Civil Law (Miscellaneous Provisions) Bill 2011: Committee Stage
Government amendment No. 1:
In page 6, subsection (9), line 10, to delete "and9” and substitute “and 9, and section 39”.
This amendment provides that section 39 of the Bill in relation to court matters will not require a commencement order. It is likely that further amendments to section 1 will be required on Report Stage to ensure we include all provisions that do not require a commencement order. This will be necessary as a number of further amendments are being contemplated in regard to existing Parts of the Bill, some of which I mentioned on Second Stage. The amendments, many of which are technical, will concern the following: Part 4, the Private Security Services Act 2004, an amendment to its appeals board procedures; Part 6, the Equality Act 1998; Part 8, enforcement of maintenance orders; Part 10, the Irish Nationality and Citizenship Act 1956, to provide a formal legal provision with regard to citizenship ceremonies; Part 10 relating to taxing masters, an increase in the proposed retirement age, as was raised by Senators during the debate on Second Stage; and Part 15 and miscellaneous where we will make a small technical amendment to the Personal Injuries Assessment Board Act 2003.
A number of courts related amendments concerning the charging of court fees, the operation of the High Court on circuit and the introduction of new provisions to allow for county registrars, where requested, to tax or settle a bill of costs between a solicitor and client in Circuit Court proceedings, arise under the courts legislation. We will also insert a provision regarding fines in the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 and a text correction in the Commissions of Investigation Act 2004. There will also be a new Part dealing with issues relating to the handling of documents following the completion of a tribunal of inquiry. Members will have the opportunity to consider and discuss these amendments on Report Stage. This initial amendment is merely a technical amendment to the first section of the Bill.
Amendment agreed to.
Section 1, as amended, agreed to.
Section 2 agreed to.
Question proposed: "That section 3 stand part of the Bill."
This section will permit the Legal Aid Board to grant legal advice to a person who is a victim of human trafficking in the context of an alleged trafficking offence or related offences. This extension of legal aid is welcome but I understand that the Free Legal Advice Centres, FLAC, hope that it might go further. FLAC notes that the section does not extend a right to legal aid, which is the right of representation in court, to the victims of trafficking. The bulk of the assistance offered is also confined to the very limited crime of trafficking. Very few people in Ireland have been identified formally as such. Finally, according to FLAC, the legal aid is available only with regard to matters connected with the commission of the offence or any other offence connected with the alleged trafficking offence. Thus, it does not appear to include assistance or representation, as necessary, to help victims of trafficking with immigration or domestic problems or with seeking compensation from the wrongdoer.
I am not familiar with this area but I hope I am outlining the concerns of FLAC correctly.
I share Senator Quinn's concerns. I welcome the Minister back to the House. I also welcome the fact that legal aid is being extended to victims of trafficking but, like Senator Quinn, I am concerned about the extent of that legal aid. Is it only legal advice that is being made available? Is it only available for matters connected with the commission of the offence or any other offence connected with the alleged trafficking offence? There are other issues on which those victims would require legal representation, such as domestic matters, immigration and so forth. While I welcome the extension of the advice being made available, there is also the issue of the representation in court that victims would require.
Does the Minister intend to protect those who do not fall within the definition of trafficked persons but who are still victims of the sex industry? Surely they will also require representation. Senator Quinn cited FLAC, which has noted that very few people in Ireland have been identified as trafficked persons. That is a concern, and we should pause and reflect on it. Does the Department intend to deal with the fact that although the extension of legal advice applies to victims of trafficking it does not apply to victims of the sex industry generally? I hope the Minister will reflect on that.
I support my colleagues on this issue. The Minister would do well to note the concerns expressed by the Free Legal Aid Centres. There are vulnerable people in society who may have language difficulties or be living in the most appalling circumstances. I am sure the Minister will take account of the points made by Senators Quinn and Cullinane. I add my voice of concern to the points they made.
I welcome what the Minister is proposing in the legislation, as a step in the right direction. Legal advice in the area of trafficking is most important. I share the concerns of others. There should be more than legal advice. Perhaps the Minister is planning to do something in that regard. As recently as last weekend I dealt with a non-national who is the subject of severe domestic violence and who went to a solicitor, under the free legal aid scheme, for advice. The person was told witnesses were required, even though there was significant medical evidence of violence. I am working on this case and it is ongoing.
The manner in which non-nationals engage with the legal system and with the free legal aid system is unsatisfactory. Senator Cullinane made an important point about trafficking and the sex industry in general. Further legislation will, possibly, be needed in this area. I would like to hear the Minister's views on this matter.
This provision is a big step forward. I recall saying from the Opposition side of the Dáil over a number of years that it was of crucial importance that victims of human trafficking should have access to legal assistance and advice. The Bill puts this in statutory form in a manner that also allows us to comply with international obligations.
I thank Senators for their contributions. The existing legal aid system does not exclude people from obtaining legal advice who qualify for it on other civil matters. The legal aid system operated by the Legal Aid Board is, essentially, intended to provide legal assistance in the civil law area. The Bill extends this into providing legal advice to those who are the victims of human trafficking so they are made fully aware of the law applicable, of the assistance they can give to An Garda Síochána, of what will occur should a prosecution take place and of the court processes.
The provision does not go beyond that. We do not generally provide legal advice through Government law centres to all victims of criminal offences. We do not have the resources to do that. At a time when resources are stretched I am conducting a battle, as Minister, to try to ensure that adequate resources are available to the current law centres, which are substantially under-resourced since the budget of last December, introduced by the previous Government. Our current difficulty in the law centres is as a consequence of the economic recession and the huge number unemployed, which is just below 450,000. A substantial additional number of people are seeking legal aid in civil matters through law centres, particularly in the areas of family law and domestic violence. In some law centres there is, unfortunately, a substantial delay in people getting access to legal advice because of the pressures the centres are under due to the lack of resources as a consequence of last year's budget and the huge additional numbers seeking assistance. We are looking at how we can address that issue in a manner that ensures that people who need to gain access to civil legal aid do so.
There are not sufficient resources to provide additional assistance through this legal aid scheme beyond what we are providing here. This is a new and important right. The Bill grants the right to victims of human trafficking who are co-operating with An Garda Síochána to obtain legal advice. During the debate on Second Stage some Senators raised the issue of legal representation in the criminal courts during a prosecution that ensues as a result of human trafficking and I explained on that occasion that, under our criminal system, the DPP prosecutes on behalf of the State, the defendant is legally represented and, by and large, witnesses and victims are not represented. I acknowledge that with regard to certain sexual offences, assistance by way of advice is given to victims but this is a separate and discrete area. I do not have the capacity to extend this beyond what I am doing, but what I am doing is an important step forward and I hope Senators will support it.
Question put and agreed to.
Amendments Nos. 2 and 3 are related and may be discussed together.
I move amendment No. 2:
In page 7, between lines 36 and 37, to insert the following:
"(d) the purpose of benefiting the community;”.
This is a simple and straightforward amendment. By and large, I support the thrust of the Bill. The section states:
"voluntary work" means any work or other activity that is carried out for any of the following purposes:
(a) a charitable purpose within the meaning of the Charities Act 2009;
(b) without prejudice to the generality of paragraph (a), the purpose of providing assistance, advice or care in an emergency or so as to prevent an emergency;
(c) the purpose of sport or recreation;
The amendments provide for a further purpose, which is "the purpose of benefitting the community". Based on statistics from 1999, some 33% of the adult population was engaged in volunteering. I hope the amendment will be accepted. I referred to hill walking on the Sheep's Head Way on Second Stage but, for example, people volunteer to control traffic at agricultural shows, Macra na Feirme outings or local carnivals. They wear jackets and they are assisted by members of Macra na Feirme or the IFA. It is a form of volunteering in the community.
I refer to the definitions of "good Samaritan" and "volunteer" in other countries such as Australia and America. The Minister's predecessor, Dermot Ahern, introduced this Bill and it goes a long way to address a major lacuna for the past number of decades. I urge him to take an extra step to include these amendments to benefit the community as a gesture of respect to all those who work on behalf of the community. The work of volunteers and community spirit have never been needed more because of the difficult economic climate in which we find ourselves. These people work for free on behalf of the community to, for example, police GAA matches, local shows or Macra na Feirme events. People may also be engaged in community work to raise funds for local cancer charities and GAA clubs. If the Minister were to accept the amendment it would bolster the community spirit, the meitheal spirit, so to speak, that is so important in society today. It was probably never more acutely needed than in the current situation. The amendment is a simple one. I will not labour the point at this stage, except to say that the Minister could easily add paragraph (d) as it would bolster the Bill and add greater value to the legislation. I hope the Minister will accede to my earnest request.
I propose to discuss amendments Nos. 2 and 3 together. I thank the Senator for proposing the amendment. I disagree in principle with absolutely nothing he said. Amendment No. 2 proposes to add a new subparagraph (d) to the provision which makes reference to the purposes of benefitting the community in the context of the definition of voluntary work. I am advised that the amendments are not necessary because the definition of voluntary work in the new Part IVA of the Civil Liability Act 1961, as inserted by the Bill, means any work or other activity that is carried out for certain purposes. The purposes include, by reference to the Charities Act 2009, a purpose that is of benefit to the community. In section 3(1) of the Charities Act 2009 a charitable purpose includes “any other purpose that is of benefit to the community”. Section 3(11) of the 2009 Act provides a long indicative list of activities deemed to be of benefit to the community.
While I agree with the Senator that work done for the benefit of the community is clearly relevant to the definition of voluntary work for the purpose of the Bill, this in fact is already achieved in section 51A(1)(a) by the reference contained in it. Repetition would not add anything to the Bill or be appropriate.
With respect to amendment No. 3, again, I do not believe that the additional words proposed are required. The new section 51G in the new Part IVA of the Act of 1961 requires that in proceedings relating to the liability of a volunteer organisation, a court is required to consider whether it would be just and reasonable to find that the organisation owed a duty of care, having regard to the social utility of the activities concerned.
The benefit brought to the community by the activities of volunteer organisations clearly falls within the ambit of social utility. I do not believe it would improve the Bill to insert the additional words. If I was advised that the words proposed by the Senator were necessary I would without hesitation be willing to include them in the Bill but those matters are already addressed within the parameters of the Bill in the context of the proposed amendments to the law being made, as contained in it.
Is the amendment being pressed?
I welcome the Minister's response but it is not patently obvious that my concern is addressed in other legislation and that it is so obvious as not to require the inclusion of the amendment. I refer to the Latin maxim of interpretation,inclusio unius est exclusio alterius. In that regard it would be safer to include the proposed paragraph as it would act in the manner of a belt and braces and avoid all doubt. I understand where the Minister is coming from but the addition of the proposed small paragraph would give greater clarity to the Bill.
This is a measure that must be welcomed. All one has to do is refer back to the previous winter or the one before that when people could not get out of their homes. There was a certain reluctance on the part of some to spread the necessary grit outside of driveways for fear there would be an accident and they would end up being liable. Therefore, I welcome the provision.
I seek clarification from the Minister on one possible scenario. If someone acting in the capacity of a good samaritan were to spread salt outside a commercial premises there would be a financial benefit because it would provide easier access for customers. If that person does not receive any remuneration, and subsequently there is a problem, given the fact that it may not necessarily be regarded as a charitable act because somebody is going to benefit financially from it, would he or she be covered? This is something I would like clarified. However, the overall thrust of what he is proposing is welcome. Over the past decade and probably longer, it is increasingly the case that no matter what one does, even when trying to help people, one must look over one's shoulder. Even a person who helps somebody to change a wheel at the side of the road, if he or she does it wrongly in some shape or form, could end up being liable if there is an accident afterwards. I ask the Minister to clarify this.
On the latter issue, this is an area about which I am particularly concerned. We had difficulties last winter when some people were worried that if they voluntarily cleared the paths outside their houses and someone later slipped there, they might be sued. Some shopkeepers in retail outlets across the country were vigorous in trying to tidy up areas adjacent to their shops while others did nothing. There was some confusion about where people stood legally in those circumstances. In the context of this legislation, I want to be clear that it does not yet deal with that aspect. It provides protection in situations in which a person who is working for an organisation engages in that sort of work, but it does not provide protection for individuals. I have asked about this within the Department and it seems to be a more complex issue than those dealt with in the Bill; however, I have asked for work to be undertaken in this regard. It is important that the law in this regard is clear. In fact, I believe that under the current law, if one undertakes such works in good faith, employing a reasonable degree of common sense, it is very unlikely one will be held liable in the event of an accident. Obviously, if one leaves a stack of ice in a location after moving it from point A to point B and someone slips on the hazard one has created, that is a different issue.
We are considering whether we can add further to the Bill by addressing the particular issue raised. I am not sure whether this can be addressed through the Attorney General's office in time to add it to this legislation; if not, it can be dealt with in a different Bill later in the year, not necessarily from the Department of Justice and Equality but from the Department of the Environment, Community and Local Government. We are investigating whether the issue can be dealt with during the Bill's passage through the Seanad, but I do not think it will be possible. If it proves possible, however, to deal with it on Committee Stage in the Dáil, I intend to do so. If I succeed, I may interrupt the Seanad's proceedings for a few minutes in the last week of July. However, under this Bill, where an individual working for an organisation, such as the Red Cross or a local voluntary organisation, engages in works of that nature, he or she does have protection.
Senator O'Donovan made reference to the community. As I have already said, the issue is properly addressed in the new section 51A of the Civil Liability Act 1961, in which voluntary work is said to mean
any work or other activity that is carried out for any of the following purposes:
(a) a charitable purpose within the meaning of the Charities Act 2009[.]
I have already made reference to the fact that charitable purposes are defined as something that is undertaken on behalf of the community. I thank Senator O'Donovan for raising the issue, but with regard to the terminology in which he partially addressed the matter, I respond by sayingres ipsa loquitur.
I urge the Minister to proceed, along with his officials, in finding a solution to the issue of individual liability. For the last number of winters we have had inclement weather, and if the issue could be clarified in this Bill it would certainly give much comfort to persons who wish to act as good Samaritans in helping their neighbours. The organisational aspect is most welcome but I am sure the Minister sees my point on this. The House would facilitate him in the last week of July if he wished to fast-track this.
Amendment, by leave, withdrawn.
Amendment No. 3 not moved.
Section 4 agreed to.
Section 5 agreed to.
Amendments Nos. 4 to 7, inclusive, are related and may be discussed together by agreement.
Government amendment No. 4:
In page 10, lines 24 to 26, to delete all words from and including "is" in line 24 down to and including "equipment":" in line 26 and substitute the following:
(a) by the substitution of the following for the definition of “installer of security equipment”:”.
These are technical amendments to section 2(1) of the Private Security Services Act 2004. Amendment No. 4 is a drafting amendment to improve the layout of the section and was advised by the Parliamentary Counsel.
Amendments Nos. 5 and 6 and paragraphs (b) and (c) of amendment No. 7 replace the reference to “for remuneration” with “in the course of a business, trade or profession”. This change in several existing definitions is necessary in light of the Private Security Authority’s experience of regulating the private security industry. It has shown the use of “for remuneration” has given rise to a loophole which has been exploited in some instances. An example would be where an electrician may install an alarm for free but, instead, charge for the associated electrical wiring so as to get around the existing definition which mentions remuneration. The amendments will counteract such a activity.
Paragraph (d) of amendment No. 7 relates to the definition of “security service”, removing suppliers of security equipment from the regulatory framework. The intention of the 2004 Act was not to regulate those selling electronic security equipment, such as alarms, etc., as they do not provide a security service. This amendment corrects that position. It remains open, however, to the Private Security Authority, as part of an investigation into the unlicensed installation of electrical security, to use its existing statutory powers to seek any information relevant to the investigation.
I thank the Minister for his explanation of these amendments. At first, I could not figure out what they related to but they seem reasonable and a reminder of the tricks someone can get up if he or she wants to get around legislation.
Could this section be adapted to deal with the rise in unauthorised surveillance, particularly in light of certain media activities in the United Kingdom reported this morning?
Will the Minister consider bringing debt collectors, who have a fairly appalling image and record, into the licensing system of the Private Security Authority to remove strong-arm merchants and thugs? I realise I cannot expect an instant response at this point, but l put these questions forward to the Minister for consideration for the next date.
The alleged scandalous conduct revealed by a certain newspaper in the United Kingdom would, under our legislation, fall under telecommunications legislation and would be dealt with in that context. I will not pretend to be an expert in the law in those areas, but I understand that type of conduct, where a media outlet conducts itself in that fashion, may well give rise to criminal offences in this State, but it is an issue exterior to this legislation.
The issue of debt collecting is another day's work. It is important that those engaged in that area behave with responsibility and decency and do not engage in the type of activity the Senator mentioned. Again, this does not fall within the ambit of the legislation with which we are dealing this afternoon.
Amendment agreed to.
Government amendment No. 5:
In page 10, line 28, to delete "for remuneration" and substitute "in the course of a business, trade or profession,".
Amendment agreed to.
Government amendment No. 6:
In page 10, line 33, to delete "for remuneration" and substitute "in the course of a business, trade or profession,".
Amendment agreed to.
Government amendment No. 7:
In page 11, between lines 6 and 7, to insert the following:
"(b) in the definition of “private investigator” by the substitution of “in the course of a business, trade or profession,” for “for remuneration”,
(c) in the definition of “security consultant” by the substitution of “in the course of a business, trade or profession,” for “for remuneration”, and
(d) in the definition of “security service”, in paragraph (b) to substitute “installer” for “supplier or installer.”.
Amendment agreed to.
Section 6, as amended, agreed to.
Question proposed: "That section 7 stand part of the Bill."
Just a quick question to ask the Minister to tease out for me what exactly this section provides for. This is a brief section and as far as I understand, it seems to provide for the contracting out of inspections. I am concerned by that because the inspection regime was introduced to deal with some unsavoury incidents. I would be concerned by a contracting out of the sector. We could take the NCT sector as an example. A recent "Prime Time Investigates" programme demonstrated how some people could, effectively, buy their NCT certificate. Therefore, there are issues with regard to the robust enforcement of these areas. I hope there is sufficient robustness in the system provided for in this legislation to allow for this. Does the section allow for the contracting out of inspections?
I understand the section allows for the appointment of individuals as inspectors, subject to specific contractual conditions. It would be for the authority to ensure compliance with those conditions and that there is proper compliance with the law. That is the essential position. For the Senator's information, the authority currently has four full-time inspectors who are appointed from within the authority's own staff. The current working of the Act does not allow for the appointment of outside inspectors, but the amendment in section 7 will enable that to happen, if necessary. The position with regard to the current wording of the Act is that it is unsatisfactory given the level of intimidation frequently faced by staff. The need for specialist knowledge arises in certain circumstances. The section allows for the contracting out of work, but it would be for the authority to ensure it was contracted to responsible people, that they do the work in an appropriate fashion and report back to the authority.
Does the Minister agree it is an area where unsuitable staff working in the sector could have dire consequences? I have had to deal with a number of people who were victims of security staff who worked, for example, for night clubs or bars. It is an area in which we must ensure there is proper enforcement. I welcome the Minister's response, but I hope the system and the guidelines under which any outsourcing will operate are robust enough to ensure the staff are properly monitored. That is necessary.
I agree entirely with the Senator that all of those issues are issues of concern and importance. We are all aware of unsavoury and unnecessary incidents that have occurred on occasion. We have read about such incidents in court proceedings that have ensued. There is a responsibility on the authority to ensure it deals with the inspections appropriately and that appropriate people are appointed. Ultimately, it is desirable that those individuals who are recruited to act in a security context in any location, be it a nightclub or a public house, behave with both insight and responsibility. It is an ongoing concern that we ensure that is the position. In particular, as happens on occasion, we must ensure that there is not an unnecessary or ill-considered incident involving young people.
Question put and agreed to.
Sections 8 to 12, inclusive, agreed to.
Government amendment No. 8:
In page 13, before section 13, to insert the following new section:
"13.—Section 37(1) of the Act of 2004 is amended by the substitution of "A person shall not provide a security service insofar as this Act has come into operation as respects the security service concerned and shall not hold himself or herself out" for "A private security employer or an individual referred to in any of the paragraphs of the definition of "security service" in section 2(1) shall not, on or after the commencement of the paragraph concerned, provide a security service or hold himself or herself out.".".
This amends section 37 of the Private Security Services Act 2004 and is proposed to deal with the prohibition of an unlicensed security service. This section requires the licensing of both individuals and contractors in all cases. Research carried out by the Private Security Authority indicates there may be instances where it may not always be necessary, particularly in light of the regulatory burden that applies in some categories, to license both individuals and contractors in all cases. In some cases, regulation of contractors may only be required. This will allow the Private Security Authority more flexibility in this regard.
Amendment agreed to.
Government amendment No. 9:
In page 13, before section 13, to insert the following new section:
"14.—Section 48 of the Act of 2004 is amended by the insertion after subsection (5) of the following subsection:
"(6) Where a person is convicted of an offence under this Act, prosecuted by the Authority, the court shall, unless it is satisfied that there are special and substantial reasons for not so doing, order the person to pay to the Authority the costs and expenses, measured by the court, incurred by the Authority in relation to the investigation, detection and prosecution of the offence.".".
This inserts a new subsection in section 48 of the 2004 Act to allow for the possibility of costs and expenses to be awarded to the Private Security Authority in cases prosecuted by the authority. There is currently no express jurisdiction to award costs and the amendment rectifies this position. It is a desirable amendment.
Amendment agreed to.
Section 13 agreed to.
Government amendment number 10:
In page 14, subsection (2), line 15, to delete "advertising, promotion or marketing of—" and substitute the following:
"advertising, promotion or marketing of intoxicating liquor and such code may apply as respects—".
This is a drafting amendment necessary to clarify the meaning of the provision.
It is good to see that this issue is being examined. The code of practice must be all-embracing. It needs to consider the operations of premises that have wine licences as well as full alcohol licences. This is particularly true when young people of 15 to 17 years of age have summer jobs working on the premises. There must be some training as part of a code of practice. This must also be considered in terms of regions. Abuse of alcohol is prevalent in certain resorts and areas. There may be a number of establishments in the town and two or three of them are flagrantly doing what they should not be doing. A code of practice is important and is welcome. Perhaps the Minister will elaborate on his thoughts on the draft code of practice.
I support the previous speaker. I have called for the preparation and publication of a code of practice for many years. I welcome the Minister's commitment. It is one of the good aspects of this Bill. It is also important to encourage those who work in the drinks industry to take a lead and, through the joint policing committees, there is an opportunity for this to happen. The Garda Síochána and local public and community representatives are present at these meetings. A number of sub-committees in Waterford and Cork were set up specifically to deal with publicans and vintners. It is a holistic way of making sure the drinks industry lives up to its responsibilities. A statutory footing was required for the code of practice. I welcome the Minister's commitment but enforcement is the important thing. The Minister should be commended on his intention to publish the code of practice.
We spoke about this topic on Second Stage. I compliment the Minister on the steps he has taken. He expressed concern that the code of practice was not universal and had not been accepted by all bodies. Has there been development on that since last week? I doubt there has been. I have seen codes of practice work very well in the past. This can work very well and, as far as I can see, it is being adhered to by the vast majority of those involved. The major threat is that if everyone does not get involved, the Minister can take another step. It would be ideal if the code of practice worked. Has there been a development on this?
Regarding the last issue, since I made my comments I have heard no more from the vintners' groups to indicate that they are extricating themselves from their agreement to abide by the code of practice. I am still hoping we will get more enlightenment in a response to that issue. It is important the code of practice is given statutory effect. This is an important move forward. Consideration was given to enforcement and the main enforcement mechanism in the legislation is that, if there is a failure to abide by the code of practice, it can be raised at the annual licensing courts by the Garda Síochána or others and this will raise the issue of what a court might do. This is a way of ensuring some transparency with regard to the application of the code.
Work is being done on the code and it will ultimately be published. It will be a transparent code that people can access. It is important to create a situation where it has a statutory backdrop, meaning there is a validity in raising it in the legal context of a court application for a licence renewal in circumstances where those who should abide by it have failed to do so.
Amendment agreed to.
Section 14, as amended, agreed to.
Acceptance of the following amendment involves the deletion of section 15. Amendments Nos. 11, 16, 17 and 18 are related and will be discussed together.
Government amendment No. 11:
In page 16, before section 15, but in Part 6, to insert the following new section:
"15.—In this Part—
"Act of 1998" means the Employment Equality Act 1998;
"Act of 2000" means the Equal Status Act 2000.".
Amendment No. 11 is a technical drafting amendment to provide for definitions of the Employment Equality Acts and the Equal Status Act relevant to Part 6 of the Bill. Amendments Nos. 16 to 18, inclusive, insert a new section before section 19 and a new section after section 19. Amendment No. 16 substitutes a new paragraph (a) in section 21(7a) of Equal Status Act, as amended, to correct a drafting error in the existing text. The existing text refers to section 21(7), where the correct reference should be to section 21(6). I presume that is not a matter of any great controversy. Amendment No. 17 is consequent on the acceptance of amendment No. 11 and provides simply for the substitution of the reference to section 25 of the Act of 2000, as amended, for section 25 of the Equal Status Act, as amended. Amendment No. 18 corrects a typographical error, where equality was incorrectly spelled in section 39 of the Equal Status Act. That it is incorrectly spelt has not resulted in the world ceasing to revolve on its axis. Originally it was a typographical error and it has been corrected under the mechanism of this Bill.
Amendment agreed to.
Section 15 deleted.
Amendments Nos. 12 to 15, inclusive, are related and may be discussed together, by agreement.
Government amendment No. 12:
In page 16, before section 16, to insert the following new section:
"16.—Section 2 of the Act of 1998 is amended, in subsection (1), by the substitution of the following definition for the definition of "discrimination":
"discrimination" includes the issue of an instruction to discriminate and, in Part V and VI, includes prohibited conduct within the meaning of the Equal Status Act 2000, and cognate words shall be construed accordingly;".
Amendment No. 12 inserts a new section in Part VI of the Bill, the effect being again to correct a typographical error in the context of the word "construed" in the existing Act of 1998.
Amendment No. 13 deletes subsection (2) in section 5 of the Act of 1998, which is now redundant. Subsection (2) makes reference to section 14 of the Employment Equality Act 1977 and orders made thereunder. Section 14 allowed the Minister, by order, to amend or repeal certain other Acts. However, each of the Acts therein referred to have been separately repealed by other primary legislation and the provision is superfluous. The Acts listed in section 14 of the Employment Equality Act 1977 are: the Condition of Employment Act 1936, repealed by section 9 the Organisation of Working Time Act 1997; the Shops Condition of Employment Act 1938, repealed by section 9 of the Organisation of Working Time Act 1997; the Factories Act 1955, repealed by section 4 of the Safety, Health and Welfare at Work Act 2005; and the Mines and Quarries Act 1965, repealed by section 4 of the Safety Health and Welfare at Work Act 2005.
I am sure Senators did not expect we would stray all the way into the Mines and Quarries Act 1965 when we were dealing with the Civil Law (Miscellaneous Provisions) Bill but it indicates the extent of what we do in tidying up areas of law.
Amendment No. 14, namely, the new section 18, substitutes a new section 4(A) in section 75 of the Act of 1998. The director of the equality tribunal currently has powers to outsource mediation and the amendment proposes to extend these current powers to permit outsourcing of the equality officer functions in investigating and hearing cases. The effect of this amendment is to facilitate a service model which would be more flexible in coping with fluctuations in demand and permit a greater geographical spread of locations where hearings might be held.
Amendment No. 15, namely, the new section 19, substitutes a new paragraph in subsection (12) of section 77 of the Act of 1998, again to correct a drafting error. The existing text of the 1998 Act refers to subsection (6) whereas the correct reference should have been to subsection (5). This amendment will bring that about.
Amendment agreed to.
Government amendment No. 13:
In page 16, before section 16, to insert the following new section:
"17.—Section 5 of the Act of 1998 is amended, by the deletion of subsection (2).".
Amendment agreed to.
Government amendment No. 14:
In page 16, before section 16, to insert the following new section:
"18.—Section 75 of the Act of 1998 is amended by the substitution of the following subsection for subsection (4A):
"(4A) Other persons with relevant qualifications or experience may, with the approval of the Minister and the consent of the Minister for Finance, be appointed to be equality officers or equality mediation officers on such terms and conditions as may be so approved.".".
Amendment agreed to.
Government amendment No. 15:
In page 16, before section 16, to insert the following new section:
"19.—Section 77 of the Act of 1998 is amended, in subsection (12), by the substitution of the following paragraph for paragraph (a):
"(a) Not later that 42 days from the date of a decision of the Director on an application by a complainant for an extension of time under subsection (5), the complainant or respondent may appeal against the decision to the Labour Court on notice to the Director specifying the grounds of the appeal.”.”.
Amendment agreed to.
Sections 16 to 18, inclusive, agreed to.
Government amendment No. 16:
In page 17, before section 19, to insert the following new section:
"19.—Section 21 of the Act of 2000 is amended by the substitution of the following paragraph for paragraph (a) of subsection (7A):
"(a) Not later than 42 days from the date of a decision of the Director on an application by a complainant for an extension of time under subsection (3) or (6), the complainant or respondent may appeal against the decision to the Circuit Court on notice to the Director specifying the grounds of the appeal.”.”.
Amendment agreed to.
Government amendment No. 17:
In page 17, to delete line 37, and substitute the following:
"19.—Section 25 of the Act of 2000 is amended—".
Amendment agreed to.
Section 19 , as amended, agreed to.
Government amendment No. 18:
In page 18, before section 20, but in Part 6, to insert the following new section:
"20.—Section 39 of the Act of 2000 is amended by the substitution of the following paragraph for paragraph (b):
"(b) to promote equality of opportunity in relation to the matters to which this Act applies; and”.”.
Amendment agreed to.
Amendments Nos. 19 and 20 are related and may be discussed together, by agreement.
I move amendment No. 19:
In page 19, line 27, to delete "12th anniversary" and substitute "3rd anniversary".
I raised this matter on Second Stage, have reflected on it and believe strongly in it. As the Minister will be acutely aware, we are in the most difficult financial circumstances ever envisaged by the State since its foundation. The only comparable situation, internationally, goes back to the Wall Street crash in the United States.
On Second Stage I agreed with the Minister's position. The previous Minister, former Deputy Dermot Ahern, had suggested a six year period and the Minister, Deputy Shatter, has reduced this to five years. In present circumstances we should consider my proposal that the 12 year period be reduced not to five years but to three years and, in that regard, the Law Reform Commission's consultation paper made certain suggestions. The 1998 Act is totally outdated and belongs to a different era. As the situation stands, we do not know, although perhaps the Minister has figures, how many people currently face bankruptcy. I do not refer to the 40, 50 or 60 big developers who brought this situation about and the banks that facilitated them but to the people who may owe €500,000 or €1 million, business people who find the situation impossible, having been caught and being unable to survive because of the banks' perspective. The banks loaned them money within the past four or five years and they are now being crippled and crucified by the same banks. In my experience, they are also, inevitably, caught by the Revenue, which debt remains outstanding.
It is important to be aware that the bankruptcy legislation of most our EU partners applies to a period of under five years. The Bill proposes amending the Bankruptcy Act to reduce the period, from 12 to five years, wherein a person can apply to be discharged from the court ruling. I suggest it be reduced further to three years because of the chronic economic situation we face. In that regard one must take account of the fact that in the United Kingdom, including over the Border in Northern Ireland, the period in question is one year. I accept there is some rethinking, and that the one year period may be totally inappropriate and is being abused. However, the gap between one year and five years is too much. I am aware there are people in business in the Republic who are currently skipping over the Border and applying for bankruptcy under the 12 month ruling in the neighbouring jurisdiction of the Six Counties. Perhaps the Minister might comment on that. If it is the case that certain people are availing of that situation it is wrong.
I do not accept that 12 months is a sufficient period, nor perhaps is two years, but I believe strongly that three years offers a reasonable balance. In its recent report, "Growing Enterprise for Ireland", Forfás stated: "In order to encourage potential entrepreneurs unnecessary disincentives such as our current bankruptcy procedures should be modernised." It further stated that the provisions of the previous Bill, which are very similar to those of this Bill, did not go far enough in this regard. The current bankruptcy laws, specifically the Bankruptcy Act 1988, are more severe than similar laws elsewhere. For example, in the UK such a ruling may contribute to a fear of failure and thus impede potential entrepreneurs. Under existing laws any person who becomes bankrupt in Ireland currently faces a 12 year waiting period to be discharged. The Minister proposes reducing this to five years but the comparison remains to a period of only 12 months in the UK. The current provisions outlined in the Bill, however, would still not bring Irish law into line with other jurisdictions. In that regard it is most important that we take cognisance of what Forfás stated. There is absolutely no doubt that we need entrepreneurs. The Government has introduced initiatives to try to create jobs and so on, but we need entrepreneurial skills and development and need to encourage people.
Speaking from my own perspective, being in business and knowing what is going on around me in my constituency and in neighbouring constituencies, probably 75% of business people who are currently in trouble are that way through no fault of their own. They were expanding their business, buying a new one, or whatever.
I am not talking about people who recklessly engaged in desperate borrowing. I am aware of a case in a town in my constituency where somebody bought a business, sold their house in Dublin and made some money on that. They were advised by the banks to expand the business, which they did. They invested the spare cash in bank shares on the advice of their banks but within a period of three to four years they were in a position where they had to close down the business and give the keys to the bank because of a €35,000 or €40,000 debt to the Revenue and an overdraft they could not service as they were marginally off the mark in that respect. There are hundreds and possibly thousands of such people in our society. The full scale of the problem has yet to be known because the Irish people are proud. People who are in business do not capitulate easily but that problem is rife.
We should take into account also the view of the Money Advice and Budgeting Service, MABS. Mr. Michael Culloty, the MABS national press officer, stated: "The processes are the same, the costs are still the same and the time period is still long by international comparison." He went on to state: "We still wouldn't be recommending it as an option for the people we're dealing with, 70 per cent of who are on social welfare." That may be an opt-out clause but MABS is concerned about the position as well.
The Irish Property Council also added its weight to the argument in this regard. There would not be much sympathy for people involved in the property market but many small operators, not the huge developers who were borrowing millions, may have borrowed €1 million or €2 million to take the opportunity to build some houses or to expand, primarily on the advice of banks, believing they were doing the right thing.
By international standards we are still a long way off the mark with regard to our five year requirement. I feel strongly about this matter and unless the Minister concedes and accepts my amendment, I will push it to a vote. This is important to note.
Regarding my amendment which was ruled out of order, I made the point about the costs involved for a bankrupt person applying to the court to be discharged of his or her bankruptcy. That is an aspect the Minister might have regard for also.
There are many reasons this amendment should be accepted. The Minister responded on Second Stage that he had an open mind as to whether the period should be six, five, three years or whatever. He took the view that it should be five years but stated that he was open to accepting an amendment on that. In that regard I ask the Minister to consider seriously the position in which we find ourselves. We have not reached the bottom of the barrel in this regard. I reckon it will take another two to three years before the full impact of this recession hits the business people of this country. When the Bankruptcy Act 1998 was enacted and despite the fact that we were coming through a difficult time in the 1980s, nobody then would have envisaged the type of recession we are now facing. To enable this country to have the resurgence we need and get the business people who failed, many through no fault of their own, to re-emerge, it is essential that we grasp the nettle, take a leap of faith and opt for the three year period. The Minister will understand in time that it is a fair compromise and if in ten or 15 years time it is decided that the period is too short, the legislation can be easily amended to extend it to five years. While I acknowledge the Minister's intention to reduce the period to five years, I am convinced that period is too long and that it will damage the recovery of our economy and the people who are caught in an invidious position.
I agree with Senator O'Donovan to a large degree. However, my problem with amending the period to three years is that while much work has been done to improve the current procedures on bankruptcy, once a person is declared bankrupt it still takes time to go through the entire procedure of collecting and distributing whatever money is involved. I would be inclined to move to the five year period. It is an issue we should revisit in two or three years time with a view to reducing the period further. It would be unwise to reduce it from 12 to three years because of the existing procedures. I am not satisfied that in many cases all of the issues are resolved. That is happening also in a large number of receiverships dealing with companies where many of the issues are not resolved within the three year period. The five year period is the one to decide on and I would say to the Minister that we should mark it for review within the next two years to determine if it should be reduced further.
I am leaning towards supporting the amendment. We all accept there is a need for reform in this area but Senator O'Donovan hit the nail on the head when he spoke about the need for this State to support entrepreneurship. Entrepreneurs take a risk and often when they take a risk it can be positive for this State because they set up businesses, create jobs, pay taxes and we all benefit. Sometimes, however, people fail and when that happens in this State they are punished and it can be very difficult for those people to recover. In this period we need entrepreneurs and innovators to come forward and create the jobs of tomorrow. It is very difficult for people who take that risk to have to shoulder the responsibility of all of the costs associated with that.
Senator O'Donovan made the comparison with the United Kingdom but we could also make comparisons in regard to other countries in Europe and the United States where the bankruptcy laws are far less restrictive. While I accept proposals in this area are under consideration by the Government, the comparable legislation elsewhere is less restrictive for risk takers and entrepreneurs. Even if somebody is successful in obtaining a discharge, they will still have to pay all of the expenses of the bankruptcy and any costs owed to the person who made them bankrupt, as well as preferential costs.
I note also that the new provisions do not state how a person is to be released from bankruptcy. The Free Legal Advice Centres, FLAC, has rightly noted that a public announcement would be entirely inappropriate but I believe this measure would discourage people from applying. I ask the Minister to respond on that aspect.
It is also an area which needs further scrutiny and discussion. When we get the new proposals that are coming on stream, we can have a more detailed debate on it. Legislation is not unwelcome but the main point is that we are sending out a message to entrepreneurs, innovators and risk takers who take a risk but for whom things do not work out. There are people who gamble and make mistakes due to their own fault, but that is a separate issue. I refer to people who are victims of circumstance in regard to the change of markets or the business environment in which they operate who find themselves bankrupt and unable to get a second chance. That is wrong. I accept that the Government is trying to address that problem but the three year period would be more appropriate and I would lean towards supporting the amendment for that reason. We must send out a strong message to people that taking a risk is seen as a good thing by the State and that we need people to create the jobs of tomorrow. I hope the Minister will reflect on those issues.
There are two issues involved in this area. The first is the period a person who is declared bankrupt must serve before they can get back into active participation in the economy. I was interested in what Senator Burke had to say on that. I might or might not disagree with him in normal times but we are in unprecedented territory. None of us has seen it in our lifetime and as many Members will be aware, while I was friendly with the former Minister, Dermot Ahern, I was critical of our failure to deal with this and other issues. We are almost three years into the most significant economic crisis we have ever faced. It parallels and is as bad as the Great Depression which, it could be argued, lasted into the 1950s. It lasted for 20 years. I know there was a world war in the middle which makes it difficult to equate, but I suggest we will be lucky to recover from the current crisis in this decade.
If interest rates are increased to a level which will add to the stress of already stressed borrowers, which is very likely, far more people will go to the wall. Many of them may not be pressed into bankruptcy because creditors will realise nothing is to be gained from it. Bankruptcy can be a little like liquidation and receivership whereby the professional classes are the beneficiaries rather than the creditors of the companies. Unless one who is declared bankrupt has a phenomenally complicated asset structure and a very extensive asset portfolio, the normal bankruptcy procedures should be more than adequate to deal with it. If the Minister is of a mind to examine this particular issue, provision could be made whereby in circumstances where such a situation arises which is being dealt with expeditiously, it could be returned to the courts for an extension to deal with the disposal of assets.
It was suggested that we re-examine this in two or three years, which will be six years into the crisis. Not only are people going across the Border, good employers of this country have moved to Britain, the Continent and the United States. They are trying to reconstruct their lives and businesses in these jurisdictions. The crisis may deteriorate further and we will need people like these to generate jobs. I was critical of the five year term that Fianna Fáil proposed as I felt it was far too long. Given the cataclysmic situation we are in, I would have argued for a shorter period than three years but I have been persuaded by my colleague that the three year period would be more prudent. I urge the Minister to examine this matter and be prepared to consider it on Report Stage. I see no good reason for not reducing it to three years particularly given the current situation.
The Bill proposes that one can apply to be discharged on the third anniversary rather than the 12th anniversary. This deals with an amendment we tabled that was ruled out of order which proposed removing the provision made for the payment of expenses, fees and costs of bankruptcy and preferential payments. It was ruled out of order because it could conceivably be a cost to the Exchequer, but let us think about it. This involves somebody who does not have sufficient wealth to discharge his or her liabilities; the amount of assets is less than the amount of liabilities, and one can presume they are significantly less as otherwise the creditors would work through the situation with the person involved. Therefore, I cannot envisage any circumstances — unless the person has won the lottery during the three years — in which he or she would be in a position to meet the costs involved in the bankruptcy, which can be quite high. Many creditors in most receiverships and liquidations complain that it takes far longer than it should. There is an incentive and an inducement to the people involved because the longer it continues, the higher the fees. We need to be careful in this regard.
If we tell people that after three years they are no longer bankrupt but not discharged simply because they have not paid the costs of the bankruptcy and their preferential creditors, the effect of this measure will be null and void and it will not have the desired effect. Why are we reducing it in the first place? It is to recognise the severe situation in which people find themselves. Most people involved come from a business background. They are risk-takers and entrepreneurs but they are also employers and this is the real motivation behind these amendments. Unless we are prepared to give them an avenue to return to their businesses and restart them, we will struggle for a very long time to address the issue of the 440,000 people who are unemployed. I strongly suggest the Minister considers this in a favourable way.
Much of the foundation of the bankruptcy legislation is from a different era and was primarily to ensure people did not act recklessly or fraudulently and to hold them to account if they did so. Nobody would disagree with this but today's climate is very different. We would all accept that most people involved will be those who got into difficulties through making miscalculations based on economic projections supported by international institutions including many of the rating agencies. I urge the Minister to make provision for them in the Bill so they have an incentive to return to business in this country, which is where we need them, rather than have them go abroad where their talents and risk-taking will be of benefit to other countries.
I wish to add weight to the arguments put forward by my colleagues on this side of the House. The debate reminds me of the question the former Minister, Mary Harney, asked about where we were as a country in choosing between Boston and Berlin as the way forward. In my experience in the House, when it comes to legislation relating to industrial development or proposals to facilitate business or the commercial world we most definitely have come down on the side of Boston rather than Berlin. Over the past 20 years, we have introduced legislation here and in the Dáil that has strongly facilitated the development of foreign direct investment to an enormous degree. Successive Administrations over the past 25 years can be proud of this.
I acknowledge that by introducing this legislation the Minister is at least addressing an archaic law which should have been addressed long before now. What we are quibbling about is the time periods. I am notau fait with the situation in the United States but I will continue the theme of suggesting we take a leaf out of its book. I understand the period of bankruptcy there is approximately two years. I am aware of a cliché that has existed for generations about businessmen from the United States whereby if one has not failed at least twice in business, one is not a success. In the United States, failure in business is seen as a badge of honour and a rite of passage rather than a failure. In this country and in western Europe in general there is a culture of holding the opposite view and this has militated against the liberalisation of bankruptcy laws. It is salutary to remind the House, as Senator O’Donovan did, that in our nearest neighbour’s jurisdiction the length of time is much shorter than what is proposed here.
I agree with the points that have been made, and they need to be reinforced, on the fact that we are facing an unprecedented crisis. Even the founding fathers of the State would never have envisaged it. Certainly, it is on a parallel with the Wall Street crash of 1929 and I agree with Senator Walsh's referral to the length of time it takes to get out of recession. If my memory serves me correctly, it was the intervention of a war that lifted the United States out of recession, which raises the question as to what would have happened to various economies, specifically the US economy which was the engine of growth in the world at the time, if there had not been a war.
The Minister should be bold and take the philosophy of a legal contemporary of his who famously stated in another context that one should be radical or redundant. The Minister will hardly be redundant as I know his philosophy has been one of taking a radical approach to the law. As an expert in various aspects of the law, he does not need Senators to remind him where his duty lies in that respect. However, we are dealing here with the impact the legislation will have on commercial life. As Senator O'Donovan noted, a significant number of people with entrepreneurial skills have found themselves in the bankruptcy courts as a result of circumstances arising from the economic collapse of recent years. This does not detract from their entrepreneurial skills or ability to rise phoenix like from the ashes and make a corporate success of themselves. This will, in turn, generate more employment.
The Minister will, I believe, agree with the general philosophy behind the amendment, which is to ensure further obstacles are not placed in the way of good business people who have sound business ideas but are being prevented from re-entering the marketplace as a result of the archaic nature of our bankruptcy laws. I agree the steps he is taking are a significant advance and I am interested to hear his reflections on the contributions Senators have made on the proposed amendment.
I listened carefully to the Minister's logical contribution on Second Stage when he proposed to reduce the term before an application for discharge from bankruptcy may be made from 12 to five years, having first proposed reducing it to six years. This is a significant advance. I gather the 1998 Act was almost ten years out of date when introduced having been based on a report published in 1978. I am pleased, therefore, that the law is being changed in this respect. Like Senator Mooney, I look forward to hearing the Minister's reflections on the strong case in favour of the amendment proposed by Senators O'Donovan and Walsh.
Unemployment is a scandal. It is also scandalous, however, that people are declared bankrupt for 12 years. It is equally scandalous when people are seen to be living a life of luxury within a short period of being declared bankrupt. Let us ensure we strike the correct balance. A strong case has been made for reducing the bankruptcy period to between three and five years. I am impressed by the position adopted in the United States where bankruptcy is accepted. As I noted on another occasion, F. W. Woolworth was made bankrupt three times before he succeeded. On the other hand, I am also aware of people who got away with not paying their debts. They were not made bankrupt and those to whom they owed money had to put up with watching their behaviour. For this reason, we must strike a balance.
On listening to the Minister's contribution on Second Stage, I considered the proposal to introduce a bankruptcy period of five years acceptable. I would not be surprised, however, if he has been influenced by Senator O'Donovan and will consider reducing the period even further.
Like Senators Quinn and Mooney, I welcome the proposed change, which is a significant improvement on the utterly inadequate legal position currently in place, to allow for the first time a limit of 12 years on the length of a bankruptcy and to allow an application for discharge after five rather than 12 years. I do not want to go over what has been a long debate on this issue on which I spoke on Second Stage. I also listened to the Minister's contribution on the matter.
As Senator Mooney noted, we are quibbling about time periods. I welcome the Minister's comments on Second Stage on introducing comprehensive reform through the forthcoming personal insolvency Bill. The debate on that legislation is the appropriate occasion for a more comprehensive discussion of bankruptcy. I was also encouraged to note that the proposals in this legislation do not amount to comprehensive reform but are focused on addressing the issue of the legacy bankruptcies which remain on the books. That is an important point.
The Free Legal Advice Centres, FLAC, provided Members with a useful briefing which noted that the original legislation is entirely inadequate and while the proposed change marks a great and welcome improvement, much wider law reform is needed. The Minister has taken this on board and will acknowledge that a much more radical and comprehensive reform programme for bankruptcy law is being envisaged. Perhaps the Minister will indicate a timeframe for its introduction. I hope it will be soon.
While we could wait for the more comprehensive reform to which Senator Bacik alluded, I support the amendment tabled by my colleagues opposite for the reasons other Senators have described so well, namely, the context in which we find ourselves, the findings of the comparative research done on how other countries deal with bankruptcy and the recommendation by the Law Reform Commission of a period of three years.
I have one other point to make from the perspective of a witness. Another speaker indicated that failure in the United States is a badge of honour. While that may be the case, bankruptcy is not a badge of honour. My father was an entrepreneur who went through bankruptcy and I assure Senators that whereas being an entrepreneur is something of which one can be proud, bankruptcy is a shameful experience. In light of my witness and experience, I believe a three-year period would be much more appropriate. The entrepreneurial spirit does not last forever but is supported by prevailing conditions and law. I concur with Senators who have suggested that this is a time for being bold in this regard as distinct from being cautious.
I thank all Senators who have contributed to this debate. This is only the start of a debate on a very important issue. I return to what I said on Second Stage, namely, these are two reforms of importance but they are small compared with the very substantial insolvency Bill which is being prepared in my Department and which we are required to publish in the first quarter of 2012 under the EU-IMF agreement. I am optimistically hoping we will be able to publish it before Christmas. While I cannot guarantee we will do so, work on the legislation is advancing. The Bill will introduce some very important and radical changes in this area of the law. What we are doing at the moment is addressing two aspects of it. We are doing so in a careful way and, as one speaker stated, to deal with legacy issues. Speaking from memory, I believe the 12-year rule we will introduce will allow in the region of 350 bankruptcies to be terminated.
We should keep all of this in context. Senator O'Donovan wanted me to predict the future, as to how many people may be rendered bankrupt. I do not know the answer to his question but I have information about the past. Despite the economic tsunami that has hit this country and the major personal difficulties many people have found themselves in, I am advised that in 2010 a total of 27 people were adjudicated bankrupt. Resort is not made to our bankruptcy laws to an enormous extent. Part of the reason for this is, as Senator Quinn fairly noted, that the law is substantially out of date and is not working the way we need it to work.
As a number of Senators stated, it is important to have a balance in this area. We want to ensure that those with entrepreneurial skills who fail through no fault of their own and do not set out to deliberately defraud other individuals are given a second chance to get back into business and extricate themselves from debt. However, we also have to protect the community from those who deliberately trade recklessly and often destroy the lives and businesses of other people who have dealt with them in good faith. There is a balance to be achieved in this respect. As we develop and change our law in this area, I wish to do it in a coherent and comprehensive way through the insolvency Bill. These are just two preliminary steps along that route. I welcome the fact that many of the Senators who spoke on Second Stage, while expressing some concerns about the number of years applicable, generally welcomed the fact that we are introducing changes.
To put the changes in focus, in section 20 I am providing for an automatic discharge, for the first time, of bankruptcies on the 12th anniversary of adjudication, with no conditions. This will deal with people in this country, numbering in excess of 300, who might have been bankrupt for decades. There are people who have gone to their graves bankrupt. It achieves no benefit to society and leaves them with a permanent stigma. The stigma remains even if they became bankrupt through no fault of their own, for example, because others who owed them money got into difficulties and caused unexpected troubles in their lives. It is a very significant reform and would not diminish it in any way. There are issues for the future such as, for example, whether that 12-year period should remain that length. This legislation allows us, through the Office of the Official Assignee in Bankruptcy, to resolve outstanding issues with regard to legacy bankruptcies of long duration and, in a sense, clear the way for implementing the new insolvency legislation when it is introduced.
As I said on Second Stage, I was not happy with the six years in the Bill published by my predecessor. We wrestled over whether it should be three, four or five years. There is no monopoly on wisdom in these matters, and I do not pretend to have such a monopoly. However, as Senator O'Donovan acknowledged, there is now concern in the UK about the effect of the one-year rule. I do not know to what extent research has been carried out in Northern Ireland in that context but there is a concern that it is creating a huge difficulty in facilitating people who have traded recklessly and got other people unfairly into financial difficulties to very easily extricate themselves from debt, wave goodbye to their obligations and start up again. I am anxious to ensure we do not create that type of situation.
The five-year rule allows people to extricate themselves after they have discharged what are described as debts to preferential creditors. Such creditors include the Revenue Commissioners, where taxes and rates are owed. Importantly, where people have been employed in circumstances where the employer is not a limited liability company and where there is a personal liability, the preferential creditors include the former employees who are owed money by the bankrupt. There are issues surrounding that. There is a debate as to whether at the end of a period of less than 12 years one should be discharged from bankruptcy without having to meet what are described as preferential debts. To what extent and at what time does one's liability to the State cease? Based on the new 12-year provision, if there are taxes owing that one cannot pay and if there are genuinely no assets or income out of which they can be paid, essentially one is free of those debts after 12 years.
If one is a compliant taxpayer and one has watched people leading a very high lifestyle, living excessively, buying cars that cost €100,000 or €200,000, going off to the Caribbean five times a year and they suddenly render themselves bankrupt and owe the Revenue Commissioners €400,000 or €500,000, at what point is it morally justifiable that they are released from that debt? That is a serious issue. At what point are ordinary workers who are paying their taxes through the PAYE system required to pick up the tab for somebody else by filling the gap of the tax payment they failed to make? At what point does one recognise the loss of funds to fund essential services that the State provides and that the loss should not be recouped?
One must bear in mind that it is not simply black and white in these areas. At a time when the State is short of money and is borrowing €18 billion per year from the ECB and the IMF, at what point in time does one forgive debt that is owed to the Revenue Commissioners by people who deliberately did not pay taxes and led a foolish, high lifestyle that more responsible people did not lead? This is not a black and white issue. There are grey areas, value judgments to be made and moral hazards. We will have a more comprehensive consideration of these in the context of the insolvency Bill and in the work being done in the Department on that and the recommendations for reform made by the Law Reform Commission. We must examine it not only from the legal perspective but also from the economic and moral hazard perspectives to ensure we do not greatly advantage people who have behaved with gross irresponsibility, to the disadvantage of those who have behaved responsibly.
It is, of course, important that people engaged in business, who genuinely operate their business responsibly but who are the victims of circumstances that are not their fault or where they simply made a poor judgment that anybody else might make, are not pilloried in the future and rendered incapable of starting up a business again. However, there is a balance and in that context the Government decided to opt for the five-year period rather than the three-year period. I appreciate the arguments made by Senators in favour of the three-year period but I cannot accept the amendment they propose in that regard. I am not opposed in principle to a further reduction in the 12-year period concerning automatic discharge. It is an issue to which we will give further consideration. However, I cannot accept the proposed amendments at this time.
This debate is important and it will feed into the work we are doing on the insolvency Bill. I hope Senators will support the provision in the Bill as it stands so we can proceed to implement it. I expect to revisit this issue in the Seanad if not this side of Christmas, certainly in the first part of next year.
I listened carefully to the Minister. Going from 12 to five years is a significant improvement. I also welcome the news that we are likely to see the insolvency Bill this side of Christmas. That is significant, although I realise it is part of our commitment under the EU-IMF agreement.
Company law in this country is not up to standard or fit for purpose. In the last two years numerous companies have gone into examinership. Some of them had legitimate reasons for doing so and the examinership has helped to re-establish their business model, so they have emerged from it successfully. I also believe that if somebody goes into examinership, emerges from it in a couple of years and is in a position to honour the debts that existed prior to that, this should be considered. I agree with the Minister that we must be careful to get the balance right.
In the present climate it is extremely important to initiate job creation and promote entrepreneurship. However, the State is borrowing €18 billion per year and it must be in a position to meet its commitments in that regard. We cannot simply walk away from debt willy-nilly. The insolvency legislation is prudent and will make a huge difference in terms of how we do business not just with regard to bankruptcy but also company law in general. I look forward to it. For the sake of the two years and given the legislation that is due to be introduced, I hope the amendment will not be pressed.
I am disappointed by the Minister's response. I will not say the reduction from 12 to five years is immaterial but it is relatively insignificant. The automatic discharge at 12 years is a significant step. I welcome the fact that the Minister has said he will look at reducing that.
I note that the Minister laid heavy emphasis on people who had been living a lavish lifestyle and may have traded recklessly or extracted money from their business operations for their own consumption rather than applying it to creditors and other causes. I accept that. Surely it is not beyond our wit to make a distinction in legislation between those who trade in that manner or operate recklessly and those who operate on a bone fide basis. Many of the people who could find themselves in bankruptcy in the next few years may be subcontractors who were not preferential creditors of main contractors. These are small people with families who owed money to suppliers for work they did on behalf of main contractors and who will find themselves and their families ruined financially as a consequence. A distinction needs to be made. I agree with Senator Quinn when he says we must maintain a balance, but we cannot brand honest-to-goodness people who have worked hard and given employment, and condemn them to a lifetime of inactivity simply because we have antiquated laws.
Will the insolvency Bill deal with these issues? Is that the purpose of the insolvency Bill?
I agree with everything the Minister said in respect of those who live lavish lifestyles on the backs of their businesses and put their businesses in jeopardy. I still think it is possible to separate the reckless from the unfortunate and to do so within the three-year timeframe. I support the amendment on that basis.
I asked how a person is to be released from bankruptcy. I do not see any new provision in that regard. Will this be considered at a later point?
I am aware that the Minister is not ideologically wedded to the notion of five years and that he will return to this matter.
I take issue with Senator Conway on a small matter of company law. Senator Conway referred to the fact that company law is not fit for purpose. I am sure he will agree that the initiative presented by the previous Administration to allow for a court examinership, similar to Chapter 11 in the United States, went a long way to ensuring that jobs were maintained in this country at a time when, without that legislation, they might have been lost.
Is it suggested that a person who is no longer trading and is judged a bankrupt is excluded from trading until he or she is discharged from that bankruptcy? In other words, even with the five year rule, if a person is adjudged a bankrupt subsequent to the passing of the Bill, can he or she continue to trade or restart in another guise.
My last question relates to those who live a lavish lifestyle. People who are leading lavish lifestyles, who do not seem to have a financial foundation for doing so and who are not discharging their financial responsibilities, may have very clever lawyers who ensure they are able to continue to live this lifestyle while thumbing their noses at society.
I stated that there were many examples of the examiner legislation leading to companies getting back on their feet. However, I also have numerous examples of the examiner legislation being abused.
The amendment proposes a reduction of the period before application for an order for discharge can be made from five to three years. It makes no distinction regarding individuals who might have recklessly traded or led extraordinarily or foolishly lavish lifestyles compared with their neighbours and, as a consequence, did not pay their taxes. There is no distinction in the legislation or in the amendment.
Senator Walsh referred to small contractors who get caught up. There have been many instances, particularly in the construction industry, of contractors who lost substantial sums of money where the principal building firm has collapsed and the contractors have not been paid for their work. The overwhelming majority of those firms are limited liability companies. That is dealt with through company law and not through bankruptcy law.
The numbers rendered bankrupt is extremely small, given the overall financial difficulties that exist and the number of businesses that have closed. There were 27 in 2010.
As it is now 5.45 p.m. I am required to put the following question, in accordance with the Order of the Seanad of this day, "That amendment No. 19 is hereby negatived; in respect of each of the sections undisposed of, the section is hereby agreed to in committee; that the Title is hereby agreed to in committee; and the Bill is accordingly reported to the House with amendment."
The Committee divided by electronic means.
Under Standing Order 62, I request a manual vote.
Question again put.
The Committee divided: Tá, 28; Níl, 19.
- Bacik, Ivana.
- Bradford, Paul.
- Brennan, Terry.
- Burke, Colm.
- Clune, Deirdre.
- Coghlan, Paul.
- Comiskey, Michael.
- Conway, Martin.
- Cummins, Maurice.
- D’Arcy, Jim.
- D’Arcy, Michael.
- Gilroy, John.
- Harte, Jimmy.
- Healy Eames, Fidelma.
- Heffernan, James.
- Henry, Imelda.
- Higgins, Lorraine.
- Keane, Cáit.
- Kelly, John.
- Moloney, Marie.
- Moran, Mary.
- Mullins, Michael.
- Noone, Catherine.
- O’Donnell, Marie-Louise.
- O’Keeffe, Susan.
- O’Neill, Pat.
- Sheahan, Tom.
- Whelan, John.
- Barrett, Sean D.
- Byrne, Thomas.
- Crown, John.
- Cullinane, David.
- Daly, Mark.
- Leyden, Terry.
- Mooney, Paschal.
- Mullen, Rónán.
- Ó Domhnaill, Brian.
- O'Brien, Darragh.
- O'Donovan, Denis.
- Power, Averil.
- Quinn, Feargal.
- Reilly, Kathryn.
- van Turnhout, Jillian.
- Walsh, Jim.
- White, Mary M.
- Wilson, Diarmuid.
- Zappone, Katherine.
Tellers: Tá, Senators Paul Coghlan and Susan O’Keeffe; Níl, Senators Paschal Mooney and Diarmuid Wilson.
Question declared carried.
When is it proposed to take Report Stage?
On Thursday, 7 July 2011.