Amendments Nos. 1,2 and 3 are related and should be discussed together. Members are aware that they can speak only once except those who propose the amendments who will have the right to reply. I will call on Senator Molony.
Pyramid Selling Bill, 1980: Report and Final Stages.
I move amendment No. 1:
In page 4, to delete lines 34 to 40, and substitute the following:
"(2) Where a participant returns goods or an article under this section to a recipient and a recipient alleges that the value of the goods or article decreased while in the possession or under the control of the participant and such decrease was occasioned by the wilful neglect of the participant, the recipient shall for a period of 21 days following receipt of written notice from the participant tendering return of goods or article, have the right to apply to the Court by way of summary proceeding and the Court, if satisfied that because of the wilful neglect of the participant the value of the goods or article decreased while in his possession or under his control, shall order that an amount equal to the amount of the decrease may be deducted from the payment falling to be returned by the recipient under this section.
(3) Where a recipient wishes to apply to the Court under this section he shall first lodge in Court the amount of the payment to which this section applies.
(4) A recipient who fails to comply with the provisions of subsection (1) of this section and who has not made application to the Court under subsection (2) of this section shall be guilty of an offence."
It was a very distinguished man, Johnny Costello, who said on very many occasions that Members of the Oireachtas were not paid to be parliamentary draftsmen but to be legislators. I had to spend some considerable time putting together an amendment to section 4 of the Pyramid Selling Bill. I must say I would have preferred not to have had to spend that time because I was aware, having drafted the amendment, that it was imperfect. I would obviously have been happier if the resources of the Department had been available to me to put together what was, in effect, a complicated amendment. But it was with considerable pleasure that I discovered today that a Government amendment, which has just been circulated to Members, in effect adopts the provisions of the amendment that I sought to put before the House.
When this matter came before us last week I spent some time making the case that the provisions of section 4 were completely against a principle that has existed in common law down through the years, a principle that has provided that where a party engages in an illegal contract the court will not allow the criminal or the person who engages in such a contract to have access to the courts to enforce parts of that contract. We had some difficulty in convincing the other side of the House that it was desirable, that that subsection (2) was offensive to this principle and I must say that, with the conviction with which distinguished Members on that side of the House found some objection to my seeking a week so that the matter could be fully considered, I felt that I was wrong and that I had misinterpreted something that I always understood to be the case. The amendments, both our amendments and the Minister's amendment, do not in fact propose to deny the criminal access to the courts and I would like to explain why, in drafting the amendment that Senator FitzGerald and I drafted, we did not seek ultimately to deny him total access to the courts.
I should like to refer to a standard work, "The Law of Contract" by Cheshire and Fifoot, which explains the background to this principle and this policy. It says:
Certain types of contract are forbidden at common law and are therefore prima facie illegal. The first essential to an understanding of this head of the law, which has been clouded by much confusion of thought, is to discover if possible the principle upon which the stigma of illegality is based. The present law is the result of a development that stretches back to at least Elizabethan times, but its foundations were not effectively laid until the 18th century. What the judges of that period were at pains to emphasise was that they would not tolerate any contract that in their view was injurious to society.
Senators on all sides of the House agree that this Bill is necessary. We recognise that pyramid selling or pyramid sales contracts are injurious to society. In various statutes down through the years it has been recognised that there are varying degrees of illegality in contracts. Some contracts, though illegal, must be recognised to some extent by the courts. There are others which the courts, with the interests of society a heart, regard as reprehensible and they will not tolerate allowing parties to such contracts access to the courts. Included amongst the types of contract regarded as most reprehensible is a contract to commit a crime. Anybody who promotes a pyramid selling scheme is inviting a participant to commit a crime. It is with great reluctance that we should allow people who pursue such schemes to have access to our courts.
As many Senators pointed out last week, there are circumstances in which great injustice could be done if participants in a pyramid selling scheme were not allowed access to the courts. The purpose of the amendment is to ensure that, where in order to be fair one allows a party to such an illegal contract to have access to the courts, he will have access only under conditions which ensure that the party seeking justice, so to speak, under such an illegal contract, is restricted to aspects of it that will ensure justice and will ensure that he will not gain in any way from the contract he enters into, or that he seeks to have others enter into.
Subsection (2) of section 4, as it stood, was highly objectionable in this sense. It put the promoter of a pyramid sales scheme in a position where, when a participant in that scheme returned with the goods and said to the promoter: "Take these goods back", the promoter could say: "Those goods are not in the same condition as they were in when I gave them to you. I am using my rights under section 4 (2) of this Act to deduct a sum of money to compensate me for my loss." We are talking about criminals. It is likely that, in almost every case in which a participant would try to return goods, the criminal would say: "The goods are not in the same condition. I am holding on to the money". It leaves the participant in the awful position that he would have to seek redress through the courts.
It would seem that we were allowing the presumption of innocence, so to speak, to fall to the person we regarded as the criminal, and the presumption of having committed a wrong to lie with the person who was lured into the contract by the participant. In order to get over that difficulty we propose that, where a participant returns goods to the promoter, if the promoter maintains that the goods are in a less valuable condition than they were when he first handed them out to the participant, the promoter can exercise a right to obtain compensation. He must, in the first instance, lodge in court the amount of the value of the goods, he must then apply to the court and ask the court to determine whether there has been a loss and, if the court is satisfied that there has been a loss, then the court will allow a deduction to be made.
We also provide in the amendment that this procedure would have to be gone through within 21 days of the participant seeking to return the goods. It is also provided in our amendment that the court proceedings would be summary proceedings and consequently would be dealt with speedily. In so far as those parts of our amendments are concerned, I am pleased to see that the Government have adopted the idea and have, in fact, incorporated all those elements in their own amendment. I am far happier with the Government amendment so far as it goes in that respect. They had the benefit of the experience of the parliamentary draftsman. I am happy to adopt the draftsman's excellent results.
There is one difference between the two amendments. In our amendment we provided that, where a promoter of a pyramid sales scheme fails to return the money to the participant, and does not exercise his right to go to court to have the court determine whether any loss has occurred, the promoter would thereby commit a crime. There would be a criminal sanction hanging over him if he refused to return the goods as envisaged under section 4(1). In the original section there was no intention—it was not provided for at all—that the promoter, or the recipient as he is described in that section, would commit a crime if he failed to respond to the request of another party to the pyramid sales contract. I would be happy to see that proposal to make it a crime dropped altogether if I understood how a participant or a party who wanted to get out of the scheme could get out of it otherwise.
Perhaps the Minister could explain to me what will happen when a party who is inveigled into one of these schemes discovers, perhaps for the first time, that he is engaging in a crime and realises that he is certainly engaging in something that could be very injurious to himself, and wants to get out. He goes to the promoter and says: "Take back these goods and give me my money back." If the promoter refuses, he is not in that way committing a crime. I accept that he is, in the first instance, committing a crime by engaging in this type of activity at all. It is putting a difficult onus on a party who himself, in some way at least, is participating in criminal activity, because you are leaving it to the party who is the less dominant of the parties to the contract to go to the authorities and say: "I have engaged in this crime. I now want to get out of it." He is, in effect—even though improving his chances of getting out of the scheme—leaving himself vulnerable to prosecution. I would have thought it better if we provided for the possibility that the original promoter would commit a further criminal offence by failing to return the money when the party who found himself involved in the scheme wished him to do so.
I second the amendment.
In relation to the question of making it criminal, would Senator Molony not accept that paragraph (d) of the Government amendment which refers to an order of the District Court, would be adequate?
Are we taking all the amendments together? My name appears under amendment No. 2. Do I get rid of that?
Yes.
I should like to open by expressing thanks to the other side of the House for the respect they have shown to the House in agreeing to Report Stage being taken a week after it was proposed to be taken, and congratulating the Minister on taking Senator Molony's point. It is an acceptable amendment. It is an incident Members of the House should remember for future occasions. Senator Molony had his own criticisms of the Minister's amendment.
I suggest that the Minister's amendment, as far as it goes, is very good, and is a great improvement on what we saw first. There is no indication in this section of the degree of neglect which will cause liability. I would have thought that in a situation of this kind it should be the minimum duty to take no more care of the goods that a man finds himself conned into having than he would take of his own goods, which I would take to be the liability of a gratuitous bailee, and that he would not have such a liability as might arise if he was deemed to have received money. Obviously he would not be entitled to throw the watches out the window, but he would not be in any more trouble than he should be if he had gone for a bathe with a watch on him. There is an absence of a definition of the neglect which would give rise to the liability in the existing measure. Senator Molony's amendment did suggest the insertion of the word "wilful" which has that degree of deliberation which would impose something of a lesser burden on the person who finds himself, together with everyone else on the terrace, stocked with goods which nobody can buy because everybody else has got them. That is the extreme and absurd case.
I would like to thank all the Senators who contributed in any way and also I appreciate the work Senators FitzGerald and Molony have put into this. I assure the House that I am not out to stifle discussion as such. The Seanad is here for discussion and if it finds a flaw in a Bill or thinks something should be done this is the place to discuss it. Senator FitzGerald has often said that he is never out for political point scoring.
Section 4(1) provides that a payment in respect of goods or articles shall be repayable by the recipient to the participant. Subsection (2) provides that if the goods have decreased in value because of the neglect of the participant an amount equal to the amount of the decrease in value may be deducted by the recipient from the payment failing to be returned by him under this section. Amendment No. 1 in the names of Senators Molony and FitzGerald proposes to give the recipient 21 days in which he may go to the court to claim that the goods were reduced in value and to look for a reduction in the amount of the repayment he is required to make. The amendment proposes to require the recipient to lodge the amount claimed in court. Subsection (4) of the amendment proposes to make it an offence to fail to comply with the provision of subsection (1) unless the recipient has made an application to the court for a reduction. The intentions of subsections (2) and (3) of amendment No. 1 are in accordance, no doubt, with the philosophy of the Bill, but there have been some problems with wording which Senator Molony referred to earlier on. He said that perhaps the wording was improper. I do not want to detract from what they have said, but were it not for the wording I probably would have been accepting the two subsections just as they are. That was the advice I got from the legal people in the Department.
The Government amendment which was circulated proposes to achieve what Senator Molony and Senator FitzGerald intended. The reason for not including subsection (4) of amendment No. 1 in the Government amendment is that I am advised it would be very difficult, if not impossible, to prove that the recipient has made the repayment required by section 4 (1). I appreciate that the situation will now be fractionally less biased in favour of the participant than the two Senators intended. If the participant's demand for a refund is ignored by the recipient the participant will have to go to court for redress. I am told there are several things he can ask the court to do. He will almost certainly get his money back but he will have to take the initiative. I regret this, but we are going as far as we can to put the onus on the recipient.
In view of the line I am taking I assume that amendment No. 2, which proposes to say that the duties of the participant should be that of a gratuitous bailee, will now be withdrawn. I recommend the Government amendment to the House.
I want to thank the Minister for his response. I accept the point that is made in relation to subsection (4) of our amendment and in those circumstances am happier to accept the Government amendment as drafted rather than our own. I want also to add my words of thanks to what Senator FitzGerald has said in regard to the generous way in which the Minister responded to this. I am aware that last week he found himself in the difficulty that he was anxious to have the Bill become law. Even though it could still have become law by deferring Report Stage to this week, by accepting the amendment it cannot now become law until the Dáil reassembles in October. It has put the Minister in the difficulty that he has been unable to discharge an undertaking that he gave in the Lower House that it would become law before the summer recess. However, the worth of the legislation will prove to be all the more as a result. I thank him for dealing with it.
I do not know where or in what way to raise the point I want to raise now. The Senators on this side of the House have been made aware of a situation which will be affected by the Bill we are dealing with on Report Stage. It is a situation of an entirely honest trading company who have been engaging in their particular activities for very many years, indeed before the war and in my childhood. They have received advice that what they have been doing for all that time will be rendered an offence by the provisions of this Bill. There would be a way of dealing with it if the House would agree to recommit section 1 of the Bill.
We are aware that such a scheme has been in operation for some time but which will not be affected by this Bill. This is a matter we went into in great detail. A Senator mentioned it to me in private and I do not want to mention names in this House, but the Bill is not intended to catch out such dealings or such selling systems. Is the Senator referring to a system that goes on mostly in private houses?
That is not affected by the Bill.
I took the view the Minister has expressed and noted his expression of it in the other House also. We have to tell him that the people concerned have received advice other than to that effect.
All those systems are really selling goods and they are not recruiting.
Perhaps the Minister could give an expression to the firm concerned of the understanding of the legislation.
We can discuss it afterwards.
The Bill is going to become law and it might be a bit late afterwards. I looked again at what the Minister said in the Dáil before we had Second Stage last week and I was quite satisfied with his view on it. Looking at the definition of a scheme under subsection (1) even though it is not intended to include people who involve themselves in direct selling schemes other than pyramid sales schemes, the constituents in section 1 (1)(a), (b), (c) and (d) could in fact include such schemes. For that reason I wonder whether the other side of the House would agree to Senator FitzGerald's suggestion that section 1 be recommitted at least for discussion now. I have looked at subsection (1)(a), (b), (c) and (d) and I am convinced that some of these schemes, with which I am familiar, could come under the scope of the Bill before us. I do not know the way around it, but I am convinced that they would come within the definition of a scheme. I am convinced they would come within the definition of the scheme. Consequently people who involve themselves, whether it is in the business of encyclopaedias, household ware or cosmetics, could find themselves committing a crime. It may not be the Government's intention to prosecute them, but there is no question but that the schemes they are presently involved in would, under the scope of the Bill, be criminal.
That cannot arise. The legal people and the draftsmen have gone into this in great depth because we knew this point would be raised. This Bill has been in the pipeline for many years. Senator FitzGerald may remember that as well. Those problems arose down the years. In the light of that experience our people were very satisfied that no genuine scheme of selling—door-to-door selling, night selling over-tea selling or anything like that, as long as they were genuine on the selling of goods—would be affected.
May I give an example most Senators are familiar with? There is a system of sales engaged in by a company—I will name the company because I do not think there would be any objection to it as it is a household word—Tupperware, boxes for keeping sandwiches fresh and so on. I do not think there is any difficulty under paragraph (a). What they do is ask a housewife to hold a party in her house, invite her friends and these goods are produced in association with wine and cheese, or tea and sandwiches, or whatever. There are also practices like this in the sale of cosmetics. Take the constituents of the scheme:
(a) goods or services, or both, are to be provided by the promoter or, if there are two or more promoters, by one or more of them;
It qualifies there.
(b) the goods or services so provided are to be supplied to or for other persons under transactions effected by participants;
It qualifies there.
(c) the prospect is held out to participants of receiving payments or other benefits in respect of persons who become participants;
That, in effect, may be one the Minister may see as a way out but I put it to him that it is not. A promoter asks a housewife to engage in this scheme. The housewife calls in her friends to the sales party. The participant is invited not just to sell goods but to have her friends sell goods. She is given money not for getting participants in, but for selling the goods ultimately. It does not disqualify the application of paragraph (c) to those circumstances. The prospect is held out to participants of receiving payments or other benefits in respect of persons who become participants. There is every possibility that the original company will pay the agent for sales of a sub-agent. They are not engaging in pyramid selling, but effectively the middle person who introduces what I call the sub-agent will receive a benefit for passing these goods on. That is a prospect held out to participants of receiving payments or other benefits in respect of persons who become participants. I accept what the Minister said in relation to legal advice, but I would ask him to take the point that Senator FitzGerald made. These people have actually obtained legal advice. I can confirm that they have obtained legal advice because I have spoken to one of the persons who advised them on this.
I will have to intervene at this point because Senators will appreciate that I have allowed considerable latitude on these amendments since we are on Report Stage. I hope Senators can now bring the matter to a conclusion. It will be possible for further remarks to be made on Fifth Stage.
Would the Minister agree to recommit the section in view of——
I am aware of the scheme. The Senator will accept that the scheme must contain the four elements mentioned, not alone one, but the four. That is quite clear.
I understand that.
At those parties there was a company to an agent or a sub-agent; but the sub-agent in those schemes cannot get another sub-agent.
At one stage they can.
No payment has been made at the parties mentioned. No payment is being made merely in respect of the recruitment of sales people. The payments are made by the people who come to that particular party for goods sold to them. They may be made by the promoter of that party—some little present given to the woman of the house or the man of the house or whoever gave the use of the house—but that woman of the house is not recruiting to participate further. I think it is quite safe. We have gone into that in great depth.
Go a level higher. I find myself in difficulties. I know the Chair is concerned but——
Sorry, the Chair will have to bring this to a conclusion.
Will the Minister agree to recommit?
We are willing to discuss this or to correspond with the company involved.
Are amendments Nos. 1 and 2 withdrawn?
Could I get guidance from the Chair? How do I become orderly?
It is not possible to become orderly at this point. There is a Fifth Stage to this Bill and you may make some remarks on that stage.
We cannot amend on Fifth Stage, merely draw attention to points.
Amendment, by leave, withdrawn.
Amendment No. 2, not moved.
Government amendment No. 3:
In page 4, between lines 40 and 41, to insert the following:
"(b) a deduction shall not be made under this subsection unless, after lodgment of the amount of the payment concerned in the District Court, that Court, upon application to it in that behalf by the recipient concerned, by order authorises the deduction.
(c) An application under paragraph (b) of this subsection shall be made within 21 days of the receipt by the recipient concerned of a notice in writing stating the intention of the participant concerned to return to the recipient the goods or article concerned.
(d) An order of the District Court in proceedings under this subsection shall make such provision as that Court thinks proper in relation to the payment to the parties concerned of the amount lodged in that Court under paragraph (b) of this subsection in the proceedings."
Amendment agreed to.
Bill, as amended, received for final consideration.
Agreed to take remaining Stage today.
Question proposed: "That the Bill do now pass."
There are in all about 15 companies involved in the direct selling schemes of sale who are concerned about this. I know the Minister does not wish to upset those sales in any way but I would ask him not just to consult those people on the basis of allaying their fears and saying the authorities will not prosecute them, but if there is any danger at all—and I am afraid there is—that their schemes might actually be criminal after the passage of this law, to bring in amending legislation.
I do not have that great fear because in the schemes I know of, the sales people who attend those functions do not really carry stocks of goods as such. That is not the way they operate. Thus they do not over-flood the market. They solicit orders. They may carry a sample, but they do not sell unless they have an order. There is no individual cost, as I explained earlier. That is another matter I would like to raise and which is very much in favour of the companies mentioned.
Question put and agreed to.