On behalf of the Fine Gael Party I should like to support the motion that Seanad Éireann concurs with Dáil Éireann in its Resolution that it is expedient that the Bankruptcy Bill, 1982, be referred to the Joint Committee on Legislation pursuant to paragraph 1 (e) of the committee's orders of reference.
Before we deal in a general way with the provisions of the Bill and indicate the areas which we find acceptable in this legislation, a number of points should be made. First of all, this is totally non-controversial and apolitical legislation and, in addition, is the most technical legislation which has come before the Seanad during the two periods that I have had the privilege of being a Member. Consideration of technical legislation such as this is quite inappropriate on the floor of either House of the Oireachtas and I am sure that a sub-committee of the Joint Committee on Legislation are the proper body to pursue the detailed points necessary in consideration of this Bill.
It is proper that I refer to the Minister's speech where he seeks to explain the extraordinary delay in putting this legislation before the House. The explanation which the Minister gives is tied up in some way with our accession to the EEC in 1973. I have too much regard for the Minister's ability to think that he really expects us to believe that that is the reason. It is inexplicable that this admittedly complicated legislation should have taken 12 years to come before the Houses of the Oireachtas — ten years if one takes into account when it was introduced — from the time in which the report on which it is based was delivered to the then Minister.
The report of the Bankruptcy Law Committee was delivered in 1972 and included in that report was a draft Bill. That draft Bill to a large extent contains most of the provisions contained in this legislation, although there are differences. It is totally unacceptable that a Department presented with draft legislation, with which obviously they did not disagree fundamentally, should take ten years before putting the Bill before the Houses of the Oireachtas. The responsibility rested with the Ministers from time to time during that period and there were successive and different Ministers and administrations then. I do not know whether the Ministers in examining how the delay took place would come to the conclusion that it was on the part of the political people in the Department or of somebody else, but it is inexplicable that it should take ten years to come before the Houses of the Oireachtas. After all, it is non-controversial and just a few decisions in principle had to be made prior to the adoption of the legislation which is included in draft at the end of that excellent report.
As the Minister has said, the law in Ireland concerning bankruptcy is contained in a number of pieces of legislation, the Irish Bankrupt and Insolvent Act, 1857, the Bankruptcy (Ireland) Amendment Act, 1872, the Debtors (Ireland) Act, 1872, the Deeds of Arrangements Acts, 1887 and 1890 and the Preferential Payments in Bankruptcy (Ireland) Act, 1889. These form the core of the body of law which deals with bankruptcy. Reading the 1972 report to which I have already referred, it appears to me that the practice of the law of bankruptcy has developed beyond what is contained in the statutes. In the exercise of the inherent equitable jurisdiction which the courts have in these matters various practices have arisen which change significantly the way in which the various Acts of Parliament which I have outlined are administered by the courts. In that regard the updating of this legislation and the patching up, so to speak, of the practice in ordinary day-to-day commercial activities and the commercial way in which these things are now administered is to be welcomed, and I welcome it for that reason.
As the Minister has identified, the core of this legislation is Part III which represents the central portion of the Bill and everything else revolves around Part III. Part III deals with the administration of property. Any Member would be well advised in consideration of this legislation to have before him or her, in addition to the Bankruptcy Bill itself, the excellent explanatory memorandum produced by the Minister and circulated with the Bill. I will refer to the circulation of the Bill shortly.
It is vital that each member of the Joint Committee on Legislation or at least each member of their relevant sub-committee would be supplied with a copy of the 1972 report. I asked that a copy of the 1972 report would be made available by the office here, but unfortunately they were unable to do so. Of course, I was able to get a copy from the Oireachtas Library, but that means that one's capacity to note and to make comments on the side is limited by this fact because obviously the Library copy must be preserved intact. However, it is important that the proper raw material for the examination of legislation would be made available. In addition, I would like the Minister to examine the practice which appears to exist when a Bill is circulated prior to the Oireachtas in which the matter is being discussed. For example, this Bill was circulated in July 1982, in an interim when I was not a Member of the Houses of the Oireachtas during the period 1981 and 1983 when I was a Member. The Bankruptcy Bill was not circulated to the Members who came in in the interim period. That is not the only Bill concerning which that has happened and it is by no means restricted to the Minister's portfolio. It has happened in the Houses of the Oireachtas previously that Bills were not circulated to Members who came in in an intervening period. That is not right, and quite a number of Members of this House have found themselves in that situation.
Regarding Part III of the Bill, I would like to bring a number of points to the Minister's attention to indicate to him the reason for our support of the very significant reform which he has before the House. The Minister himself is to be commended on grasping this nettle after such a long time. By no means do I intend to examine the Bill section by section, but section 45 indicates the change of atmosphere and the updating which the committee propose and the Minister is continuing. At present a person who is bankrupt or going through the process of bankruptcy is entitled to retain certain household goods, tools of his trade and so on for the purpose of maintaining a certain standard of dignity and the capacity to earn money. At the moment it is set at the now ridiculous sum of £20 — in other words, goods to the value of £20 can be retained by the individual for the purpose of clothing himself and earning a living if he is a tradesman. The committee suggested an increase to £100 and the Minister is suggesting an increase to £1,000 in the Bill. That is the kind of development we like to see continuing and it shows that whoever examined the legislation did so in a critical fashion not just automatically accepting what was coming from the committee, excellent as that was.
I would like to refer briefly to section 49 and the effects of the proposal to abolish the operation of any covenant on a lease where the lease would be forfeit in the event of a bankruptcy. That is far-reaching law. I do not really object to it as long as it is clearly understood — this is something the committee might consider in due course — that there remains on the official assignee or any person who is acting in respect of the lease which is being retained the obligation to pay rent and that in the event of the assignee not being in a position to pay rent for the State there would be no question of the lease continuing indefinitely pending the conclusion of the bankruptcy. It would be very unfortunate if a property was held in abeyance for a period of time, until the bankruptcy was concluded. As you will hear from what I have to say later, that could be a very lengthy time indeed. While the proposal in section 49 conforms with the proposal in chapter 30 of the report of the Bankruptcy Law Committee, there are problems associated with its implementation which must be considered.
Of very great significance also are the suggested rules with regard to the conclusion of a bankruptcy and the discharge of a bankrupt. The proposal is that there should be a change in the system whereby the process of annulment and discharge, two ways of terminating the bankruptcy, should be changed. That is a principle to which we should subscribe. Basically, annulment seems to convey the idea that somebody is saying that the court in exercise of its jurisdiction decided that in all the circumstances this did not or should not have happened. That seems to be extended in one regard, in that it is proposed in the Bill, and this is also proposed in the appropriate and corresponding section of the law committee report, that any person who is bankrupt for a period of approximately 20 years prior to the passage of the Bill should automatically have his bankruptcy annulled. It was set at 1950 and because of the intervening ten years it is now suggested that it should be 1960, which is reasonable enough.
What is being suggested is that any bankruptcy which had not been concluded prior to 1960 and which had started prior to 1960 should be cancelled. That is a good idea and it should be done without there being an onus on any person to make an application to the court. The bankrupt would not be under an obligation to show cause to the courts as to why this should be done; it should just happen automatically. In that way we are establishing a new principle, after 20 years, irrespective of fault or anything like that, the bankruptcy should be cancelled. That is something with which I agree but in the Bill it refers only to bankruptcies prior to 1960. There is no suggestion that, as the years go by, 1960 should be progressively brought forward so that all bankruptcies starting 20 years before the date at which one would be considered in the future would in fact be annulled. That is something the committee might consider.
The discharge of a bankrupt is different from an annulment in that he is discharged because he paid his debts fully. The suggestion that the provision whereby a bankrupt is discharged by reason of the fact that he has paid a sum of 50p in the £ should be re-enacted and improved upon is to be welcomed.
There is a provision in the Bill — this is a continuing provision so it will go forward from year to year — that any bankrupt after a period of 12 years will be in a position to make an application to the court to have himself discharged from bankruptcy, but the onus will be on the bankrupt to make that application.
I was rather surprised to hear what Senator Lanigan said about preferential payments because I have no doubt that he arrived at that conclusion having diligently examined the recommendations of the Bankruptcy Law Committee rather than the recommendations in the Bill because that is one very significant difference between the law committee's report and the Bill. The law committee basically suggested, and their recommendation was simple in the extreme — it is in page 355 of the report — that preferential payments of all kinds should be abolished. The Minister in his statement has correctly pointed out that the Bill seeks to continue the system of preferential payments. In that regard Senator Lanigan was a little in error in depending on the law committee's reports for his information rather than on the draft of the Bill. The law committee had obviously a very sustainable argument. I see from the way the Minister has spoken in the introduction that he might at least be in some way sympathetic to what the committee have suggested. This is an area of difference between the committee's recommendations and the Bill as drafted. I mention section 80 in relation to which the legislation committee should give particular attention to what is the proper way to move forward. There are, as the Minister quite rightly points out, certain longer-term consequences or certain collateral consequences of doing away with the system of preferential payments. It could be seen to be the thin end of the wedge to applying it to limited liability companies and various other things like that. That would be a substantial advance in the law even in that area. We are really talking here about a difference in principle. We are talking about a difference between those on the one hand who say preferential payments, which now means largely the State, should be maintained and those on the other hand who say they should be abolished. That is something the committee should examine.
The Minister should seek the advice of his colleagues in Government in this regard because are as he said, this has implications far beyond the bankruptcy area. Obviously it has implications in the area of company law, but merely because it has these implications does not mean that we should not examine it when the time comes. I should like the Minister to maintain an open mind in this regard because it is important that we should examine it constructively and logically in the months ahead.
There are a number of other matters which are also important. There is a new system of arrangements about fraudulent and involuntary conveyances which we need not examine here but they will need further examination by the committee. It is important that it should be noted here that that examination is expected of the committee.
Part IV of the Bill which deals with the arrangements under the control of the court is another very important section. It deals with the actual happenings on the ground and what happens on the ground is that private arrangements under the control of the court are, in fact, very normal arrangements. It is something which is continuing all the time and which I think we should examine before confirming the new legislation.
The Minister says that the procedure entitling a bankrupt to show cause against the validity of adjudication is being retained. He said that over the last two decades the practice has evolved of making successive adjournments of "show cause" applications, frequently for quite long periods even where the validity of adjudications is not disputed. The committee's report is very long and I was not able to find some information in it. It is possible that it is in the report and I just have not seen it. There are 589 pages in it. I should like those who will be advising the Minister at the committee to indicate to us the frequency with which this system is being used.
I have never practised in this area as a lawyer and, therefore, I am no more skilled in this area than any private individual. It appears that bankrupts are people who are considered bankrupt in the eyes of the public. In other words, they may be people who are the subject of these successive "show cause" applications. They appear to be in a state of limbo over a period of years. Successive adjournments of the show cause applications last not in terms of months but in terms of years. I should like to know how many people are in that state of limbo. If it is a significant number of people, as I suspect it might be, then a more careful examination of the procedure might be required, the jurisdiction of the court in this regard might have to be tightened up and statute law might have to come into play. More background information as to the number of people who are in this intermediary stage is vital. What is also required is considerably more information concerning the number of applications which are being made now. Who is making the applications? A lot of that background information would be very helpful to the committee when they consider the matter.
That brings me back to the question of the arrangements under the control of the courts, which are similar arrangements, but they are really private arrangements under the control of the courts. They allow a trader to continue trading. Paragraph 87 of the memorandum states:
These arrangements allow a trader to continue trading, to maintain his place in the commercial world and to be helped by his friends. Moreover, he is assisted by the Court and its officers and the minority creditors are protected by the Court's power to refuse to sanction a proposal.
It would be important to know the number of people who are under the control of the court so that we could see if it is important in the scheme of bankruptcy and the application of bankruptcy law.
I note that in Part V of the Bill the Minister proposes to deal in a different fashion with the estates of people who die insolvent. That is very wise indeed. There are considerable changes in that area. There is a degree of court supervision which requires excessive numbers of applications to court to be made which I do not think should be necessary. It makes the administration of these estates quite difficult. The possibility of entering into an arrangement with creditors in the event of a person dying insolvent should be considered and extended. Part V of the Bill has to be examined against that background.
Part VI of the Bill deals with the question of offences and the amount of fines and terms of imprisonment. They are all routine matters which can be considered during the course of the Committee Stage examination of the Bill.
I welcome the Bill. The way in which it differs from the proposals contained in the Bankruptcy Law Committee's report of 1972 must be highlighted. I suggest, for the assistance of those people who will be examining this in committee, that, in addition to the excellent memorandum which outlines in each and every case the recommendations of the Bankruptcy Law Committee's report where they have been adopted, a similar table should be produced which would show where the recommendations of the Bankruptcy Law Committee had not been adopted. That would be excellent. I do not mean in terms of substituting £100 for £200 because I do not think that is a significant change. I am talking about where a decision was taken not to accept a recommendation of the committee. The recommendations of the committee are vast and they are in an order which is not necessarily the same as the order in the memorandum to the Bill. The provision of a list which would show in a concise way the recommendations of the committee which were not adopted would be very helpful in regard to assisting the Committee on Legislation to balance the various interests which need to be balanced for a proper examination of a technical Bill of this kind.
For all these reasons, and with these provisos, the general principle of the Bill should be welcomed by the House. Therefore, we should concur with Dáil Éireann in its decision to refer this Bill to the Joint Committee on Legislation for a proper Committee Stage examination while retaining the right to amend the Bill when it comes back to us on Report Stage.