Finian McGrath (Dublin Bay North, Independent) | Oireachtas source

I am speaking on behalf of the Tánaiste and Minister for Justice and Equality, who regrets she cannot be present due to official commitments. I thank Deputy Mick Wallace for introducing the Statute of Limitations (Amendment) Bill 2017. I also appreciate that his introduction of the Bill draws on experience over the past six years of dealing with people throughout Ireland who are in debt or have a debt hanging over them. It thus has an overall context related to the management of indebtedness and enforceability of debts. The key challenge for policy making in these areas is that of balancing the interests and rights of the parties concerned while affording the opportunity for a negotiated rather than an imposed outcome.

Very real concerns have arisen from the structure and varied scope of the Bill in its initial consideration by the Department of Justice and Equality and the Office of the Attorney General, on foot of which the Government has decided to oppose the Bill. It makes proposals across several fronts, which do not necessarily hang well together. For example, it is proposed the limitation period, which is generally six years, for bringing a range of contract and tort claims and some other types of claims, including those based on quasi-contract or recognizances and seamen's wages, be reduced to just two years. There is a proposed exception for personal injuries cases based on negligence, nuisance or breach of statutory duty where the limitation period would be increased from the current two years to three years. The limitation period for enforcing liabilities arising from a document under seal, an arbitration award or certain company-related debts is to be reduced from 12 to two years.

From these examples, one can see the broad sweep of the Bill's revisions to the limitations regime, many of which do not seem to relate to the key issue of contract debts, which has been highlighted. A key proposal of Deputy Wallace's Bill, which would have very broad implications, is that the limitation period for enforcing a court judgment of any type is reduced from the current 12 years to just two years. It is also envisaged that interest may only be claimed on a judgment debt for a maximum of two years from the date on which the interest became due. Apart from fines for criminal offences, the limitation period for enforcing any penalty or forfeiture sum recoverable by virtue of any enactment is to be reduced to two years. An apparent anomaly is that while the Bill cuts limitations periods generally, it also provides an exception for slander, where the limitation period would be increased to three years from the current one year period albeit extendable by up to two years by the court. Nor is it clear why the Bill proposes to extend the limitation period for slander but not for libel, particularly given that the distinction between the two was abolished by the Defamation Act 2009.

Fundamentally, it does not follow, as the Bill suggests, that because the bankruptcy period has been reduced from 12 years to one year there should be commensurate reductions in the periods following which actions in contract or tort law become statute barred. They are different areas of law, with largely different objectives, rights and legal principles in play. While it is appreciated that Deputy Wallace would wish to reduce the period under which debtors and others are under the threat of an action, it is considered that the Bill's unilateral and sweeping approach to the reduction of limitation periods on so many fronts at once has the very real potential to have the very opposite effect for various reasons I will outline.

The core of the Government’s concerns is that while the proposed Bill would shorten the duration of a potential creditor's action against a debtor it would, by the same token, effectively deprive creditors and debtors of time and options. That is to say, deprive all parties of any space or reasonable time for a negotiated resolution which can take better account of personal, financial, family or business circumstances. Such space and time can be to the benefit not only of those seeking payment of moneys owed to them, but also to those who owe such moneys.

If the Bill were implemented as proposed, it would potentially increase pressures on debtors by compelling creditors to take earlier action, that is to say within two years as opposed to six. It would render creditors less amenable to reaching negotiated agreements with debtors. Indeed, we would be incentivising the harshest and most immediate of debt enforcement or recovery options. Putting such pressure on creditors to sue, as would undoubtedly arise, would not, therefore, be in the ease of debtors. This scenario could also have the effect of drastically increasing the number of actions brought before the courts by creditors who would feel compelled to act immediately. In short, in so far as debtors are concerned, the Bill as put could well backfire and risks provoking a rapid increase in repossession actions on home mortgage arrears, just as those numbers are falling.

As far as the proposed two-year limitation period proposed by the Bill for the enforcement of a judgment is concerned, this could, in certain circumstances, render a judgment potentially unenforceable. For example, it could take longer than two years to complete an order for sale on foot of a judgment mortgage of the High Court. By the same token, there would be a concern as to the effect of such a radically foreshortened limitation period on property rights. This could well arise where creditors may be denied the time to access information on mortgage default and other relevant issues before taking action. It is also considered that such a reduction would conflict with the primary objective of the Central Bank's code of conduct for mortgage arrears, which is to assist indebted borrowers in addressing their mortgage debt without the loss of the family home by reducing the time a creditor would have to act to secure the asset.

Another fundamental concern is that the Bill, as it stands, would include within the scope of its potential creditors not just banks or big investment funds but also trade creditors, ranging from large companies to SMEs, which provide goods or services on credit to other businesses or to consumers. This could impact adversely on them, particularly from an enforcement perspective. Similar enforcement concerns could also apply to Revenue actions taken before the High Court by the Collector General. In the current context of Brexit negotiations it is also of concern that the Bill would result in our jurisdiction having a limitation regime markedly different from those of England and Wales under the Limitation Act 1980, and of Northern Ireland under the Limitation (Northern Ireland) Order 1989. These regimes have core limitation periods of six years, with 12 years for contracts under seal. By the same token, introducing any unbalanced changes in creditors' rights to enforce loans, particularly ones that could end up being out of step with those applicable in similar jurisdictions, also carries the risk of reducing the willingness of banks to offer credit, particularly mortgages, and that of increasing interest rates.

The Bill also fails to acknowledge the relevant provisions of the Statute of Limitations (Amendment) Act 1991 relating to personal injury claims which, as amended by the Civil Liability and Courts Act 2004, provides for a two year limitation period in personal injury cases in general. Similarly, the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015, which seeks to ensure that relevant borrowers such as mortgage holders and SMEs whose loans are sold to third parties maintain the regulatory protections that they enjoyed prior to sale.

In putting forward this Bill, it is argued that reducing the periods after which contract or tort claims become statute-barred would reflect recent changes made in personal insolvency and bankruptcy. However, this reflects a misunderstanding. This is particularly so with bankruptcy. We have reduced the normal bankruptcy period from 12 years down to one year, but it has to be remembered that a person who becomes bankrupt still loses all of his or her assets and surplus income in the process.

The comparison with personal insolvency is also amiss. Far from seeking to compress the period for creditors to take legal action or to enforce debts, personal insolvency provides a court-supervised protected period for negotiations during which creditors cannot issue proceedings or pressurise the debtor. Personal insolvency also enables courts to adjourn repossession proceedings to facilitate a negotiated settlement. Despite the unprecedented crisis in personal debt and particularly in home mortgage debt, which still bears heavily on many families, the extensive series of reforms and initiatives put in place by the Government is bearing fruit. Home mortgage arrears have been falling steadily for 14 consecutive quarters. Some 121,000 home mortgages have been restructured. Numbers of repossession orders and of new repossession proceedings are falling significantly. Almost 6,000 vouchers were issued under the Abhaile mortgage arrears resolution service to borrowers still at risk of losing their homes, for free, independent, expert financial and legal advice. We have also seen the abolition of the so-called "bank veto" in personal insolvency. Almost 1,000 applications for personal insolvency arrangements were made in the last quarter of 2016. The latest sample of concluded personal insolvency arrangements shows that 89% kept the person in his or her home, with another 7% choosing to rent instead.

Most recently, reforms have been made to the mortgage to rent scheme, which is working on the ground. In a recent assessment of solutions available to borrowers, the Central Bank found that "there is strong evidence that banks and non-banks are looking to exhaust available options before moving into the legal process". While we still have work to do, it is critically important that these advances and reforms are not undermined by measures which could ramp up pressure on creditors to litigate and enforce rather than to adjourn and negotiate. For the many reasons I have just outlined, the Government is opposing the proposed Statute of Limitations (Amendment) Bill. It is also the view of the Government, in opposing the Bill, that the various, fundamental, cross-cutting and sweeping measures being proposed would need to be considered coherently as part of an overall reform of our limitation of actions regime. As acknowledged by Deputy Mick Wallace, we have an instrument for such reform in the Law Reform Commission report number 104 of 2011, and its recommendations. We need to take the kind of approach advocated by the Commission, and look carefully at the potential interactions of measures implemented since 2011. We must do this so we do not contribute further to the ad hocrandom and haphazard nature of the current limitations regime that the Law Reform Commission has criticised and is seeking to change by the creation of a simpler and more intelligible core limitations regime.

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