As Senators will be aware from the resolutions passed in the House last Tuesday, Committee Stage of this Bill was taken by a former joint committee on legislation and there are no amendments. We cannot have a Report Stage debate. We are into Fifth Stage, as has been agreed. This is usual when a debate is confined to the Bill as content. Therefore, for the help of Senators participating, speeches can now be made on Fifth Stage, and as there is a gap since all this happened the Minister might like to come in and bring the Senators up to date.
Bankruptcy Bill, 1982: Report and Final Stages.
Question, "That the Bill be received for final consideration" put and agreed to.
Question proposed: "That the Bill be now passed."
On a matter of clarification, will I then reply to the points made by Senators?
Yes, the Minister will open and close the debate.
As this is the first time for the Bill to come before the present Seanad, I should say a few words about the background to it. It was introduced following the report of a committee set up to examine the existing bankruptcy law and practice and, in the main, gives effect to the committee's recommendations.
It consolidates and modernises the whole law of bankruptcy. It provides a more efficient and speedy method for realising the property of bankrupts and arranging debtors; it aligns bankruptcy law more closely with the law governing the winding up of insolvent companies, particularly in regard to preferential payments; and it provides for winding up in bankruptcy the estates of persons dying insolvent.
The Second Stage was taken in the Dáil early in 1983. Subsequently, it was referred to the Joint Committee on Legislation. It was examined in a sub-committee of the joint committee, under the chairmanship of Senator Maurice Manning, during 1984 and 1985 and a number of amendments were agreed. In May 1986 the joint committee reported the Bill, as amended, to both Houses.
The Bill passed Report and Final Stages in the Dáil on Wednesday, 29 June.
On Report Stage in the Dáil, I introduced a number of amendments arising out of undertakings given to the sub-committee. These relate primarily to a bankrupt's entitlement to awards arising from actions for personal injuries and the like, the removal of certain obsolete provisions regarding acts of bankruptcy or implications of insolvency, the updating of provisions challenging transactions made by a debtor prior to bankruptcy and the provisions governing the sale of a family home, as well as the retention of the procedure whereby a bankruptcy can be wound up by a trustee and committee of inspection as an alternative to having it administered by the official assignee.
I also accepted a number of Opposition amendments on Report Stage. The main thrust of these amendments was to ensure that, before bankruptcy proceedings can be initiated against a debtor, a creditor must have a debt of at least £1,500.
It is a great source of pleasure to me to officiate, so to speak, at the final stages of the placing of this measure on the Statute Book. It has been a very long time in preparation. The Bankruptcy Law Committee were appointed in 1962 by the present Taoiseach when he was Minister for Justice. It reported ten years later and another ten years elapsed before this Bill was published. In fairness, I should say that the delay in bringing forward the Bill was due to the fact that the EC Convention on Bankruptcy that was then being negotiated would have required radical changes in our legislation. It was some years before it became clear that hopes of finalising the convention within a reasonable time were unlikely to be realised and that it would be better to go ahead with the Bill. Moreover, fairly extensive revisions had to be made in the text of the Bill prepared by the committee.
But the House will not want me to dwell too long on the past so far as the Bill is concerned. Nevertheless it would be remiss of me if I did not pay tribute in this House, as I did in the Dáil, to the members of the committee for their dedicated work over a long period on this complex branch of the law — during meetings, all of which took place in the evenings. Sadly, many of the members of the committee, including their distinguished chairman, the late Mr. Justice Budd, are no longer with us but, for those who remain, this will be a very special day.
I also want to thank my predecessor, Deputy Noonan, who introduced the Bill and shepherded it through the joint committee and, in particular, Senator Maurice Manning who chaired the subcommittee of that committee throughout their deliberations and as a result of whose activities only a few matters remained to be disposed of on Report. Senator Fallon and others were also on the subcommittee.
I commend the Bill to the House and trust that it will now agree to signify its approval of the measure as amended and pass the Final Stage so that the Bill can come into operation not later than 1 January next.
Obviously, I welcome the Bill into the House today. I am very pleased that the Minister has been able to bring it in at the end of this parliamentary session and that the important updating which has been waiting so long in the whole area of bankruptcy law can now take place. It is the first major reform of the bankruptcy laws in this country in almost a century. Many of the changes in this Bill are updates and in some cases the abolition of laws that came on to the Statute Book well over 100 years ago. The whole concept of bankruptcy was very different then when there were many penal aspects and when otherwise fully law abiding citizens could find themselves facing extremely draconian measures as a result of a bankruptcy which was not their fault. The time taken to get to this stage is perhaps not an example I would commend to the House or to the general law making process. It has been too long. The ten years for the commission to report was over long but, as the Minister said, we were entering into a phase where many aspects of our law were about to be harmonised with various aspects of the EC law.
At least the length of time was used to bring in other changes that might not have happened but for our membership of the European Community. In being critical of the length of time this legislation has taken to get through the Oireachtas the fault certainly is not with the present Minister, he might have dealt with in quicker but he has moved reasonably quickly on the matter. The blame must be shared equally by the last Government. The Bankruptcy Bill, 1982, went into committee in 1985, the final Report of the committee was issued in November 1985, but it should not have taken three years to get to this stage. I know elections have intervened and other things have happened in the meantime, but I am glad we are at this stage today.
As the Minister said, there have been many distinguished names associated with this legislation down through the years. The present Taoiseach, when Minister for Justice, set up the commission which investigated the bankruptcy laws. The report prepared by the late Mr. Justice Budd was an example of the type of public service report which has been at the disposal of the State from the early stages. There have been various Ministers for Justice associated with the reforming legislation as well. This Bill got very detailed, dispassionate and nonpartisan scrutiny. I believe the type of committee procedure which was used to process this Bill is something to which both Houses should pay greater attention. It was possible in the calmness of the committee room to go through this Bill in great detail.
Senators Fallon and Seán O'Leary were both members of that committee, as were Deputy Mervyn Taylor, Deputy Michael Woods, Deputy Alan Shatter and Deputy Seán Calleary. They all worked calmly and with great expertise to finalise the legislation. They had one interest only, and that was the common good, the public good, and seeing that the best legislation got on the Statute Book. There was one further feature of this committee which commended itself greatly to me, and that was the participation of the officials of the Department of Justice: two of the three who were very much involved in that Bill are happily here with us today. What was very refreshing and very useful in the work of that committee was that it was frequently possible to go into a sos where we could, off the record, get enlightenment from the officials of the Department of Justice who could explain to us some of the more technical details of the Bill. It was a procedure which greatly commended itself to all.
I would like to pay tribute to the courtesy, the helpfulness, the sheer technical expertise of the officials of the Department of Justice who nursed us through that Bill. I and others have been frequently a little critical of civil servants, but in this case I have nothing but the highest praise for the civil servants involved. I would like to put my thanks, and I believe the thanks of all of those who served on the committee, firmly on the record. I should have said for the record that the first meeting of the committee was held on 7 November 1984.
However, looking at that committee, I would commend this procedure to the Government for other legislation. The Companies Bill might have been better served if it had been discussed by a joint committee, with the possibility of Members getting expert advice from departmental officials.
This legislation is coming in here cold today. Most of us, to a certain extent, have forgotten about the Bankruptcy Bill. When one is involved in a Bill, one talks to the various groups concerned, one tries to study what is involved, and one becomes almost totally immersed in it. Most of us at this stage are fairly cold on the Bankruptcy Bill. We know it got a very good scrutiny, we certainly do not want to reopen the debate today; we want to see it on the Statute Book and we believe it got as detailed a scrutiny as any Bill ever got going through the House. I would commend Members to read the reports of the committee.
This debate has not been accompanied by the press and media publicity which is normally associated with Bills going through both Houses. It is important at this stage that the Minister would have his Department prepare a fairly detailed statement for public consumption as to what the changes are. We may find there are many people who will not read the reports of the Seanad and if they are depending on the papers, who are not represented here today in the press gallery, they certainly will not hear that this Bill has become law. I would ask the Minister in the interests of the public to have his Department prepare a digest of the major changes involved and that this be circulated to the media and to other interested groups so that the effect of what is happening will be apparent to all. I would ask the Minister in his concluding speech today to indicate the changes which were brought about in Report Stage in the Dáil.
Finally, I welcome the Bill, I think it is going to have far-reaching implications. It is a very important updating of, in many cases, outdated and, in some cases, penal legislation. While the procedure adopted took too long I believe it was the right procedure. I ask the Minister if he would engage in a campaign of enlightenment so that the general public are aware of the far-reaching changes involved in this legislation. May I thank the Minister and his officials for their extraordinarily good service during the passage of the Bill.
This Bill seeks to consolidate and update the entire statute law relating to bankruptcy. It has been pointed out that the Committee Stage was taken by the Oireachtas Joint Committee on the Secondary Legislation of the EC. Senator Manning and I were members of that committee. Senator Manning mentioned that we were perhaps "rusty" on the details of that committee, but I will always remember it because I was getting phone calls to be here on Fridays and Mondays. I can even remember being told on the evening of our Ard Fheis to be here for a meeting. I will always remember it. The committee met from 7 November 1984 to November 1985.
While we were discussing bankruptcy law, what emerged clearly was the fact that so many other legislative measures were relevant to the bankruptcy laws — family law and home protection legislation. As we clearly understood, if the bankrupt person owned a house only, that could have repercussions for the family and the wife, and in that context, the family protection legislation was discussed. Even now we ask, how will it fit in, for example, with the Companies Bill?
The reality of life is that the whole area of debt and debt collection, the problems of bankruptcy, is an ongoing and changing process. In this year's Finance Bill we had the power to attachment — purely a revenue matter, and in the 1986 Finance Bill we had the infamous introduction of the sheriff. It has been said that this legislation has been under discussion for the past 26 years. I believe it will always be a changing situation. In that period, many eminent groups have had an input into the Bill.
We were endeavouring to have a more speedy method of revising the estates of bankrupts, the official assignee and the minimum amount of petitioning creditors' debts. Those are the aspects I remember most. We have to make the point, and there is no reason for hiding it, that in this country, and probably in every country, there is a stigma attached to bankruptcy. Many companies go out of business owing a lot of money and it is seen in a different light. For the individual to be declared a bankrupt is having one's name entered in Stubbs Gazette and people have a horror of that happening.
The Bill, as has been said by the Minister, is a very complex and highly technical one. One could argue that it needs constant updating. As a member of that committee I, and I am sure the other members, developed a much greater understanding of the complex aspects of the practical problems of bankruptcy. The Minister has congratulated all concerned and so has Senator Manning who was the chairman of that select committee. I, too would like to congratulate everyone involved in drafting and formulating the Bill over the past 26 years.
My role started in 1984 as a member of the select committee and I would like to congratulate Deputy Michael Noonan who was then the Minister for Justice and, in particular, his civil servants who impressed me very much. As Senator Manning has said, and I restate the point, the Committee Stage was dealt with at a very leisurely pace. If we found we needed to clarify aspects of it we were not happy with we could adjourn and come back and the civil servants would have the information. Generally I thought the civil servants involved in that Bill were top class; they understood their brief. They had the expertise and for that I congratulate them. I also thank Senator Manning who was a very committed chairman.
I support the view expressed by Senator Manning in regard to the Bill. It might be a good idea for the Minister to issue a statement. Some months back the Minister issued a statement of two pages dealing with the Intoxicating Liquor Bill which said it all. Something like that again would be very helpful.
I would like to congratulate the Minister, Deputy Collins. In his reign as Minister since March 1987 he has been notable for bringing worth-while important legislation before us. He has improved this Bill in the short time he has had an input into it. I was very much aware that he would not leave it on his desk for too long. He has the signal honour of having made the final move to make this Bill part of the law of the land and for that I congratulate him.
I would also like to welcome this Bill and to congratulate the Minister and the various persons associated with it during its long period of gestation. I believe it is a humane one and one which protects the human rights of those persons who are unfortunate enough to become involved in bankruptcy proceedings.
I am aware that a large number of people share the views expressed by Senator Fallon and that this situation is one which causes shame and distress to the individual. In case there is anybody who may be undergoing this who will read these reports, let me cheer them up by referring them to the correspondence of George Bernard Shaw which I am currently perusing in which he actually writes to say to somebody in the process of going bankrupt that bankruptcy can be a very good and refreshing process and that a large number of those leading commercial figures in the England of the 1930s had gone through at least two and had always come back to make greater fortunes, so it may not necessarily be other than a temporary purgative operation, it may in fact be good for the system.
I would like to ask the Minister to expand on some of the material contained in his speech, particularly where he says that among the principal amendments introduced by himself in the Dáil are amendments relating primarily to a bankrupt's entitlement to awards arising from actions for personal injuries and the like. I assume this means that if a bankrupt is injured and receives an award consequent upon that injury that, because of the nature of this award, it would be exempted from bankruptcy proceedings and charges. It seems this is precisely the kind of humane thing that is needed in bankruptcy legislation.
If somebody happens, either through negligence or through a situation which is no fault of their own, through prevailing economic circumstances, to be driven into bankruptcy and they are then injured, that injury is the paramount feature of the situation and that any such awards should be protected by this legislation. I assume that is what is meant. I have looked very quickly through the Bill while other Senators were speaking but I could not locate the exact section and I would like to be reassured by the Minister.
I would also like to welcome the Bill. The first committee was set up to deal with bankruptcy legislation in 1962. That is a long time ago. I have noted that it was ten years before they submitted their report. As commented on by Senator Fallon, they worked at a very leisurely pace since they took ten years.
A year.
It passed on then to a very active sub-committee of which Senator Manning was chairman. I would like to congratulate him and Senator Fallon for the work they put into it; they were almost called out in the middle of the night to attend meetings here. I would also like to congratulate the present Minister in having brought this legislation to finalisation. He will probably go down in history as the Minister who brought it to its final conclusion since it was first considered in 1962.
When we do not get an opportunity to discuss legislation in committee we are often vague about it, but since it was discussed by a select committee I am sure that they put long hours and hard work into dealing with it. Select committees are a good way of dealing with difficult legislation. Possibly in the near future we will see other select committees set up to deal with complex legislation. It would be a good idea.
I do not want to enter any note of discord into the congratulations which are flowing backwards and forwards across the floor of the House. In principle, I agree with them. It is a very useful exercise that a Bill of this sort and complexity should be considered by an all-party committee and recommendations made on as non-political a basis as possible. I have to admit, that because of the speed at which legislation is going through this House at the moment, I have not read the Bill in detail and I have not had time to construct a speech on it. I should also like to congratulate those who have had an input into this Bill. An enormous amount of hard work has been done. It should be pointed out that this debate has been a bit short on detail today and it has been short on detail because Members of this House have not had time to consider the Bill in full and it is a very complex Bill. That I regret and I think that fact should be placed on the record.
Finally, I would like to point out formally that those who were so keen on curtailing a speech on a Bill here last night are not present and I would like to ask if there is a quorum in the House.
Notice taken that twelve Members were not present, House counted and twelve Members being present,
I call on the Minister to conclude.
I would like to thank the Members of the Seanad for their contributions this morning on this legislation. This is probably one of the most discussed measures dealt with by the Oireachtas, certainly during my political life. It is legislation that has been teased out in the greatest detail by very dedicated Members of this House and dedicated Members of the other House in committee under the chairmanship of Senator Manning, and by my predecessor in the previous Government, Deputy Michael Noonan, very ably assisted, as mentioned by Senator Manning, by the officials of the Department of Justice. Because of its complexity, this legislation required that sort of approach to ensure that we would get the best possible results from the efforts that were required to be made. It is not too often that we have the opportunity to finalise legislation 26 years in the making. A lot of effort has been put into it down through the years, from the day the present Taoiseach, as Minister for Justice, established a committee to examine fully this complex subject and to advise him on what should be done.
It is with regret that I say that many of those people who sat on the official committee are no longer with us to see their work being finalised today. Indeed, many of those from the Oireachtas involved in the committee gave of their time and efforts to this legislation, often at their own personal inconvenience as mentioned by Senator Fallon. During the period that committee sat two of the members Senator Manning and Deputy Desmond O'Malley had serious car accidents and were hospitalised, and the clerk of the committee, Mr. Dwan was injured in a car accident as well. I do not know whether that had anything to do with the subject matter under discussion at the time but it must be interpreted as a sign of their dedication to be present at all meetings on this very complex subject.
The committee recommended a number of amendments for Report Stage. Also on Report Stage, Deputy Michael Noonan and Deputy Sean Barrett of the Fine Gael Party tabled additional amendments which I was able to accept. I will go into more detail on these amendments later. In all 25 amendments were tabled and all were acceptable. I would like to avail of the opportunity in this House to pay a special word of thanks to Deputies Michael Noonan, Sean Barrett and Michael McDowell of the Progressive Democrats whose help in getting this legislation through is very much appreciated.
With regard to Senator Manning's comment that we probably have gone cold on the Bill — if I may borrow the phrase used — I agree wholeheartedly with his suggestion that a public statement on the changes involved should be made when the Bill becomes law. We have become cold on the Bill and I believe that it would be very useful and essential that the public and Members of both Houses should be reminded of these changes. We could also do this on other Bills such as the Data Protection Bill which was dealt with in this House yesterday. We should let people know exactly what is contained in that Bill. We will issue the statements; not everybody will be interested in them but at least we will be able to enlighten those who would have any sort of interest in them, professionally or otherwise.
Here I am thinking of the confusion that existed immediately after the Intoxicating Liquor Bill became law. There were so many vested interests involved that it is very difficult to imagine that the Bill could have been signed by the President, its provisions become operative, and that the vintners knowing that they could stay open longer than they were staying open. If I were in a flippant mood and in another place I probably would say other things that might be more appropriate to the occasion but I had better be very careful of what I say on that.
The Holy Hour still exists in some parts of Dublin.
We have often been accused of being slow to change but I think we had better keep off that ground for the time being. I will certainly take the advice of Senator Manning as regards that suggestion.
On the point made by Senator Fallon in relation to bankruptcy and company law, one of the main aims of the Bill is to align the bankruptcy of the individuals with the law regarding the winding up of insolvent companies. The Senator rightly referred to the stigma of bankruptcy and to the problem as regards the family home. We have sought to meet these concerns by ensuring that bankruptcy proceedings can only be initiated if a creditor is owed a debt of £1,500 at least. As the Senator is aware, the figure was increased, from £1,000, following acceptance of an amendment on Report Stage put forward by Deputies Noonan and Barrett.
As regards the family home, an amendment to section 61 lays down guidelines to assist the court to postpone sale. On Report Stage the following changes were made by way of official amendments. I am, of course, excluding drafting amendments. The first amendment related to after-acquired property. The purpose of the amendment to section 44 was to ensure that the provisions of the Bankruptcy Bill, which in principle vest in the official assignee on adjudication, all the property of a bankrupt, would not interfere with or prejudice the established case law and practice governing these rights of action and awards deriving from them. Another amendment made it an offence not to comply with section 20, which requires a bankrupt to notify his change of name and address to the official assignee.
Section 59 deals with the avoidance of voluntary settlements and the amendments were made to this section as a result of suggestions made at the sub-committee that the section should be updated. Briefly, voluntary settlements, such as the transfers of property, will be void against the official assignee, (a), if made within two years of adjudication in all cases, and (b), if made more than two years but within ten years of adjudication unless the parties claiming thereunder can prove that the settlor was solvent at the time of the settlement and the whole interest of the settlor in such property passed to the trustee on the execution of the settlement.
The following settlements are exceptions to this provision: (1) settlements made before and in consideration of marriage; (2), settlements made in favour of a purchaser or incumbrancer in good faith or for valuable consideration and, (3), settlements made on or for the spouse or children of the settlor of property which has accrued to the settlor after marriage in right of the spouse. The sub-committee considered that the concept of "property accruing in right of the spouse" is now obsolete in the light of the modern matrimonial property legislation.
They also considered that the ten year period should be reduced to five and the views of the sub-committee were given effect to in that amendment.
The Bill was also modified in relation to the sale by the official assignee of the family home. It provides for the court in deciding to postpone the sale and this official amendment arose out of discussions by the sub-committee on the vesting of the bankrupt's property on the official assignee, the avoidance of pre-bankruptcy transactions entered into by the debtor, and the official assignee's power to sell or dispose of a bankrupt's property.
Concern was expressed about the position of the family home in the context of the Bill and of the Family Home Protection Act, 1976, and the Succession Act, 1965. An official amendment to section 61 was put down in the sub-committee requiring the prior sanction of the court to the sale or disposition of the family home.
While it was pointed out that the family home vested in the official assignee, subject to any interest attaching to it, that the Family Home Protection Act, 1976, did not deal with the ownership of the family home and that a Bill was being prepared to provide for joint ownership of a family home by both spouses, it was agreed to re-examine the position again. Various options were considered. It was decided that a provision should be included in the Bill giving effect to the sub-committee's suggestion that the Bill should contain guidelines for the court in the exercise of its discretion to postpone the sale of a family home. Accordingly, section 61 (5) enacts that the court should have power to postpone a sale where appropriate, having regard to the interests of all concerned and all the circumstances of the case. It follows the trend of modern insolvency laws in permitting the interests of dependants of the bankrupt other than children, to be considered, such as the grandparents. The Central Bank was also designated as the bank which would deal with the official assignee's accounts.
Finally, on the trustee clauses, the effect of the amendments was to retain the trustee clauses. It was decided to retain these clauses, that is, the procedure by which a bankrupt's estate could be wound up by a trustee and a committee of inspection as an alternative to having it administered by the official assignee, because of the increase in the number and size of bankruptcies.
When I say official amendments, these amendments came to the Minister of the day from the sub-committee. Then there were other amendments which I will describe, for the sake of convenience, as Opposition amendments on Report Stage. As I have already said they were accepted and they provide that the creditor must have at least a debt of £1,500 before initiating bankruptcy proceedings against the debtor and they ensure that the Bill must come into operation not later than 1 January next. Deputy Michael Noonan suggested that if I felt that that type of guillotine measure might in any way frighten me off from meeting my deadline he would withdraw it. I was quite prepared to take that on and I have no doubt that they will meet that deadline. I think it is good that the deadline is there for us because Members know that the Rules Committee have to do a lot of work between now and the time the Bill comes into operation. I have no doubt that they will be able to meet that deadline.
Senator Norris asked about the position of a bankrupt who has been awarded damages in a personal injuries case. We have made amendments in the Bill to deal with this. The amendments arise from discussions which took place in regard to section 122, which enacts that it will be an offence for a bankrupt not to disclose after-acquired property, that is, property which comes to him after his adjudication. The question was raised in the sub-committee as to the position of rights of action in respect of injury to the person or character of the bankrupt and of damages recovered by a bankrupt in such actions, such as, actions for personal torts.
It was pointed out that while rights of actions of the bankrupt generally speaking vest in the official assignee those in respect of injury to the personal character of the bankrupt do not, and furthermore, the damages recovered by an undischarged bankrupt for a personal tort do not vest in the official assignee. In practice, this means that if a bankrupt obtains an award arising out of a personal tort the damages cannot be intercepted by the official assignee, and so long as they retain the character of damages he cannot lay claim to them as after-acquired property.
There is a wide variety of cases involving awards for injury to the person or character of the bankrupt, awards for injury to his person and to his property, and awards arising out of actions for personal earnings after bankruptcy. It is the purpose of the amendment to ensure that the provisions of the Bankruptcy Bill, which in principle vest in the official assignee on adjudication, all the property of a bankrupt, do not interfere with or prejudice the established case law and practice governing these rights of action and awards deriving from them.
The new subsection (5) proposed to be inserted is based on the saving clause common to section 1 of the Statute Law Revision Act, 1896, and the Statute Law Revision Acts of 1962 and 1983, section 2 in each case, where its purpose is to emphasise that the mere repeal of a statute does not affect any established rule or practice based on it.
I am very thankful to the Members of the Seanad for their help and in having this much-talked about Bill finally enacted. The suggestion by Senator Manning that a detailed statement be prepared and issued will certainly help to ensure that the public generally will understand what we are doing here today.
Question put and agreed to.
We did not expect the Bill to end so soon and the Minister is not ready yet. May I suggest we adjourn for half an hour?
Is it agreed that we adjourn for half an hour? Agreed.
Sitting suspended at 11.30 a.m. and resumed at 12 noon.