Mick Wallace (Wexford, Independent) | Oireachtas source

I move: "That the Bill be now read a Second Time."

I am well aware that the Bill is far from perfect. There are some clerical errors in it and Deputies can see that we did not include amendments that have been made since the 1957 Act which was a mistake on our part. It was mentioned to me that I might have a conflict of interest with the Bill, but given that there are 158 Deputies in the Dáil and I am the only one who is bankrupt, I am the only Deputy who could not possibly benefit from the Bill. Therefore, I do not have a conflict of interest.

The law of limitations in Ireland is governed by the Statute of Limitations Act 1957. It contains seven different limitation periods of one, two, three, six, 12, 30 and 60 years, all applying to different types of civil actions. The law has been slightly amended on a number of occasions, but has never been subject to any type of general review, despite the fact that it is based on legislation dating back to the 17th and 18th centuries.

This Bill seeks to amend two categories of limitation period within the Statute of Limitations. Its aim is to reduce the current time limit from six years to two years in the case of a civil claim based on a contract debt such as a loan from a bank. The Bill also seeks to reduce the lifetime of High Court and Circuit Court judgments from 12 to two years, which would be in line with the most recent bankruptcy legislation.

The Bill is guided by a report produced by the Law Reform Commission in December 2011 on the limitation of actions which states that:

[T]he rationale for applying different limitation periods depending on the type of action is no longer clear. Nor is it apparent that it is advantageous to continue to follow this approach.

In fact, the Law Reform Commission holds that the multitude of limitation periods can lead to difficulties in categorisation, bringing about complex satellite litigation in order to ascertain whether a claim is statute-barred or not. This is a waste of time and resources in our already backlogged court system.

Common law actions, which include claims relating to contracts, including debt-related claims, and torts, including personal injury actions, make up a large portion of the civil cases taken in Irish courts, accounting for 45.5% of all civil claims in 2010. Reducing the limitation period would reduce litigation costs and the costs on the defendant and, given that the judicial process receives public subsidies, there would be a reduction in costs to the taxpayer.

Article 6 of the European Convention on Human Rights states that everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. This right is aimed at preventing the parties involved from living too long under the stress of uncertainty, and to ensure that justice is carried out without delays which could threaten its effectiveness.

With regard to the question of what length of time is reasonable, the Law Reform Commission in its 2011 report cites legal analysis relating to Ireland, the UK, Canada and New Zealand, indicating that a two-year uniform limitation period would he the most appropriate in order to satisfy the rights of both parties to a dispute. The plaintiff must have enough time to consider his or her position, take legal advice, investigate the claim and prepare his or her case, but not so much time that it could put him or her in a position to delay unreasonably.

6 o’clock

Civil limitation periods are a common feature of the legal systems of the state parties to the European Convention on Human Rights, although the European Court has noted a lack of uniformity in their duration across member states. According to the case law of the European Court of Human Rights, namely Stubbings v. United Kingdom (1997):

They serve ... important purposes, namely to ensure legal certainty and finality, protect potential defendants from stale claims which might be difficult to counter and prevent the injustice which might arise if courts were required to decide upon events which took place in the distant past on the basis of evidence which might have become unreliable and incomplete because of the passage of time.

According to the Law Reform Commission, a fair limitations period would take into account the rights and interests of both the plaintiff and the defendant, while also acting in the public interest. As we are talking about debt, the reality is that a vulture fund, with seemingly unlimited resources, could take up to six years to decide to take a case against an individual who generally has considerably fewer resources at his or her disposal. The vulture fund has the resources to prepare its case quickly, but the defendant could be forced to live in fear of the financial and reputational repercussions of the legal action for six years. Small businesses and home owners could be particularly vulnerable.

The Law Reform Commission of Western Australia has found that the "the adverse economic effects on defendants of having potential claims lying around too long can harm the health of the commercial sector generally." Every day, families in Ireland are living under a cloud. They are waiting for a knock on the door, a summons to arrive in the letter box or a call from their solicitor to say that the debt from the past has come back to haunt them and that this will possibly to result in them losing their home. That could be a debt incurred six years ago and in some cases even longer. Solicitors have mentioned to me some problems they have encountered in this area, for example, school and college tuition fees for children and pension savings are swallowed up by six and ten-year old debts and families are unable to save, invest or plan for their futures because of the overhang of historical debt and not knowing when the risk will end.

Old judgments are often registered as a mortgage on a family home. In some cases the debt may have been incurred ten years previously and the court proceedings are issued just before the six-year limitation period expires. The court proceedings take a minimum of 12 months, heaping added cost and misery on a family and the judgment mortgage which follows survives as a legal burden for another 12 years. In total, one could be looking at a legal sentence on the family of 18 or 19 years. For many, that is a sentence on an entire generation.

The six-year period within which to bring court proceedings has resulted in families and relationships being broken up, has removed any chance of a planned future and has caused distress, illness and, in rare cases, even suicide. There is a growing market in what is known as bottom feeders who seek to buy up old debts that the banks and other concerns see little point in pursuing after two or three years. The unscrupulous outfits then take over the debt and threaten litigation within the six-year period and adopt the most aggressive moneylender-type tactics in seeking recovery on the historical debts. Justice delayed is justice denied. A six-year period is completely unnecessary as the vast majority of outstanding debts which are the subject of legal proceedings are commenced within two years. As the vulture funds that stalk this land are aware - and, indeed, as creditors all over the world will testify - old and stale claims that have been in existence for more than two years are very difficult to recover. Pursuing such old claims often results in no-win situations, as the debtor does not have the money to repay. And all that happens, therefore, is that the valuable time of the courts has been used up and distress is added to the hapless families.

James Treacy, managing director of StubbsGazette, recently statedthat recovery of outstanding contract debts is crucial to the efficient operation of our economy and that the key to recovering contract debts is good information and swift action. The current six-year period contradicts that approach. The 2011 value-for-money audit carried out by the Department of Public Expenditure and Reform on the legal debt collection process of the Revenue Commissioners arrived at a similar conclusion when it discovered that the most significant returns on court actions for outstanding tax debts were those taken in the early period after the liability is incurred. Waiting six years to commence action is lazy and oppressive and risks losing the State and creditors enormous sums of money. In addition, the longer the case is hanging about or delayed, the greater the risk of what is termed "satellite litigation" where other parties become involved and the costs and delays increase further.

Modern society and Irish business have instant communications and computerised accounts and do not need the snail's-pace inefficiency and delay of a six-year period. If the decision to enter into the contract and debt was the correct one at the outset and that debt remains unpaid, that can be acted upon within two years and a six-year period makes no sense. All citizens have a right to a speedy trial and it is a breach of their fundamental rights to have a cloud hanging over them for an extended period of six years or more.

Evidence deteriorates over time and memories dim, which means there is a risk of prejudice against the debtor with delay. The latter is all because of a laziness and inefficiency on the part of the creditor in not acting promptly to collect the debt. The cost to the courts and also to individuals and business of maintaining records for six or seven years instead of two years is enormous and unnecessary. It is phantom work and is completely unproductive. In many modem economies, the time limit is two or three years because everyone is entitled to have the slate wiped clean and be able to conduct a life that is not filled with the dread of a historical debt being resurrected several years later with little possibility of payment. In addition, judges find it difficult to imagine the context and circumstance of the original transaction several years previously and that adds to the uncertainty.

Exceptions to the proposed two-year rule would be latent or hidden defects that would enable purchasers or users of services or products to avail of a longer period. It would not be reasonable, for example, if a solicitor acted in the purchase of a home but did not secure proper title and was free of responsibility after a mere two years given that the person would be unlikely to find out until he or she tried to sell the house. He or she should have potential for redress. The main purpose of the Bill is that the core limitation period for legal actions on breach of contract should be reduced from six years to two years in the interest of fairness; to reflect modern best practice; to update an archaic but cruel law and to implement the recommendation of the Law Reform Commission.

In 2015, the Tánaiste and Minister for Justice and Equality, Deputy Frances Fitzgerald, addressed some core points relating to the Bill, when she stated:

The operation of the law in relation to the Statute of Limitations is a matter of ongoing review at my Department. This process also takes account of the Law Reform Commission Report on the Limitation of Actions published in December 2011 (LRC 104 -2011). In this Report, the Commission expressed the view that the principal legislation governing limitation of actions, the Statute of Limitations 1957 (as amended), is unnecessarily complex and in need of fundamental reform and simplification. The Commission made a series of recommendations in relation to enhancing the coherence of the broader limitation of actions regime including the introduction of a uniform two-year basic limitation period for common law actions.

As part of the ongoing review of the operation of the law in relation to the Statute of Limitations at my Department I will, therefore, continue to take account of the Commission’s recommendations and other relevant developments in the bringing forward of any future proposals for legislation in this area including, possibly, as part of any new programme of legislation.

It is good to see that the Government did not dismiss the proposal out of hand at the time. She also added that the Law Reform Commission had informed her:

Since the Commission was established in 1975, it has published 117 Reports, and about 70% of these Reports have either been implemented in Acts or are in the process of being implemented in Government Bills (which as you know are the most common way that legislation gets enacted). This compares very well with other similar law reform agencies around the world, where implementation rates are sometimes between 50%-60%.

It is not as if I picked the Bill from the sky; we followed as closely as we could the recommendations of the Law Reform Commission.

It sees a need for change, and we think that given the changing climate in Ireland, particularly following the economic crisis and the banking crisis, which had such a dramatic effect across the board in so many aspects of life in Ireland, business is not the same as before. I honestly believe it is time for the Government to address this issue. I admit our Bill is not perfect. We would be very happy for any of the parties to table amendments to improve it because we accept changes are required. However, we think in principle it needs to be addressed.

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