This amendment effectively sets out the circumstances in which a call could be made on the tour operator's or the travel agent's bond. It is accomplished by linking the term inability or failure on the part of the operator to recognise insolvency situations, bankruptcy, winding up, liquidation or other process. In addition, under paragraph (f), there is a general discretionary clause under which in a crisis the Minister could on reasonable grounds call in a bond to protect or rescue customers without having to wait for the completion of the formal processes which are mentioned in paragraphs (a), (b) or (c) and which, of course, as the House will see could take quite some time before they might be initiated, and consequently there could be a situation where speedier action would be required, and the reserve power is contained under the paragraph (f). I might mention that the insurance industry who, of course, are going to be very actively involved in the implementation of this Bill through the provision of the bonds, asked for clarification of the Bill to clarify what will constitute inability or failure on the part of an operator or agent. This point was made by Senators during the Second Stage debate and this amendment is designed to meet those queries and to meet that general position.
Transport (Tour Operators and Travel Agents) (No. 2) Bill, 1981: Committee and Final Stages.
How does the Minister intend the bond to operate? Is that relevant at this Stage?
That is relevant to section 13.
Acting Chairman
Amendment No. 2 to section 4 and amendment No. 3 to section 5, are to be taken together.
These amendments are to make it clear that a licence under this section entitles the applicant to trade as an operator only or as an agent only. During the Second Stage debate a number of speakers had the impression from the existing wording of sections 4 and 5 that there would be only one licence that would cover both operators and agents. This is not so. There will be two separate and distinct licences. A person who is doing both types of business will have to be licensed separately. An operator's licence will not permit a person to operate as an agent and vice versa. The purpose behind these amendments is to make that crystal clear.
On the question of the licence, will this protect the consumer, the customer, the person who wants to travel, from the travel agent, like one of those mentioned here last week? Will we be dealing with members of IATA? Will they all be correct members of IATA? We must ensure that a "blow-in" will not set up business, because this would lessen the chances of these persons being caught.
It is not the intention to confine the licences to members of any particular trade organisation. Any person who wants to set up as a travel agent will be entitled to have a licence, provided he meets the criteria that have been established — financial, administrative and other criteria. Whether that person then seeks and is admitted to membership of a particular trade association will be a matter for him and the association. But the fact that he might not be a member of the association will not make the people dealing with him any more vulnerable than those dealing with members of the association, because at that stage the licensing régime will have been introduced and it is from that licensing régime that the protection will come, not from membership of the association. At the moment membership of the association is not a guarantee, but almost, to a member of the public who is trading with a firm that has had to pass certain criteria established by the association. After the legislation is passed, membership of the association, as far as the public is concerned, will not be so important to ensure protection for the public.
There is a reference to the fact that the licence shall remain in force for such period as the Minister thinks fit. Is it a once off licence, or is there a renewal each year, or two years or something like that? On the question of licence fee, and having regard to what the Minister said a moment ago regarding two licences if a person was engaged in both the travel agent and tour operator business, is there a lesser fee for one as opposed to the other?
With regard to the duration of the licence, the Bill does not set out the duration. Our minds are running on the basis of an annual licence. In order to effect the protection we all want to give to the public, the licences will have to be renewed annually, and the necessary criteria could be reviewed annually. At the end of a trading season, when a person comes to apply for his new licence, one will see if it has been a successful trading season and if there will be financial viability for the next season. Biennial licensing could be risky, and it is the intention at the moment to have licences issued annually.
The level of fees has not been set. The general idea is that the level of fees to be set would pay for administration. Where a person is both an operator and an agent, there could be something equivalent to a quantity discount; there could be some concession, and the fee for the agent — because it would be a smaller operation generally and the inspection would be less detailed — could be smaller. This is a matter of detail that will be worked in the regulations, and, as I emphasised on Second Stage, they will be worked out in consultation with the trade to devise something that will be satisfactory to the trade.
The Minister said the licences may be annual or biennial. It is still an open question whether he is satisfied that, under the terms of the Bill as drafted, which seem to refer to one licence only which apparently would be there in perpetuity unless varied or revoked under section 8, it would be possible without some further amendment to have licences of shorter term.
I am satisfied because section 6 (5) says:
A licence granted under this Act shall remain in force for such period as the Minister thinks fit and specifies in the licence.
I think that will answer the Senator's point.
Has the Minister given any consideration to the problem of a person carrying out a business, as a tour operator or a travel agent but not actually coming within the definitions laid down in the Bill? I am thinking of somebody carrying on an airline business. I am aware that it is possible for some people to get registered as airlines and carrying on businesses which, as far as the general public are concerned, are practically indistinguishable from a travel agent, but not carrying out business as a travel agent. Has the Minister given any consideration as to how these people would be affected by the Bill? If he has not given such consideration already, would he do so now or when this goes before the Dáil?
Before the Minister answers, I would like to ask him about Aer Lingus. They took over a tour operation business and a retail business. I mentioned this fact last year when the Minister was present.
I will answer the last point first. I remember the Senator mentioning this at the time. Aer Lingus act as agents and possibly operators through subsidiary companies. Thus subsidiary companies would fall within the Bill and would have to be licensed under the legislation — not Aer Lingus itself, but its subsidiary companies who engage in the tour and travel business.
The point raised by Senator O'Leary has been considered in the drafting of the Bill and has had a lot of consideration. Carriers are specifically excluded from the Bill. There are many reasons why it would not be practical to include carriers within the ambit of the Bill though they might on occasions be acting as tour operators as defined in the Bill. We defined a carrier as being a person whose principal business is the provision of transport. In the type of operation the Senator has in mind it could be clearly shown that the principal business would not be the carriage of people. Some of the people he has in mind might find it hard even to produce a single aeroplane or a single ship, and it would be very difficult for them to show that carriage was their principal business if they had no means of conveying their customers. It would be quite clear on examination that they were, in effect, travel agents trying to masquerade as an airline.
The definition defines a carrier as a "person whose principal business is the provision of transport ... on aircraft, vessels or other modes of transport owned and operated by such persons;". That is tight enough to exclude the type of operation the Senator is worried about.
There might be a tiny loophole here for a person who is engaged in the carrying business who is not one of the flag-carriers with which we normally associate airlines. There are none of them operating here at present. If one were to come and were operating principally as a carrier and doing some tour operating as well, he would not come within the ambit of the Bill. For a person to be at that level of business where he would comply with the definition of carrier, we would be happy enough to allow him to carry on and I would not reckon there is any real loophole.
May I ask the Minister for confirmation of a point which relates to a discussion we had on Second Stage? I suggested the desirability of flexibility in the kind of conditions that might be imposed. The Minister agreed that the point was valid. I am really asking whether the licences granted under this section may be different in their terms and conditions from one licensee to the other. Is that how one should read subsection (4)? Where we refer to regulations later, the conditions that shall be complied with before a licence is granted are conditions quite apart from those that are in the licence and are probably intended to be standard conditions.
As the Senator said, I dealt simply with the point he raised. When we are talking to the trade about the details of the regulations, we will obviously consider whether that point can be honoured. There would almost certainly be a constitutional difficulty if one were to devise differing licences for the same trade. A person who has a licence with more onerous terms than his competitor might feel he had valid reason for objecting on constitutional grounds, that the law was not bearing equally on all citizens and that the rule of law to that extent was being infringed. There might be a real difficulty there. But when we come to draft the regulations and, as I said, that will be done in close consultation with the trade who, after all, are the people who will be affected by this, we will see if they suggest that there is a particular stratum within the trade that is not in a position to carry all the conditions we would like to impose. Having thought about it I would have some doubts as to whether we can get out from under the constitutional difficulty.
When I raised this I was aware that there was a background of constitutional difficulty as far as ministerial conditions imposed by way of licences are concerned. That was why I referred to the Central Bank Act, 1971, where it is not a Minister who is involved, but where means were found in the drafting under which the Central Bank were able to differentiate between individual cases without coming up against the constitutional difficulty the Minister referred to.
Is the Minister saying that before one gets a licence, one must have a bond? Is he saying the bond comes first?
Yes. The bond comes first.
This is the most important section of the Bill as it deals with the question of appeals. It reads:
Whenever the Minister proposes to revoke, other than pursuant to section 10 of the Act, or to vary the terms and conditions of, a licence granted under this Act, he shall notify the holder of the licence of his proposal and of the reasons for such proposal and shall, if any representations are made in writing by such a holder within seven days, consider the representations.
In other words it is saying that in pursuance of section 10 of the Act, the revocation of licences in certain circumstances, of financial and contractual obligations, there is no duty on the Minister to notify the person whose licence he is going to revoke. I can understand that there would not be a possibility of giving seven days' notice, but some notice should be given. I would like the Minister to consider this point.
Section 9 (5) dealing with appeals says:
an appeal shall not lie in any case where the Minister refuses to grant a licence to an applicant who does not comply with the provisions of section 13 of this Act....
Section 13 talks about the bond. I am very concerned that when the Minister revokes a licence under section 10 it will stick. The Minister has substantially met the point that I was going to make by defining in the first amendment the inability or failure of a tour operator. His defination of financial or contractual obligations under section 10 — the wording in section 10 is not now the same as is used in amendment No. 1 — may not be the same as the tour operators' definition. The operator may seek to go to court and say that the Minister, in arriving at his decision, said the operator had a contractual obligation to certain clients and he did not believe he had that obligation. The Minister could be put in the position of having to say why he thought there was a contractual obligation. Then we are back to the court area and whether the person had a contractual obligation, or it was valid for the Minister to revoke the licence.
In so far as section 9 limits the ability of the applicant to go to the High Court on the question of his contractual or financial obligation and whether he has fulfilled it, that might be a mistake and might give rise to difficulties in the future. I would like to hear what the Minister has to say.
We cannot exclude any aggrieved person taking an action to declare that the Minister has unlawfully or wrongfully exercised the authority or the powers given to him under the Act. That is a basic legal right and cannot be excluded. If some aggrieved operator or agent felt that the exercise of ministerial powers did not conform with the Act, he would be entitled to challenge the exercise of that power and go to the court for whatever relief would be appropriate, irrespective of whether he would go by way of appeal or not. In this case that would not arise, he would not be going by way of appeal, he would be challenging the very basic nature of the ministerial act.
On the question of whether there should be notice of revocation when it falls to be made under section 10 — similarly there is a notice provided for under section 9(1) — I think we can distinguish section 10 particularly because it envisages a situation where there has been a failure or inability by the operator or agent to meet financial or contractual obligations, or the bond has had to be called in, or payment has had to be made from the fund. If we take it that there has been failure to meet a contractual or financial obligation, the revocation in that situation could happen very quickly and suddenly, and I think it would be entirely appropriate that it would, and that the person would not be left trading for any length of time after such an event occurred. The danger of such a person continuing to trade justifies not giving notice of revocation in that situation. Should the revocation fall to be made consequent to the bond having to be called on or payment to be made from the fund, obviously those two events would only take place quite some time afterwards and there would be a history of collapse, there would be no need for notice. Subsection (5) excludes an appeal in the two circumstances mentioned in the subsection. I am advised that it is legal to include such exclusion. I had some doubt about it, that it was a constitutional right for every citizen to have an appeal to the highest court of the land, but I have to accept the advice of my legal betters.
Would the Minister consider going back and asking his legal betters again?
I want to support the points made by Senator O'Leary. While the Minister's legal advice may be that section 9 (5) is all right, I wonder as to the advisability of the provision and what there is to lose by allowing an appeal. Senator O'Leary dealt fairly adequately with section 10, but section 13 provides that, where an agent has entered into an arrangement satisfactory to the Minister, it is purely at the Minister's discretion. I suggest that it would be better if there was a provision in this Bill, even if it is not legally essential, to allow an appeal from the Minister's decision.
The second point I wanted to make was on section 9(2). Why has the Minister decided that the appeal should lie to the High Court rather than to perhaps the Circuit Court? There might be certain advantages in allowing the right of appeal to the Circuit Court. One could envisage situations where this appeal would need to be made fairly quickly, and one would have the problem of the cost of an appeal to the High Court.
The High Court is the appropriate forum for an appeal of this nature where the subject matter is of substantial gravity. Secondly, I would not agree with the Senator that the speed of the matter would be better served in the Circuit Court, because the Circuit Court serving the town of a particular agent might not sit in that town for three months after the event. There could be difficulties of delay there. The delay in the High Court at the moment is on the jury side, there is not any delay for matters such as would be dealt with by this appeal. I think the High Court would be a more suitable forum having regard to the gravity of the matter and it would be speedier. It would, as the Senator said, possibly be somewhat more expensive, but I think only marginally more expensive than an appeal to the Circuit Court.
Subsection (5) provides that an appeal shall not lie in any case where the Minister refuses to grant a licence to an applicant who does not comply with section 13. Section 13, of course, is the very heart of the new protective regime. It is the one which makes provision for the bond. If a person is refused a licence because he has not a bond I think it is fair to say that that should be that. It is hard to imagine a situation in which an appeal would lie because he has not provided a bond. If it is a question of an insurance company refusing to give him a bond that would be a separate matter between the aggrieved party and the insurance company. The other situation in which an appeal does not lie under subsection (5) is in a case where the Minister revokes a licence pursuant to section 10. Again, section 10 envisages a situation of collapse. If a business has collapsed an appeal at that stage could be well nigh vexatious. That is not to say that a person who may have suffered difficulty having his licence revoked might not come back into the trade at a later date when his financial house is in order and when he can satisfy the Minister, and the bonding company, or can satisfy the bond requirements, that he is a fit person to recommence trading. It might be difficult to do but there is no prohibition on it. Section 10 envisages a collapse and section 13 envisages a person unable to meet what is sine qua non of the entire protective scheme.
I appreciate the various points made by the Minister. Of course, he is quite right that section 10, the one I specifically drew attention to at this stage relates to section 9 because it is referred to in section 9. It is obvious that there is a need for speedy action if the circumstances which give rise to action under section 10 even occur. The need for speedy action there must be agreed.
Two worries I have about it are that under the provisions of section 10 as it stands at the moment——
We are discussing section 9.
Section 10 is referred to section 9(5) and it is very hard to discuss one without referring to the other, they are inter-related. I want to refer to subsection (1) where it is not proposed that there should be any notification to a person who under section 10 is going to have his licence revoked, or even to vary the terms of the licence. If the Minister is to take an action like that it is reasonable that he should indicate to those against whom he is taking the action the reason for the action. I am not suggesting that he should give seven days notice because it is quite impractical under the provisions contained in section 10 which is referred to in section 9 (1). It is quite unrealistic to expect him to wait for seven days while the notice is, in fact, germinating, or something like that. The Minister should be under some statutory obligation to serve upon the people against whom he is taking the action some notice which would not delay — this is the kernel of the point I am making — the ability of the Minister to take immediate action. There is no reason why we could not impose an obligation on a Minister to serve a notice on somebody and give him power to act immediately having served the notice on somebody. Where a Minister proposes to revoke or vary a licence under section 10 there could be a clause dealing with that. There could be a clause to the effect that the Minister may revoke a licence at any time after such notification. In other words, he would not have to wait for the seven days but he would have to give notification to somebody to tell him that he is revoking it under section 10 and give the reason he is revoking it, that his financial or contractual obligations were not being met or whatever. That is the point I want to make under section 9 (1). I will make a different point under section 10 when we reach it.
It is implicit in section 10 that notice be given to the defaulting agent because obviously in a situation of a failure to comply with financial or contractual obligations customers and an agent would be involved. The agent would know that the Minister is involved because the Minister's men would have been in inspecting under the earlier Act. The whole scene is such that the agent will be informed and could not avoid knowing that he is going to lose his licence. It is inherent in it that that revocation is notified to the agent and inherent too following the inspection when the Minister satisfies himself that the failure and inability have occurred. That can only be established by involving the agent and his books and his staff. The agent will be well aware of what is going on and what is about to happen to him. I do not think there is any need to alter that because after all that there will have to be some sort of a formal notice. The Senator adverted to the question of notice. The Minister must give notice because it is a mandatory direction to him. He is required to revoke any licence granted in situations envisaged in section 10. That is why section 9 (1) does not provide for the giving of the seven day notice as would be necessary in other cases.
Would the Minister consider introducing an amendment here, or in another place, to spell out in section 9 (1) that notice will be given but that no time need elapse before the action is taken in respect of that notice?
I would not because I do not see the necessity for it. It is impossible to conceive a situation in which section 10 would come into play. It is impossible to conceive that the agent or operator would not know that he is getting notice or is about to get notice. The whole point of giving notice is to acquaint somebody of the intention to revoke. He will be well aware — he could not avoid being aware — that revocation is about to take place.
I had a problem with section 10 as it was originally because there was no definition of financial and contractual obligations. The Minister has gone a long way in an excellent amendment which he brought in, No. 1 — unfortunately I was not here when he was discussing it—in which he said that for the purpose of this Act the inability or failure of a tour operator or travel agent to meet his financial or contractual obligations meant... and he went through a whole list of things which are very worthwhile. The problem I am trying to highlight is that the Minister will have to make a decision on certain items — it is covered in (f) of the Minister's previous amendment, which states that: "the Minister has reasonable grounds for believing".
It is my interpretation of the legislation as it now stands that somebody who feels aggrieved could go to the court and say that the Minister had unreasonable grounds for acting under section 10 and as a result of that the prohibition in section 9 no longer is valid because somebody can go under this new definition and say the Minister has not acted reasonably. I understand that while appeals are pending licences will continue to exist. I am trying to avoid the situation where the Minister feels he has to act under section 10. Because the question of the Minister's reasonableness or otherwise could be a valid issue for the High Court to decide, the Minister's decision could be the subject of an action in the High Court. Pending the decision of the High Court as to whether or not the Minister acted reasonably the safeguards which section 10 is designed to bring into the Bill could be frustrated by the fact that it appears that under section 10 somebody can go to the High Court and have the matter examined. It is not something on which I have any specific amendment to make. I merely make the point that the Minister might like to have a look at it and consider how best to tidy it up if he considers it needs tidying up.
Certainly, I will have a look at it in the light of what the Senator has said. My first reaction is that the sequence that would take place would obviate the difficulty the Senator envisages. The sequence would start with the Minister believing he has reasonable grounds and then revoking the licence. If the person from whom the licence is revoked feels that the Minister's grounds are unreasonable he can seek court action to quash the Minister's action on the ground that he did not have reasonable grounds, that it is an injustice and all the rest. That action would not have the effect of reviving the licence. The licence would stay revoked until the termination of the High Court proceedings, and if they terminated in favour of the aggrieved agent then obviously the revocation would not be lawful and the licence would have to be restored. That is the way it would work. The licence would stay revoked until such time as the person succeeded in showing that the Minister did not have reasonable grounds, and consequently the public would be protected in the meantime. I will, however, check to make sure that there will be no question of a person seeking an injunction to restore the licence pending the hearing of the action.
Would the Minister consider inserting the word "reasonable", "a person authorised by the Minister may at any reasonable time enter into any premises"? It is important that the person authorised by the Minister would use his discretion when he enters the premises and would not cause undue embarrassment or harrassment to the operator or trader. I notice that in the Fire Services Bill there is similar wording to the effect that the council, or a person authorised by the council, may enter at all reasonable times and inspect any land or building.
I sympathise with the Senator's point and, indeed, on philosophical grounds one does not like to see the country overrun with ministerial functionnaries invading the premises of private citizens. Nevertheless we have a problem to deal with here. We have hard evidence of the nature of the problem, how quickly it can suddenly come to light and how necessary it might be for a quick inspection even at an unorthodox time. Because of the evidence we have from what has happened there are people operating or who might want to operate in this scene but who might not be reasonable. It might behove the supervising authority to go in quickly and at a time which might seem to the rest of us to be unreasonable but might be the most effective time in order to find out what we want to find out to protect the public. In almost all circumstances I would agree with the Senator's suggestion that a power such as this should be exercised at a reasonable time during the day, but in this instance for the reasons I have stated I do not think we can be as reasonable as the Senator would like.
Supposing the travel agent or the tour operator says: "I am sorry we will not let you in", or "we will not let you look at our books". Is the section strong enough in that regard? Maybe, as Senator O'Leary said in regard to another point, an amendment at this stage to make it more positive, more definite and stronger is necessary. For example, a provision that a failure to do so might result in one losing his licence or something like that would suffice. Is that a fair idea at this stage?
There are serious penalties provided in section 20 (2) for somebody who obstructs or impedes the person exercising the powers of section 11. I imagine that the Minister could serve seven days notice of his intention to revoke the licence and that might be sufficient to provide admission.
On the point raised by Senator Bolger about reasonable time, certainly, the Minister has a very valid point because there are few areas of commercial activity that the expression of fly by night activity could be more appropriate. If one is dealing with scoundrels even the middle of the night could be reasonable. I will go along with what the Minister had said if he said reasonable time during the day. A reasonable time merely puts a restraint on those who are carrying out the functions under the Bill to behave in a reasonable fashion. It may well be that going in at 3 o'clock in the morning is reasonable if there are circumstances to lead the people to believe that 8 o'clock or 10 o'clock in the morning would be too late but there are other circumstances in which going in at 3 o'clock in the morning might be totally unreasonable. The Minister should think about the matter and give it some consideration because if we can put into our legislation the general tenor that it is progressive then the necessary powers which are given to the organs of the State must at all times be reasonably carried out, even if that reasonableness differs with regard to the particular circumstances in which they call to be acted on. The Minister should consider the matter.
I will do that. I do not think there will be any question of entering in the middle of the night unless the premises happened to be open, because we have not power to do a Watergate on this and we will have to operate during normal business hours. If we were to put in the word "reasonable"—as the Senator rightly said there have been some peculiar people operating in this trade — they might refuse us on the grounds that it is not reasonable for them at that moment and then there would be litigation to decide if it was or was not reasonable. I will think about it but I am not holding out a lot of hope that I will change my mind on this one.
The purpose of this amendment to subsection (1) is to tidy up the original wording of section 13. The amendment makes it quite clear that the bond is to protect travellers who book their holidays during the period of validity of the licence, whether the holidays occur during the same period or after the licence period has expired. The amendments to subsections (4) (b) and (4) (d) are just to improve the original wording, again by clarifying the intent. The new subsection (4) (b) would allow the bond to be used to reimburse a customer for reasonable expenses incurred, for example, if he was to be evicted from his hotel while on holiday. The new subsection (4) (d) would allow the Minister to send out an officer of the Department to look after the interests of the holidaymakers evicted or in danger of eviction. The wording in subsection (4) (b) provides for reasonable expenses because we do not want to have serious claims for consequential loss and have long arguments about the remoteness of damage and all the rest.
On section 13, as amended, I do not think that the trade is quite as clear about the bonding of the retailer, or the small travel agent, as the Minister seems to give the impression. There seems to be a member to member agreement between the travel agents and the tour operators. I understand this is the association and the group the Minister said last week that he had met in Limerick. When bringing in a Bill of this nature I wonder why a much stronger line was not taken to try to control those fly-by-night agents. I find that they can still be there without licences or bonds. Is that correct?
No.
There is another point about legal liability. This is where the small travel agent has strong views on why he should be bonded, or asked to be bonded, in the same manner as the big tour operator. When one goes to a travel agent in a small town in the country, or anywhere, that agent books the ticket by telephone. The deposit is put in the post that night. Therefore, the legal liability for anything that may happen is directly on the tour operator or the wholesaler. The retailer, the agent, only has responsibility while he is waiting for an acknowledgement. That would amount to about two days and not 14 days as mentioned earlier. The tour operator has the legal responsibility once the order is laid or the ticket booked and a deposit only paid, not even the balance. I understand we are talking about a bonding figure of £5,000 to £6,000 and how could a small travel agent see his way to pay such a bond? Maybe my figures are wrong.
Last week I pointed out that the small agents had set up this funding of their own and that by February or March it will be £120,000. By next July that fund will be £200,000. If I book my ticket this evening with a travel agent in Ennis his responsibility to me will be until tomorrow only when that ticket is booked with the tour operator. From there on it is the tour operator's responsibility. Is it right to ask — or maybe the Minister is not asking — the small agent to pay this large bonding? I notice that the Minister has not mentioned a figure on the bonding or mentioned a figure on the licence. The Minister said they agree with everything in this Bill, but travel agents and the small business people who are in the travel business here are not agreeing with the bonding arrangement. Is there a looseness in this Bill that will cover the control of people who might do a duck and catch people?
I have some sympathy for the arguments Senator Honan has put up. No section of this business, whether they be at travel agent or tour operator level, should be exempt from some type of bond. It would be possible in theory for fly-by-nights in that area to offer a package which could be fantastic. Many people in good faith would lodge their deposits and overnight the person could go. I feel that the bond must extend to cover all involved in the business. I am concerned about the availability of the bonding. The Minister in his reply to Second Stage assured us that he was aware that there were people in this business, and not altogether in the insurance business, who were prepared to come up with the necessary bonding. If he would like to elaborate further on that I would be pleased to hear it, because I want to be sure that bonds are available. I want him to consider the possibility of having a different type of bond, possibly a two-tier system of bonding, one for travel agents and one for tour operators where the risk is much greater. I would like to know if it is administratively possible to do that, and how in fact would the bond be applied. On what basis would it be applied? Is it to be on the turnover of a person's business or on what basis do we determine that a bond is necessary? If it is to be based on turnover what percentage does the Minister envisage? Have those details been worked out?
I should like to support Senator Honan in her comments with regard to the division between the wholesaler, that is, the tour operator, and the ordinary retailer, the ordinary travel agent. There is no question that the real problem in this business has been the failure or the collapse of tour operators. We have had that in the past. The retail agent is a completely different animal. Those retailers who are members of the International Air Transport Association have been well and truly vetted by the airlines. If a person purchases a ticket from them in the month of November the money must be paid to the airline by the 15th of the following month. In this way there is clear control, a clear hold by the airline on the travel agent. Failure to pay over that money would result in the agency being cancelled. Therefore I am stressing that the airline has a very strong hold. Furthermore I understand that the retail agent people have a fund of something like £82,000 or £85,000 which is substantial and which would more than compensate for any failure of a retail person. The case for not bonding the retail agent is valid. The tour operator can work the price of his bond into the overall package but the unfortunate retail person cannot do that. Any bond premium that is paid by the retail agent is eating into his profits. He cannot pass it on to the consumer. I was heartened by what the Minister said in his Second Stage speech in this regard because it led me to hope that perhaps the Minister was having second thoughts on this one. He said that the Bill gives the Minister for Transport power to apply the measures proposed to tour operators at first and to travel agents later. Perhaps the Minister at this late hour would consider reviewing the retail agent person in the light of what Senators have said.
Senator Ferris referred to a package. Anyone who organises a package holiday must be treated as a tour operator, but the honest retail agent who has been in business and dealing with different airlines is a different kettle of fish. A bonding situation will make very serious inroads into his over-all trading and his profitability. Therefore, I would ask the Minister to consider what has been said with regard to this matter. It is something that is worrying many of the small retailers throughout Ireland.
I am aware that there is anxiety on the part of some agents as to how this section will operate with regard to them. I have been at pains to assure them, individually as I have met them, and through their association that it is not our intention to enforce a regime that will be commercially difficult for them. There would be no point in driving them out of business or in making business unprofitable for them. That is not the intention. In that regard may I say about the figure mentioned by Senator Honan of £5,000 to £6,000 being the cost of the bond, that I have not heard that figure and no figures have been mentioned up to now as to what bonds might cost. Obviously the cost of a bond will vary depending on the amount involved. The agent has to come within the ambit of the Act.
Senator Honan gave a graphic example of the involvement of an agent. She indicated that she goes to her home town and hands to an agent what could be a very substantial sum of money and says that he is only passing it on. That is so, but if there are a lot of people coming in and handing very substantial sums of money to agents, they in turn have a very substantial sum of money to pass on. What we want to guard against is the agent who does not pass it on. This is the reason why agents are being included within the Bill.
The bond does not have to be a bond in the normal sense that we think of — an insurance company providing a guarantee bond for a builder for a large public works contract or the like. It can take many forms. The Bill is quite flexible as to what way the protection envisaged by the concept of the bond should be. For example, Senator Honan mentioned that the association have accumulated voluntarily a very substantial sum to meet any obligations that might arise out of default of any of their members. It is possible that in our discussions with the association we might be able to devise an arrangement whereby that sum could be added to or the fruit of that sum could be the premium to buy an umbrella bond for agents below a certain level of business. Agents above that would have to do their own depending on turnover. The Bill provides lots of flexibility as to how the actual bond will be operated in practice. We will be having discussions with the trade to tease out what will suit the needs of the trade and at the same time — and this must be the bottom line so far as the Bill is concerned — what will protect the public and what will implement the Bill. It is possible that even after that there will be some agents who will find it a little bit harsh but unfortunately that is the way it has to be because what we have to do is to protect the travelling public. I am most optimistic, having regard to the attitude of the trade that I have encountered so far, that we will devise a system of bonding that will meet the needs of the trade and at the same time satisfy the requirements of the Bill.
I am aware that the correct members of the trade are behaving correctly and in 15 years I understand that there has not been any default by any member. But what I did ask was whether there is room still for one of the others to slip through the net.
It will not be lawful for anyone to carry on business as an operator or an agent without having a licence. They cannot have a licence without having a bond.
Developing this point, with respect to Senator Honan, the bond, as the Minister has pointed out in his Second Stage speech and pointed out again today, is obviously very flexible. It is open to development having discussed it with the people within the trade. Would it be possible, and it would appear to me that within section 13 it would be possible, for the Minister to consider whether at least part of the bonding arrangements might be what we could call piggy-back bonding arrangements? In other words, if I go into my local travel agent and I am booking a holiday through a tour operator and if he is an authorised agent of that tour operator, that that local travel agent can, in respect of that transaction by quoting a number, become part of the bonding arrangement of the large tour operator. As a result of that, the amount added to my holiday would be just one payment to one tour operator which would cover both the cost to the travel agent in respect of my transaction and also the cost to the tour operator in respect of my transaction. The travel agent's bonding arrangement could be made up of four or five different agreements with different tour operators and something quite small to cover the remainder of his business, such as dealing directly with CIE or with Aer Lingus. Would the Minister consider that such an arrangement would be possible? It would overcome many of the problems mentioned.
Is it correct that the tour operator will be able to pass on the cost of the bonding to the consumer, whereas the travel agent will not be able to pass on the cost of the bonding?
I should like to refer to a point that Senator O'Leary made. I could imagine the type of situation he referred to whereby a travel agent was arranging a package through a tour operator. Surely in such case the onus is on the tour operator at that stage. He would be bonded, we would hope, under the Bill. The Minister referred to the instance of Senator Honan buying a ticket from a travel agent in Ennis. In that case she gets an airline ticket, and surely the good name of the airline is paramount and vital to that airline. So that even if the travel agent goes out of business the airline, to protect their good name, will allow Senator Honan to continue to travel out from Ireland to her destination and back. Would that not be the position?
The Minister in his response to our questions has mentioned the possibility of the existing travel agents' association using a fund that they have accumulated for a possible umbrella-type bonding system if that could be agreed. Am I not to take it from that that other people are precluded from entering into this area of business in the future? The conditions for entry into that association are stringent. I mentioned at Second Stage that at times some of the restrictions were there for the preservation of the association and not so much for the preservation of the travelling public. That was something that concerned me. In this area we must have an element of free competition. In the Minister of State's introduction to the Bill he did say, in regard to new people coming in, that if they are genuine and committed, and are prepared to go through the realms of accepting a bond and being licensed, they would not necessarily have to be members of the ITAA and that if they meet the Minister's criteria, they may set up legitimately in business. I would like an assurance that that will be the case.
On the question raised by Senator Fallon with regard to the airline ticket delivered, this could be true of an Irish airline but a lot of package tours are sold by relatively unknown airlines and tickets from them may or may not have the same validity that an Irish airline would have. If the tour operator was not dealing with our national airline what would the situation be or how would we afford protection? The two ends of the trade must be protected. They must answer the same criteria, but I still feel that a double system of bonding or a different level of premium would be required. Perhaps that is a matter for the bonding people rather than for us.
Senator Ferris is really saying that ITAA is a closed ahop. It is not a closed shop but it is hard to become a member because the rules are quite strict. The Minister is well aware of what I am saying. They have to be as strict as they are, and if you are ready to abide by the rules and run your business properly you can straight away become and will be accepted as a member of ITAA.
We would not be in the dilemma in which we are now if, in fact, it was as strict in the financial aspect as it should have been.
The people who caused the trouble in the past few years were not members of ITAA.
Senator O'Leary asked if it would be possible to have a piggy back arrangement. I would see no objection to it. What we want to do is to have an arrangement satisfactory to the Minister for the protection of the travelling public, and if such an arrangement ensures their protection it would then comply with the requirements of the Act and there would be no objection to it. Likewise it could be a two-tier system. You could have different levels of different types of bonds, but that is something to be teased out. It would be no business of the Department to act in a restrictive trade manner so as to confine the availability of this umbrella thing to certain members of the travel trade only. Again this is something which will have to be worked out with the association, because it is their money and their members are the people who are providing it. Nevertheless, if it were to be used in order to provide an easier bonding system there would be a certain element of discrimination involved. Any negotiations we would have with the association would have to be designed to ensure that all members of the trade would get the benefit of that. That might mean that the fund might not be available at all. Then in that case you are back to a simple bonding system. So that is obviously a negotiating point.
So far as the cost of the bond is concerned it will be a matter for the operator or agent as how to deal with it. It will be an extra part of the expenses of their business and undoubtedly it will be reflected in the charges they make to the public. To that extent one can say that it will be passed on. If there is enough competition between agents in trying to keep their prices down there may be a saving and it may not, in effect, be passed on. They may decide to carry it in order to keep their prices down. This would be a normal feature of commercial operation.
Senator Fallon raised the example of a person buying an airline ticket. In that case the ticket was sold and that was it, the job was completed and no loss could result to the customer. I agree that if the agent's business was entirely confined to selling tickets for scheduled airlines we would not have any need to grant-aid it. But where much of the business is involved in selling other travel activities but mainly package holidays, where the protection of the airline ticket in your hand does not arise, it is in that sense that we need the protection.
The requirement as to the bond is worded in such a way as to allow a flexible arrangement to be introduced. I want to emphasise that. It is not our intention to prejudice anybody in the trade but at the same time we must bring the Act into effect and I have no doubt that we can achieve both objectives. I have indicated my goodwill in that regard to the trade and they have reciprocated. I am confident we will devise a satisfactory working arrangement.
I wish to make it quite clear to the Minister that the trade are very happy about what he is doing.
But unhappy about the way in which I am doing it.
Yes.
On this section, it is just a comment arising out of the previous discussion which the Minister had — if you read the section it goes on and says that:
The Minister shall establish a fund to be known as the Travellers' Protection Fund... from which payments may be made in accordance with the provisions of section 18 of this Act in respect of losses or liabilities incurred by customers of tour operators or travel agents who held a licence under this Act or whose licence has been revoked and the revocation is the subject of an appeal to the court....
That gives the impression that if the Minister revokes a licence and it is the subject of an appeal to the court, business may be carried on in the meantime, or at least if it is carried on in defiance of the law it will be covered by the Act. Section 10 gives the impression that the revocation of a licence does not end the matter but that business can be carried on pending the appeal to the court. If there is the possibility of an appeal to the court under section 10 it would appear that the protection afforded by section 10 might not be as copperfastened as it might have appeared at the start. The Minister might consider that aspect when considering the other point. The provision is repeated in section 18 (2).
I have undertaken already to look at the possibility of an injunction to restore a licence pending the hearing of an action examining the grounds for revocation. I would read this section somewhat differently: that the funds shall come into being to make good losses incurred by people who held a licence. In other words, what took place was during the currency of a licence, but that person is no longer licensed. Obviously if the fund comes into play that person would not have a licence. Regarding the words, "or whose licence has been revoked and the revocation is the subject of an appeal to the court," I would read that as meaning that the licence is gone and that although there is an appeal to the court the people who have been at a loss can be compensated without prejudice to whatever the court may do. The court might decide to restore the licence but the court obviously has no power to give compensation to people who have lost money. This section gives power to pay those people out of the fund pending the determination by the court.
Is this fund to be set up out of public funds?
No. It will be a levy on tour operators.
Am I to take it that tour operators only will contribute to the fund? I raised this matter on Second Stage. It is linked to section 18. While contributions to the fund will come from tour operators only, disbursements from the fund can be made to victims of failure on the part of tour operators or of travel agents. These are two distinct categories. The situation could arise where tour operators' moneys were being used to compensate the victim of a retail agent's carelessness. Several references have been made already to the potential for carelessness or dubious behaviour by the said agents.
As the Senator says, the section provides that the fund will be contributed to by operators. The intention is that the contribution will be on the basis of so much per head per passenger carried on tour. If the agents also have to make a contribution or pay a levy on the same basis, they will be paying the levy in effect under the same heads because the operator is selling all his seats through a variety of agents and it is at this point the levy will be put on for all the seats coming in through the agencies. If the agents had to pay levies too, there would be a double payment in respect of each head carried. That is why it is confined to the operators. What would happen then is that the customer would be paying twice because this charge would be referable to a customer's journey. If it were to be imposed by both the operator and the agent the customer would end up paying on the double. It is correct to say that that fund when it is gathered like that, will be used not to meet the obligations of an operator, but to meet the losses of the public. It is the public who will be paying it in. It will be a loss to the public to be made good out of this fund. It will be collected by the operator. It will be immaterial whether it is the agent or the operator who collapses.
Surely the same applies to the bonding. Are there not two payments in that respect?
This travel protection fund will involve a levy per passenger. The bond will be an insurance premium, a single payment made by the agent and by the operator. Whether it is £500, £1,000 or £2,000 he will have to make a single payment at a time and in a manner agreed between him and his bank. He is not going to divide that between all his customers for the year, putting an additional 50p or £1 on each customer.
He still has to pay it.
It will be reflected in his charges.
This amendment is designed to improve the wording of the section. There is no change of substance involved. The amendments to subsections (1) (b) and (1) (d) are to improve the original wording by clarifying the intent. The new (1) (b) would reimburse a customer for reasonable expenses incurred.
An Leas-Chathaoirleach
Is the Minister taking all the amendments to this section together?
Yes.
In section 18 (4) is the Minister saying that if, for example, a tour operator has problems in, say, Miami he would send somebody over immediately, pay all the bills and then reimburse from the insurance companies on the bond? Who will pay for the rescue operation in whatever part of the world the holiday is being spent?
In the first instance the funds under the bond will be called in to pay whatever has to be paid. It is provided here that in the event of there being any difficulty in getting in the money under the bond the Minister may make payments from the fund.
Who arranges the immediate rescue operation? It would not come, presumably, for a period afterwards.
The position there is that there is power under the earlier section for an officer of the Minister to go out and do this and he could avail of the fund to make immediate payments.
There is one point I would like to raise with the Minister which also relates to section 23. There may be an omission in the Bill or perhaps I am not reading it correctly. Is there a provision in the Bill to provide for the following circumstances? Where, for example, you have a company carrying on business as a tour operator and that company are unable to meet their commitments and the fund is called on to rescue the people who are in difficulties, is there provision to allow the Minister to go against the liquidator of that company in the event of that company having assets but having run into difficulties because they had a cash flow problem? Section 23, quite rightly, takes away from the right of customers to get a double payment but I think there should be provision, which I cannot see in the Bill, to subrogate the rights of the customers to the Minister to allow him to recoup from the company in the event of the company having assets in a liquidation situation. If we do not do that we are then providing in this Bill a situation where the travel fund which is contributed to by all travellers could be subsidising shareholders in companies which go bankrupt.
That is a consequence. I would not quite put it in those terms. We considered that it would not be practical to provide for the Minister to take part in winding-up proceedings in regard to the length of time they go on and complexity of them. All that we are concerned with in this Bill is to provide through the trade the bonding arrangement and also from the public the protection fund to pay for any collapses. I considered whether we should then be in a position to take part in the winding-up procedures to recoup the fund but decided against it, that all things considered it would introduce an unnecessary complication and, again, the right of the Minister to take part in the liquidation proceedings as creditor of the company could be questionable. There would be no direct relationship between the Minister and the company. The Minister is merely there administering the bond provided by the company and administering the protection fund gathered in. He is only there in a trustee position to administer those funds.
On Second Stage I raised the question whether the building up of a substantial protection fund to be invested in trustee and like securities is a sound procedure in an era of high inflation. The Minister took my point as referring to the desirability of finding investments that would hold well against inflation. I wish I had a list of those. I had a more fundamental point in mind. The question I had in mind was whether the aim should be to build up a substantial fund or whether it might not suffice to aim at a reasonable degree of liquidity in the fund. In other words, to aim at keeping the amount in the fund at a reasonable but not necessarily a substantial level and so reduce the erosion hazard attaching to investments.
I realise that if the fund were not substantial, and even if it were, the risk may arise from time to time of it being deficient in relation to the payments that have to be made from it. That could be dealt with by some temporary limited borrowing facility being provided for the fund. The liquidity aim would enable one, if there were a deficit, to make good the deficit out of contributions over a reasonable future period in much the same way as motor insurance policy premiums are raised from time to time according to the actual experience of claims arising from accidents. The Minister may have either of two reactions to that. He may say that whatever about the erosion of the investments he jibs at having any borrowing facility for the fund or he may say, in an optimistic spirit, that he thinks the era of high inflation is rapidly approaching an end.
It is, but not immediately. There are plans in that regard. Leaving that aside, it is not the intention to start the fund and let it keep on building without putting a stop to it. It is the intention that when it reaches a certain figure to stop. It will of course be guesswork as to what is the appropriate figure to stop the levies coming in at which the fund will be big enough to meet any likely claims on it. This is something that we will have to be fairly conservative about and look at in the light of the experience of the trade over the last few years and look at the English situation, where they have stopped contributions to the fund on the grounds that it is big enough. We can look at the two scenes in proportion and decide what would be a figure at which we would stop contributions to this fund. It is not the intention to let it build up ad infinitim. It will be stopped and in the meantime we will do our best with the investments.
Would the Minister consider re-wording the beginning of this section to read "Any person who acts as an officer of a limited liability company or who carries on business"? This would be advisable in order to broaden the responsibility in this area and to eliminate any loopholes that some smart people might see in it. This would be desirable.
The Senator's point is met by subsection (3) of the next section where it is provided that "where an offence is committed by a body corporate and the offence is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer". Section 21 (3) meets the point made by Senator Bolger.
The whole question of limited liability must be brought into it. I am a little taken aback by what the Minister says about section 21 (3) which seems, according to the heading, to deal only with summary offences. Would the Minister also consider as a possible penalty under this to cater for the situation where an officer of a limited liability company has carried on such business the additional possible disqualification of the person holding the office in such company from holding an office in a company registered under the Companies Act 1963?
Any company?
Yes. There is, of course, provision in the Companies Act where the registrar can take such a view. Would the Minister consider if a person abuses — this is the crucial point — the limited liability company screen and tries to hide behind a limited liability company as an officer or a nominee that the additional disqualification would be available to the court? That, of course, does not mean that it would be mandatory on the court to impose it, to disqualify that person from carrying on business in a limited liability company as an officer in that company. There is a whole range of offences for which this kind of penalty should be imposed. I do not suggest that this is the only such case in which it should be imposed, but the question of people abusing the officerships in limited liability companies and then being free to remain as officers in such companies at a later date is something which has to be tackled somewhere. There is no reason to suppose that this is not as good a Bill as any to tackle it in. I do not expect an answer from the Minister now but I would like him to consider it and see in the case of a person abusing the protection of a limited liability company that it should be open to the courts to impose that penalty on him.
I asked the Senator if he was referring to every company when he sought this bar or if he was referring to a company that will supposedly carry on business in the travel trade, and he surprised me by saying every company. That would be draconian and would be putting an extra and heavier penalty on a person who was persecuted for a breach where the breach was committed by a company than on a person who was carrying on trade as an independent person. He would suffer the penalties set out under section 20 with the added penalty of being prohibited from acting as an officer of a company. There would then be two levels of punishment available for individuals. That would be harsh.
The Senator answered the point himself when he queried whether this is the appropriate Bill for it. I think not. I think it is probably more a matter for reform of the company law. I sympathise with his point that the code of company law is sometimes abused by persons. It is not unreasonable to suggest that people who would abuse the protections and privileges given by that code should be prevented from taking advantage of it at a future date. That raises wider matters of policy and is more suitable for another Bill.
I want to query the Minister. In a Bill like this the orders and regulations are matters of the utmost importance, I wonder if the Minister could give any kind of timing as to when the orders and regulations would be likely to appear, because the actual working of the thing will depend very greatly on the orders and regulations.
I reckon at least three months. Not before three months, and we hope as soon as possible after the expiration of the first three months immediately following the passage of this Bill.