I think there may be some case for paying compensation to directors who are displaced by this Bill, but I do not think it is reasonable to pay compensation to those who decided to take office in the new company which is being established under the Bill, and then in certain circumstances, to pay them compensation equivalent to the remuneration from both companies. I think it is far too generous and I move that the sub-section be deleted.

Mr. Sweetman

I also tabled this amendment, because the Minister himself in the Dáil (Vol. 94, Col. 2336) said: "He will get no compensation at all unless he resigns" and as it did not appear to me to be the position under the sub-section, I wanted the matter further clarified. In discussing this amendment, I find it a little difficult, in view of the line taken by the Minister here, to see that he does not propose to discuss at all what the fees for directors of the new company would be. I would have thought that in the case of Córas Iompair, as it is going to be a more important concern than the Great Southern Railways or the Dublin Transport Company, the presumption at the back of the Minister's mind was that a director of Córas Iompair would receive more than he would have received as director of either of the two dissolved companies. He would be going into a better job and it does not seem to me equitable that he should get compensation for taking that better job.

Mr. Lemass

I do not contemplate that the amount voted by the shareholders of Córas Iompair Éireann for remuneration of directors will be substantially different from that provided by the stockholders of the Great Southern Railways Company for the remuneration of the directors of that company. We are dealing in sub-section (2) with the case of an individual who is a director of both companies and we shall try not to be unfair in this regard. Throughout this Bill we have acted on the principle that wherever, as a result of our action in effecting this amalgamation, persons lose their employment, lose financially, or are worsened in their conditions of employment or in their prospects, they should be compensated.

I agree with the Minister if he agrees that the remuneration of the directors of Córas Iompair is going to be the same as that of railway directors.

Amendment, by leave, withdrawn.

Section 42 agreed to.

SECTION 43.

Mr. Duffy

I move amendment No. 31, standing in my name and that of Senator Kyle:—

In sub-section (1), paragraph (d), page 19, line 38, to delete the words "closing of railway lines".

This section is one of great importance because it affects a large number of people. I do not know the exact figure, but there are probably 20,000 people in the employment of the two companies. All of them are not concerned in this section but a very substantial number of people are concerned.

The proposal in the section is that compensation will be payable under two headings. All those affected by the first sub-section would be entitled to pensions, and those affected by the second sub-section would be entitled to lump sums. I am concerned with the first sub-section. That provides that if a person's office is abolished directly and solely in anticipation of, or as a result of amalgamation effected by this part of the Act, and if certain other things do not operate, he shall be paid by the company compensation calculated in the manner set out in the Bill. He will not be entitled to compensation under paragraph (b) if the abolition of his office or situation is shown by the company to have been caused by a decrease of traffic, a reduction of renewal or maintenance work and so forth, the closing of railway lines, or other economic causes.

With regard to the closing of railway lines, I should say that that is covered by another Act which the Minister himself introduced in 1933, and provision is made there for that situation, the closing of lines. I gather that the Minister is of opinion that its introduction here makes no difference to the law. I have been consulting with representatives of the men concerned, and I have asked them to get legal opinion on the matter. I do not profess to be an authority, and I do not suppose the officials can be cited as an authority on the interpretation of a statute. The Minister has resources at his disposal for finding out the effect of his legislation, and I thought it would be reasonable to ask the people concerned to get an opinion on it. Here is the opinion, in part, at any rate:—

"We have examined all the principles of statutory interpretation relative to this question (that is, the question of the closing of railway lines, the subject I am dealing with at the moment), and we are forced to the conclusion that an arbitrator might readily hold Section 9 of the 1933 Act to have been impliedly repealed pro tanto, by Section 43 of the Bill, or, in other words, that a person who would be otherwise entitled to compensation under the 1933 Act is not so entitled if his redundancy is caused by the closing of a line resulting from the amaglamation of the two companies concerned.”

The opinion also states:—

"It may be argued that persons dismissed as a result of the closing of a line caused by the amalgamation are only precluded from receiving compensation calculated in the manner set out in the Fifth Schedule to the Bill and this exception is limited only to compensation so calculated and cannot, therefore, affect a person's rights under the Act of 1933."

The legal opinion goes on:—

"In this connection the arrangement of the section and the position of the words objected to are of considerable importance. The section first sets out in positive terms the circumstances under which a person is entitled to compensation and then lists a series of specific exceptions which preclude a person from recovering compensation where the circumstances giving rise to such person's dismissal come within the scope of these exceptions. It is clear that with regard to the exceptions other than the closing of railway lines, the principle implicit in the arrangement and wording of the section is to deny the right to compensation, not to deny the right to some particular form of compensation. It is difficult to find adequate grounds to show that the exception, ‘closing of railway lines,' is not used in the same order of ideas to which its associated exceptions belong. In other words, anybody reading the section must inevitably come to the conclusion that the phrase ‘closing of railway lines' has precisely the same significance as ‘reduction of traffic' or ‘reduction of renewal or maintenance work'."

Then the legal authority adds:

"To support what appears to be the Minister's argument, the word ‘compensation' must be at all times regarded as inseparable from the words ‘calculated in the manner set out in the Fifth Schedule.' In other words, the compensation payable under the Bill is to be conceived as a particular type of compensation only identified and distinguished by the method of its calculation. It is true that the words ‘method of calculation of the prescribed compensation' will always be associated with the manner in which it is to be assessed, but we find no words in the section to warrant the assumption there that the method of calculating compensation forms part of its definition. If the Minister's argument is correct, an absurd position can arise. For instance, two men, A and B, join the service of the Great Southern Railways in the same year and historically their careers are similar. Both are dismissed following amalgamation, A as a result of the closing of a line, and B, for some reason other than the exceptions to Section 43. A would claim under the 1933 Act, and B under the Bill, but the two Schedules differ in certain respects and to this extent, the results even in the case of success might work out quite differently. For instance, under the Second Schedule to the 1933 Act, paragraph 5 (b), it is provided that where an employee was absent from his employment for a period of less than one year on account of the closing or partial closing of a railway or section of a railway in consequence of the civil strife in the years 1922-23, such absence shall not be deemed to have caused an interruption of his employment if otherwise continuous, but shall not be reckoned or included in his period of service for the purpose of calculating compensation under this Act. Presumably, if he has been absent for the reasons stated for one year or more, the continuity of his service is interrupted, and he is only compensated as if his service began for the first time on the date of resumption after the interval of absence. That would be the basis upon which employee A would be compensated. It might mean cutting off ten, 20, or more years from his service for compensation purposes. Then we come to B, and we find under the Fifth Schedule, Part 2 (d), page 64, that ‘if that person was by reason of disruption of railway services due directly to civil strife in the years 1922, 1923 or 1924, temporarily absent from his employment with the former transport undertaking, such temporary absence shall be included in the period of his pensionable service.'

In this case there is no limit to the time during which he may have been absent in the years 1922-3-4 and the period of such absence shall count for pension. As stated, in the 1933 Act only the years 1922-23 are provided for; the absence must be less than one year and it shall not count for pension purposes. Then there is in the 1933 Act no provision such as that included in the Fifth Schedule, paragraph 2 (c), page 64, of the present Bill. A number of railwaymen do, in fact, come within this sub-section (c) of the present Bill, but if they are made redundant under the Railways Act, 1933, they are deprived of the benefit of it. The Minister argues that it would not be proper to have two different rates of compensation for railwaymen dismissed because of the closing of railway lines, seeing that the 1933 Act applies to all railways within the State. On the other hand, he sees no inconsistency in paying two different rates of compensation to railwaymen working for the same employer, as will unquestionably happen if this Bill remains unamended. It is inequitable, and can be monstrously unjust, to have two employees with equal rights, morally and otherwise, treated differently, as can happen under the Bill."

Mr. Hearne

I do not like to interrupt the Senator, but, on a point of order, I ask for a ruling as to whether it is in order for a member of the House to quote at length from a document which purports to be a legal opinion, without naming the author?

Acting-Chairman (Mr. Campbell)

The Senator has stated that he is quoting from an opinion by Counsel. He is entitled to quote in support of his argument and is not required to name Counsel.

Mr. Duffy

I want the Senator to bear in mind that I am not trying to create any difficulties. I am trying to inform the Minister of the opinions given to the representatives of the men, and I do feel, from what the Minister has said himself, that he is anxious to see justice done to them. The only question which arises then is whether the information at his disposal is as good as the information at mine. At least he is entitled to be told what I have been told by legal people.

Acting-Chairman (Mr. Campbell)

You may proceed, Senator. It is quite in order.

Mr. Duffy

This is the last paragraph of the opinion:—

"The argument that the 1933 Act applies to all railways is no argument at all, seeing that the present Bill applies to the Great Southern Railways conditions not applicable to the other companies. There is, of course, nothing simpler than repealing Section 9 and the Second Schedule of the Act of 1933 as far as they apply to the Great Southern Railways."

It seems to me that, if that opinion is substantially sound, the employees transferred to the new company who are dismissed because of the closing of a line, even though that closing has been brought about by amalgamation, would be deprived of compensation under both Acts. That is substantially what this opinion amounts to—that the application to them of the 1933 Act is repealed by implication in the present Bill. I do not believe for a moment, and I am not suggesting for a moment, that the Minister intends that. I read his speech on the subject in the Dáil and I am perfectly satisfied that his intention is that those who are dismissed because of the operation of this Bill will get compensation under whatever scheme of compensation applies to them. I am urging that there is no need to retain those words in the Bill. I do not think there is any need whatever for them. Paragraph (d) refers to the position which arises when "the abolition of the said office or situation is not shown by the company to have been caused by decrease of traffic, reduction of renewal or maintenance work, introduction of improved methods of working ..." There seems to me to be no reason why those words in relation to the closing of railway lines should be inserted if there is a danger that the men may be prejudiced and will not have the advantage of receiving compensation under the 1933 Act.

Mr. Lemass

The instructions given to the Parliamentary draftsman in framing this Bill were intended to ensure that railway workers who lost their employment by reason of the closing of branch lines under the 1933 Act would continue to be entitled to the compensation provided for in that Act. When this question was raised in the Dáil I had the legal advisers of the Government re-examine the question, and again they assured me that they could see no reason why a worker disemployed by reason of the closing of a branch line would not continue to be entitled to the compensation provided in the 1933 Act. To test the matter fully, I put the specific question as to whether the closing of the Bray line, following the amalgamation, because of a decision of the new company to provide transport services to Bray exclusively on the road, would involve the employees dismissed in consequence of the closing of that line not being entitled to compensation under the 1933 Act, and their answer was that those disemployed would be entitled to compensation under the 1933 Act, not under this Act —that the closing of a line which is excluded from this section would nevertheless be fully covered by the provisions of the 1933 Act.

I gather that Senator Duffy and his colleagues have got a legal advice which casts doubt upon that opinion. If the Senator will be good enough to send me a copy of that opinion, I will arrange to have it considered by the law advisers of the Government, because I am anxious to ensure that there will be no mistake made here, a mistake which, if made, would involve additional legislation, because I state specifically that it is my intention that a worker who is disemployed by reason of the closing of a line will get the compensation contemplated in the 1933 Act. The Senator has, however, drawn attention to the fact—those who prepared the opinion also mentioned it— that the Schedule to this Act is now somewhat different from the provisions of the 1933 Act. That is so now; it was not so when the Bill was introduced, and I should not like the fact that I improved the provisions of this Bill in relation to one particular aspect of the matter for workers who may be disemployed as a result of the amalgamation to be used as an argument in favour of the exclusion of the employees of this company from the provisions of the 1933 Act in respect of the closing of branch lines. I think there is force in the contention that the 1933 Act, which applies to all railway companies, should provide for uniform treatment for the employees of all railway companies in the same circumstances. It is quite true that we could exempt the employees of the Great Southern Railways Company from the provisions of the 1933 Act, and make them subject to the provisions of this Act, but I think that would be wrong. If there is need to modify the provisions of the 1933 Act to bring them into accord with the new provisions of this Bill, then I think we should amend the 1933 Act and give the benefit of the improved provisions to railway workers whether employed by Córas Iompair Eireann, by the Great Northern Railway or the Donegal Railways, who become disemployed by reason of the closing of branch lines.

The changes are not very substantial. They will affect a very limited number of cases. The calculation as to service with the company, and the determination that the period during which the worker may have been disemployed by reason of the cessation of transport in consequence of the blowing up of bridges or other destructive activities in 1923, does not constitute an interruption of the service can affect only a very limited number of those who may have a claim for compensation either under the 1933 Act or this Act. In fact, there may be no such cases. If there were any number of such cases to an extent requiring the attention of the Government, then I would propose to deal with it by amending the 1933 Act rather than by special provisions in relation to the employees of Córas Iompair Eireann. The 1933 Act provided uniform conditions for all railway workers, and I think we should maintain that. There is no dispute between Senator Duffy and myself as to the intention here. The intention here is that a worker who is disemployed by reason of the abolition of his office in consequence of the amalgamation will get compensation in accordance with the provisions of this Bill.

The worker who is disemployed by reason of the closing of branch lines will get compensation pursuant to the provisions of the 1933 Act. If there is any doubt as to the interpretation as a result of the consideration of the information that Senator Duffy will be good enough to send me, I will have an amendment introduced. If, despite the opinions now held, the workers whom we intend should get compensation should be deprived of it because of a different interpretation being put on the matter by the courts, we will have amending legislation introduced to deal with it.

Mr. Ryan

I heard the Minister speak on this sub-section this evening and I have read what he said in the Dáil on the Report Stage of this Bill. I have considered this sub-section and by reason of the fact that I happened to be a standing arbitrator for 11 years, having had to interpret analogous sections of the Railways Act, 1924, and the Railways (Existing Officers and Servants) Act, 1926, I think I have some idea as to the probable effect of this sub-section. This sub-section will be interpreted and construed by an arbitrator. It was laid down by the High Court that the standing arbitrator under the Railways Act, 1924, was exercising judicial power and that it was part of his duty to construe sections of an Act as a matter of law. I would earnestly ask the Minister, for many reasons, to reconsider this sub-section. The intention of the sub-section is to provide compensation for an officer or servant whose office or situation is abolished as the direct result of amalgamation. For that purpose paragraph (d) is unnecessary, because paragraph (c) provides as follows:—

"That person's office or situation is abolished directly and solely in anticipation of or as the result of the amalgamation effected by this part."

Stop there, because there you get what you desire. Then the sub-section goes on, and I say that paragraph (d) is a travesty of a similar paragraph in a different context in the Third Schedule to the Railways Act, 1924, as amended by Sections 3 and 4 of the Railways (Existing Officers and Servants) Act, 1926. Paragraph (d) says:-

"the abolition of the said office or situation is not shown by the company to have been caused by decrease of traffic, reduction of renewal or maintenance work, introduction of improved methods of working (other than methods which would not have been feasible for either dissolved company), closing of railway lines or other economic cause."

Paragraph (d) has no meaning unless you read into that paragraph the words "as the result of amalgamation". It would thus read:-

"The abolition of the said office or situation is not shown by the company to have been caused by decrease of traffic as the result of amalgamation, reduction of renewal or maintenance work as the result of amalgamation, introduction of improved methods of working as the result of amalgamation, closing of railway lines as the result of amalgamation, or other economic cause as the result of amalgamation."

Why should paragraph (d) be there at all when paragraph (c) is quite sufficient for all your requirements? Therefore the effect of this sub-section, in my opinion, will be that the railway company can go before the arbitrator and say "we have closed this railway line"—in a moment I will deal with the loose use of the word "closing"— and they can say: "It was due to the closing of the railway line as the result of amalgamation that the office or situation was abolished and so there is no claim for compensation".

Paragraph (d) was taken from the Third Schedule of the Railways Act, 1924, as amended by Sections 3 and 4 of the Railways (Existing Officers and Servants) Act, 1926. But in that Third Schedule as amended you have a different provision:

"Every existing officer or servant who under paragraph (2) of this Schedule relinquishes his office or situation within seven years after the passing of the Principal Act, and every existing officer or servant whose office or situation is abolished under the said paragraph (2) within such seven years on account of his office or situation having become unnecessary in consequence of changes of administration due directly to the amalgamation and absorption of companies effected by or under the Principal Act and not shown by the amalgamated company to have been caused by decrease in traffic, reduction of renewal or maintenance work, introduction of improved methods of working (other than methods which would not have been feasible for the amalgamating or absorbed company by which the officer or servant was formerly employed) or other economic cause.."

You have in that paragraph a provision that the company have to show that the changes in administration were not caused by decrease in traffic and so on. That view is set forth in the decision of Judge Davitt as standing arbitrator in the Kerins case which was referred to by the Minister. This is what the judge said:-

"The words ‘such changes of administration as aforesaid' relate back to the first part of the section where the words ‘changes of administration' are qualified in two ways. They are qualified first in a positive manner thus:

‘Changes of administration due directly to the amalgamation and absorption of companies effected by or under the Principal Act'.

and secondly in a negative manner thus:

‘and not shown by the amalgamated company to have been caused by decrease of traffic, reduction of renewal and maintenance work, introduction of improved methods of working (other than methods which would not have been feasible for the amalgamating or absorbed company by which the officer or servant was formerly employed) or other economic cause'."

Therefore the changes in administration were qualified in a positive and negative way in the Act of 1924. Here in this Act the abolition of offices is qualified in a positive and negative way. I would ask the Minister to reconsider this whole sub-section because so far as compensation is concerned it is, in my opinion, worthless. It will be only necessary for the company to say that an office or situation was abolished by decrease in traffic as the result of the amalgamation and so forth. Therefore I would suggest to the Minister it would be far preferable to delete paragraph (d) altogether.

I come to this particular amendment which is before the House, namely, the deletion of the words "closing of railway lines". The Minister has told the House that he has had legal opinion on that and that where railway lines are closed the employee who suffers can get compensation under the 1933 Act. In the first place I would like to say that the word "closing" in this paragraph has no legal ancestry. I have read the section in the Railways Act, 1933, on which the Minister relies. But what does that section deal with? It deals with the discontinuance of train services. Under the Railways Act, 1933, an officer or servant is entitled to compensation as the result of an Order made by the Minister giving a Railway Company authority to terminate wholly a service of trains over a specified railway line or a section of a railway line or to reduce the service of trains over a railway line or a section of a railway line. There is not a single mention in Section 9 of the Act of 1933 of the phrase "closing of railway lines". Section 110 of this Bill deals with the "abandonment" of railway lines.

What is the arbitrator to do when faced with the necessity of construing the words "closing of railway lines"? The word "closing" is ambiguous. Does it mean partial discontinuance of trains or a total discontinuance of trains, because Section 9 of the Act of 1933 provides that lines shall not be closed? Section 9 (4) (b) provides that an Order of the Minister giving liberty to a railway company to reduce its train service

"shall not relieve from or affect any liability of such railway company to maintain all bridges, level crossings, fences, drains, and other works constructed and maintained for the use, accommodation or protection of the public generally or of any section of the public or of the owners or occupiers of particular lands".

Since provision is made for the maintenance of bridges and fences, the closing of the railway line cannot have been contemplated. Under Section 110 of this Bill, it is provided that, after the Order under Section 9 of the Act of 1933 has been made, the railway company may obtain an abandonment Order from the Minister which will entitle it to deal with the local authority as regards bridges and to sell the land to adjoining owners. The suggestion that the closing of railway lines as a result of amalgamation entitles a disemployed man to compensation under the Act of 1933 is, I contend, unsound.

I also ask the Minister, if he intends to retain the phrase, "closing of railway lines", or the idea, to amend it by inserting the words "closing or partial closing". In the Act of 1933, mention is made in clause 5 (b) of the Second Schedule to a closing or partial closing of a railway during the years 1922 or 1923. That is the only mention of it in the Act of 1933. There is no mention of it in Section 9. In my opinion, the phrase "closing of railway lines" is ambiguous and indefinite, and may enable the company to say "we have closed this railway line as a result of amalgamation". That will entitle the arbitrator, if the sub-section stands, to refuse compensation to a worker whose situation has been abolished as a result.

Mr. Kingsmill Moore

Enough has been said on this section to show that there can be a number of views held as to the correct interpretation of the drafting and as to its perfection or lack of perfection. I understand that the Minister has already consented to refer the matter back to his legal advisers and to the Parliamentary draftsmen. I would respectfully suggest that, in doing so, there should be not merely a communication to the Minister's advisers and Parliamentary draftsmen of the legal opinion which has been obtained on behalf of the Labour Party but that there should be direct consultation with them. The reason I say that is that, last week, I was engaged for a whole day in a case in which counsel on all sides were agreed that practically the sole object of a statute was to obtain a certain result and they were also agreed that it was very doubtful that the Act had obtained that result. The court decided that it had not. That was a piece of what I might describe as atrocious drafting. I have not studied this section in the way my colleague, Senator Ryan, has done, but it is obvious that there are a great many matters at issue. Perhaps the Minister would say that, in considering the legal effect of the section and its redrafting, he would allow direct consultation between his advisers and those who take a contrary view on the question as to whether the section gives the result which, apparently, everybody intends it to have.

Mr. Lemass

I undertook that, if Senator Duffy would be good enough to send me the legal opinion which he quoted, I would have it considered with a view to ascertaining whether an amendment of the section was necessary or not. I find some difficulty in dealing with the points raised by Senator Ryan because I am not sure that I grasped them properly. I can see no objection to the use of the phrase "closing of railway lines". It is a commonsense phrase which is understood by everybody. To add any words to it would only create confusion instead of removing it. I do not think that any arbitrator or court would have the slightest difficulty in deciding when a railway line had been closed. They might have difficulty in deciding when there had been "cessation of traffic" over it. The closing of a railway line comes at that period when signalmen, plate-layers, gangers and other employees of that type cease to be required in connection with its operation. For various reasons certain lines have had no services over them for the past year, but they have not been closed. I submit that there is a substantial difference between the closing of a railway line and the cessation, for a period, long or short, of services over it.

I cannot understand the reference made to paragraph (d). Nor do I think the representatives of the railway workers will have any objection to an arbitrator interpreting the provision as if the words "as a result of amalgamation" were put after each phrase therein. It would be a comparatively easy matter for the company to show that an employee had been disemployed by reason of a decrease in traffic. It would be a difficult matter to show that he had been disemployed by reason of a decrease in traffic as a result of amalgamation. Clearly, if the arbitrator chooses to interpret the section in the manner suggested, it will increase, not decrease, the prospects of workers in disputed cases getting verdicts in their favour. As regards the closing of railway lines, leaving out of account for the moment the applicability of that term, there is obviously a misunderstanding. The company does not escape the obligation of paying compensation if it shows that there was a closing of a railway line as a result of amalgamation. I tried to explain that, whether the line is closed as a result of amalgamation or not, the obligation to pay compensation to disemployed workers arises under the 1933 Act. The sole purpose of excluding workers disemployed as a result of the closing of a railway line from compensation under this Act is to maintain the position established by the 1933 Act. The 1933 Act, as I explained, applied to all railway companies and it provides for compensation, upon the closing of a railway line, to the workers disemployed as a consequence.

When I inserted in the Schedule the amendment to which Senator Duffy refers, the amendment which brought the provisions relating to compensation in this Bill out of accord with the provision of the 1933 Act, I appreciated that that might be used as an argument for bringing under this Bill rather than the 1933 Act, employees of Córas Iompair Éireann who may in future be disemployed as the result of the closing of railway lines. I felt, nevertheless, that I should proceed in that manner but I explained to the Dáil that while I was doing that I wished to preserve the position that workers disemployed as the result of the closing of branch lines would continue to get compensation under the terms of the 1933 Act and if there should appear at any stage need to bring the provisions of that Act into accordance with this Bill, it should be done by an amendment of that Act which is applicable to all companies and not merely to the Great Southern Railways Company or Córas Iompair Éireann.

The wording of paragraph (d) could hardly be described as a travesty of the corresponding provisions of the 1926 Act. They are in fact exactly the same words as appear in that Act, modified only to bring them into accord with the context of this section. I think these words should be retained. I think it is desirable to have it clearly understood by the workers concerned that we are not guaranteeing to them any definite employment in future or compensation on the loss of such employment. I think we should make it clear beyond doubt, and not merely leave it to the chance that an arbitrator will decide in that sense, that if in future a worker is disemployed for any of the reasons set out there—a decrease in the traffic available to the company, a reduction in the amount of maintenance and renewal work, the introduction of new methods of working which either of the amalgamated companies could have adopted in any event or other economic cause—and by "economic cause" I mean a variety of possible circumstances of which in the Dáil I gave certain illustrations; they may not have been very good illustrations but they will serve to indicate the type of circumstances I had in mind—compensation will not be payable. I instanced the possibility of the cessation next year of deliveries of coal or petrol which would make it impossible for the railway company to operate either rail or road services and consequently to earn revenue from them. In such circumstances the company should not be under any obligation to pay compensation to workers disemployed, whatever other provisions might be made in relation to them. The arbitrator under the 1926 Act indicated that these words had to be related to a decline in revenue and that if there was a development in future which caused a substantial decline in the company's revenue, say a repetition of the circumstances of the economic war which might make it impossible for the company to operate on an economic basis, and in which they would have to contemplate the possible disemployment of workers, in such cases compensation would not be payable to them. If we were to establish the principle that the workers employed in this new company were to be compensated in circumstances of bad trade or of bad times, then we could not contend that workers in other occupations, even in occupations equally vital to the country, would not have a similar right.

My argument for retaining paragraph (d) is to ensure that there will not be in the minds of the persons concerned, that is the employees of the amalgamated companies, any misunderstanding as to what is intended. It is intended that if a worker becomes disemployed as a result of amalgamation, by reason of the fact that there will be now two people to do one job where there were two jobs before, or some corresponding circumstance, he will be compensated. If in future, however, he loses employment because the company is unable to get sufficient traffic, or there is a decline in the amount of work he has to do or because there are substantial improvements in the methods of working—circumstances which may arise in any occupation—then the worker will have no more right to compensation than other workers would have. There will probably be agreements made between the unions of which these workers are members and the company, agreements which will determine the order of priority or the circumstances in which they may be released, but these are matters which would be outside legislation. I, therefore, propose that paragraph (d) should be retained. I think it is important to retain paragraph (d). It is intended that the insertion in that paragraph of "the closing the railway lines" will not operate to deprive workers of compensation on the closing of railway lines, in the belief that these workers are covered by the 1933 Act. As, however, doubt has been cast on that by the opinion received by Senator Duffy, I shall have the matter re-examined and if it is clear that there is a necessity for an amendment to remove that doubt I shall have an amendment prepared. If, after having amended the Bill, it is still felt that we have failed to protect the workers in that respect, then I give the assurance that if we find that workers disemployed by reason of the closing of branch lines are deprived of the compensation provided under the 1933 Act, by some interpretation put on this Bill or that Act, we shall introduce amending legislation to make the position clear.

Mr. Ryan

There is just one matter to which I should like to refer. Perhaps I did not make myself clear as to the functions of paragraph (d) in this section. Paragraph (d) does not come into operation at all unless and until the condition required by paragraph (c) has been first fulfilled. In other words, the worker claiming compensation must prove that his situation was abolished directly as a result of the amalgamation effected by the Act. The Minister referred to the difficulty of getting coal or petrol next year as coming under the heading "other economic cause". Firstly, if a worker is disemployed as a result of failure to get coal or petrol, he is not disemployed directly as a result of amalgamation so, therefore, the coal and petrol stage would never be reached under paragraph (d) because he did not prove that his dismissal was due to the direct result of amalgamation. I say, therefore, that paragraph (d) has no function whatsoever except the worker first proves that his situation was abolished as a direct result of amalgamation. When he has proved that, paragraph (d) comes into operation. In other words, paragraph (d) is governed solely by the wording of paragraph (c).

Mr. Lemass

When the Senator talks of proof, the necessity for proof will first of all arise if there is a dispute. We make it the law that the company will pay compensation to workers who are disemployed as a result of amalgamation. If a worker claims that he was disemployed and not compensated, then he may appeal to the arbitrator. If the company wants to contend that he was disemployed for other causes the company must prove that. The function of the section is to put the onus of proof on the company.

Mr. Ryan

The worker has to prove that he was disemployed as a direct result of amalgamation, but even though he proves that his situation was abolished as a direct result of amalgamation, he still will not be entitled to compensation if the company can prove that his situation was abolished as a direct result of amalgamation caused by decrease in traffic or caused by a reduction of renewal or maintenance work. In other words, it is a loophole for the company to get out through even though an employee's situation has been abolished as a direct result of amalgamation. Let us say, for instance, that there is a decrease in traffic as a direct result of the amalgamation, the worker will not get compensation if the company can show that his office or situation was abolished on that account, even though it was a direct result of amalgamation. In other words, it is not sufficient for the worker to show that his situation was abolished as the direct result of amalgamation, because there may be certain causes of the abolition of the situation, due directly to the amalgamation, which will enable the company to escape having to pay compensation, and these causes are set out in paragraph (d).

Mr. Duffy

Personally, I am very much obliged to the Minister for having promised to go into this matter further because I think that, on examination, he will find that there is room for doubt, and if there is room for doubt, it means that there is room for arbitration. Unfortunately, however, the history of arbitration, in relation to similar legislation at an earlier date, has not been very happy, so far as I understand. I am informed that a certain case, which was taken before one arbitrator, was decided in a particular way, and that the effect of the decision of that arbitrator was the depriving of 400 or 500 men of compensation to which they believed they were entitled. These people felt that there was no use in going to that arbitrator for a further decision, but in the meantime the arbitrator was changed and, although the circumstances were similar, the new arbitrator gave a ruling which was quite opposite to that of the previous arbitrator. May I say that the first arbitrator was Judge Davitt and that his successor was the present President of the High Court? Now, the difference between them was in the interpretation of a section somewhat similar to this. The result of the latter decision was that the then Mr. Conor Maguire benefited 300 or 400 men, because his decision was the very reverse of what had been laid down by the previous arbitrator.

Mr. Douglas

I take it that the point made by Senator Ryan will be carefully examined, because it seems to me that it is a very big point.

Mr. Lemass

Certainly.

Mr. Douglas

I am particularly concerned with regard to what the Senator says as to the effect of paragraph (d).

Amendment No. 31, by leave, withdrawn.

Mr. Duffy

I move amendment No. 32:—

In sub-section (1), paragraph (d), page 19, lines 38 and 39, to delete the words "or other economic causes".

Already some reference has been made by the Minister to this amendment with regard to the effect of the retention of the words in the paragraph. I should like to suggest at the outset that the incidents to which the Minister adverted are already covered in the earlier words of paragraph (d), dealing with the possibility of a decrease in traffic. A decrease in traffic, of course, will be caused if there is no coal or if we do not get a sufficient supply of petrol.

Mr. Lemass

It is not so much a question of a decrease in traffic but of a decrease in the capacity to handle traffic. One can contemplate a position where there might be plenty of traffic available but not sufficient facilities to handle it or, on the other hand, where plenty of facilities would be available but there would not be sufficient traffic. There are the two possibilities to be considered.

Mr. Duffy

I agree, but I see the aspect of the question where you put in a provision for a decrease of traffic, but in any event I should like to say that this is another matter, which has given a lot of trouble and about which there has been a good deal of argument amongst those who have, I think, the same object in mind but differ as to how it could be applied. Information was obtained for me in regard to this matter also, and I should like to read it for you, if I may.

"The rule of legal interpretation is that, where general words follow particular words, unless there is something to show that a wider sense was intended, the general words take their meaning from the particular words and are assumed to comprehend only things of the same kind as the latter. It will readily be seen how the application of this rule gave rise to elaborate and lengthy arguments in previous arbitrations. The Minister in the Dáil said that the words would react against the company because the onus is upon them to prove the existence of such cause."

This is the advice that has been given:-

"The scope of the defence permitted is, however, material and if couched in ambiguous terms capable of a variety of constructions, the advantage must lie with the person making the defence. This is, in fact, what has happened in the past: the company's counsel has made an elaborate, ambiguous statement, the bulk of it in general terms, impossible to contradict, but difficult to associate directly with the case under discussion."

In the course of his judgment in the Kerins case, Judge Davitt said:-

"These considerations induced me to hold that the company are entitled to rely upon the decreased revenue occasioned by the modified scale of charges as an economic cause...."

That does not imply a reduction of traffic. He is referring to a reduction in the receipts, "brought about by a decision of the Railway Tribunal reducing the charging power of the company". Judge Davitt continued:-

"But if I were to hold with Mr. Duffy (Mr. Gavan Duffy), the company would escape liability because the dismissal of his client was caused by the reduction of renewal and maintenance work, whatever was the occasion of such reduction."

Dealing with a somewhat similar case, Mr. Conor Maguire said:—

"I am unable to agree with Mr. Phelps (appearing for the company) by holding that a decrease in receipts from traffic is in itself an economic cause. It may be, and very probably is, to some extent at least, the result of economic causes."

There is clearly a conflict of views. Judge Davitt said that it was an economic cause if the company could show that they suffered a reduction in revenue. Mr. Justice Conor Maguire, as he now is, said that he was firmly of opinion that it was not an economic cause. It seems to me that that conflict between two arbitrators suggests that there is a danger in retaining these words. I do not think there is anything I desire to add to that because the Minister himself has dealt with the situation on this and the previous amendment.

Mr. Lemass

I think I could give quite a number of illustrations of economic causes other than those mentioned here. What we intend to provide is compensation for the persons who lose their employment because of our action in amalgamating these two concerns. Persons who lose their employment through the economic causes will not have a statutory right to compensation under this Bill. It may be argued, as has been argued here, that we can leave the matter as it stands at the end of paragraph (c) but I think there is good reason to indicate the type of economic causes we have in mind, that disemployment by reason of economic causes does not entitle a person to compensation. That term was interpreted by Judge Davitt as having relationship with the saving of money. It could have a wider interpretation, but even taking it on that basis, the circumstances in which there would be a heavy increase of taxation on the company or such an extraordinary increase in the cost of material they had to purchase for the operation of their service that they could not maintain their net revenue without effecting substantial economies in working. These are other economic causes which might arise in any business and that is precisely what I had in mind in the wording of paragraph (d), that circumstances which arise in any business if arising in the Great Southern Railways should impose no further obligation on the company as an employer than on any other employer. The obligation to provide compensation arises as a result of something we are doing here, something we are imposing on these companies and it would not have arisen if we had not enacted the legislation.

Mr. Ryan

I would ask the Minister to consider the deletion of these words from the paragraph, assuming that the paragraph has any meaning at all, because they will never be construed in any decisive way unless they are construed by the High Court. Different arbitrators may take different views as to their meaning. Judge Davitt found difficulty in construing these words "or other economic causes" and his successor, Mr. Conor Maguire, now President of the High Court, said in his judgment in the Peate case:-

"I agree entirely with Judge Davitt as to the difficulty of classifying the particular words under any definite genus. In the Kerins case, Judge Davitt did not decide that the words ‘economic cause' were to be construed ejusdem generis with the preceding words. It was not necessary for him to decide the point in that case as it was decided on other grounds. He does indicate, however, as his opinion that the causes enumerated in the preceding words almost defied classification under any genus. In this I fully agree.”

And, now, with the addition of "closing of railway lines" the genus will be more confused than ever, and I am satisfied that these words will never get a satisfactory interpretation because there will be different views as to their meaning. The words "other economic causes" have been referred to by the Minister. He cannot divorce the words in this paragraph from economic causes due to amalgamation. The example which he gave as to the shortage of petrol or coal is an economic cause, but it is an economic cause that has nothing to do with amalgamation and accordingly has nothing whatever to do with this sub-section.

So, therefore, if it means anything, it means that the railway company will be able to defeat the claim of a worker whose situation has been abolished as the direct result of amalgamation, provided the company can show that the employee's situation was abolished owing to a disposition on the part of the railway company to save money as a result of the amalgamation. I think myself that these words which originally came into the 1926 Act, not the 1924 Act, have some peculiar origin which I have never been able to trace. They are not in any English Act and I do not know how the words came to be inserted when the Railways (Existing Officers and Servants) Act, 1926, was going through the Oireachtas.

The intention is that any worker who loses his employment because of the amalgamation of those two companies will be compensated. I think it is desirable to make clear, because I know there is a great deal of confusion amongst workers, that those who lose their employment in the future for reasons that might have operated even if we did not pass this Bill will not be covered by its protective provisions. It is desirable that that should be understood, because there is a great deal of misunderstanding. In fact, in connection with the amendment to which Senator Duffy referred, I have received a volume of letters from people who retired from the railway company 20 years ago and think they are now going to get compensation under this Bill.

Mr. Duffy

I take it the Minister will consider the position?

Mr. Lemass

The Senator will, I presume, send me that opinion as he promised, and I will have it considered.

Amendment, by leave, withdrawn.

Mr. Duffy

I move amendment No. 33:—

In sub-section (2) (c) (ii), page 20, line 7, to add at the end of the sub-section the words "or may relinquish his office or situation, in which event he shall be paid compensation calculated in the manner provided in the Fifth Schedule to this Act".

That is a different type of case. Most cases that will arise here will arise with persons in the clerical grade transferred from one job to another, required to transfer from Dublin to Cork, or who suffer some other disadvantage.

I agree with the Minister that, if there is to be an appeal, it must be an appeal by either party. That is what the amendment provides. There is no question of giving to one side a right not accorded to the other. With regard to the suggestion of Senator Ryan, I am in this difficulty, that if there is to be an application to the court on a case stated by consent, one party can prevent the other from getting to the courts by refusing consent. That is not satisfactory. I think that a citizen is entitled, on a question of law, to have recourse to the highest court. That principle is important in this case because we have knowledge of two arbitrators interpretating a provision similar to that in this Bill in fundamentally different ways, showing that there ought to be some authority to decide what the law is and to have that decision binding in all cases. No arbitrator feels that he is bound to follow a decision given by his predecessor. We had a case in which the present President of the High Court took a view opposite to that of his predecessor.

I move to report progress.

Progress reported; Committee to sit again to-morrow.

The Seanad adjourned at 9 p.m. until 10.30 a.m. on Friday, 10th November.

Seanad Éireann debate - Thursday, 9 Nov 1944