Eugene Regan (Fine Gael)

I reiterate our objections to the procedures being followed by the Minister of State and the Leader of this House in the scrutiny and passing of legislation, which is most unfortunate. This is serious legislation which involves potential imprisonment of people for non-payment of debt. Serious issues were raised in the judgment of Laffoy in the McCann v. Judge of Monaghan District Court on 18 June. It is suggested that this legislation should be dealt with in one day in this House without adequate time following Second Stage for reflection and consideration in terms of tabling amendments on Committee Stage. The Minister of State said that matters will be considered later, but no time has been provided by Government, or by the Minister of State, to allow consideration of the Bill.

We are dealing with the fall-out from the aforementioned judgment in which it was held that the provisions of section 6 in particular of the Enforcement of Court (Amendment ) Act 1940 concerning attachment and committal was unconstitutional on two grounds, namely, it failed to comply with the constitutional right to fair procedures inherent in Article 40.3.1° of the Constitution and it failed to comply with a constitutional right to liberty guaranteed by Article 40.4.1° of the Constitution. I appreciate that this Bill is an attempt to deal with this and the implications of that judgment. It fails, however, in the important material respect of complying with the judgment, findings and ruling of Ms Justice Laffoy.

The court held that section 6 of the 1940 Act was unconstitutional with reference to fair procedures. The judge found there was no basis for treating a person facing the possibility of imprisonment for three months for non-payment of debt at the suit of a creditor differently from a person facing a criminal charge and the possibility of the imposition of a criminal sanction. In her view there were three fundamental safeguards which had to be in place before the court could properly, and without violating the constitutional rights of a debtor, make an order for the arrest and imprisonment of that debtor. Those three safeguards were that the debtor be present before the court, unless he or she has consciously understood that arrest and imprisonment is a possible outcome of the application and absented him or herself; that the debtor be apprised by the judge of his or her entitlement to legal representation and provided by the court with a means of obtaining legal aid at the expense of the State if he or she is impecunious and incapable of representing him or herself; and that the court applies fair procedures in the hearing of the creditor's application and does not make an order for arrest and imprisonment unless it is satisfied that failure to pay is due to wilful refusal or culpable neglect.

On all of those grounds the court found that section 6 of the 1940 Act was unconstitutional. Section 6 as originally enacted expressly envisaged that an order could be made imprisoning a debtor, notwithstanding that the debtor did not appear and, further, the judge had no jurisdiction to compel the attendance of the debtor with a view to ascertaining whether his absence was due to a conscious decision or otherwise. It is clear the proposed subsections (3), (6) and (7) of section 6 attempt to deal with that.

The second issue is legal aid. The judge held that the Bill was unconstitutional with regard to the guarantee of fair procedures. No jurisdiction was conferred on the judge to grant legal aid to the debtor if he or she did not have the means to retain a lawyer to represent him or her. Again, the new section 6, especially in subsections (5) and (6), attempts to deal with that.

Another fatal defect of section 6 of the 1940 Act was that the burden of proof rested with the debtor to establish that the inability to pay was not due to his or her wilful refusal or culpable neglect and that there was no stipulation that the standard of proof was that of a criminal trial, namely, beyond reasonable doubt. Again the Bill attempts to deal with that situation, with the standard of proof provided by section 6(8) that of beyond reasonable doubt, and the burden rests with the creditor rather than the debtor to establish that the failure to pay is not due to a mere inability to pay or to wilful refusal or culpable neglect and that the debtor has no goods that could be taken in execution under any process of the court by which the judgment order decree for the debt is given.

The issue of imprisonment being a last resort was given great emphasis in the judgment. The judge held that in circumstances in which a debtor had some resources to meet the debt, a statutory scheme that did not require the creditor to seek redress by attaching those resources did not impair the debtor's right to liberty as little as possible. This was a point made by the plaintiff in the case, that it would have made more sense to attempt to attach the debtor's resources, such as social welfare payments, thereby rendering the application for committal a last resort, something required by the application of the doctrine of proportionality to the constitutional right to liberty.

It is on this point that the Bill fails - the proportionality test. It fails to take full cognisance and account of the judgment of the High Court in this respect. It retains imprisonment not as a last resort but as a fundamental part of the scheme and merely deals with the constitutional impediments in the existing Bill. The High Court judge stated that the judge is not entitled to make an order for committal unless he is satisfied the debtor has no goods that could be taken in execution under any process of the court by which the judgment order decree for the debt was given. There is no provision in the Bill for the attachment of earnings. This is the fundamental basis of Fine Gael's objections to the Bill and the manner in which it has been drafted. This is why adequate time should be given for consideration of the Bill if we are to deal properly with the judgment which has been given and the defects in the 1940 Act.

The judge on page 84 of her judgment, wrote that, as the plaintiff's case illustrated, a statutory procedure for enforcement of debt under which the debtor may be imprisoned without there being a positive requirement that the court determine if non-payment is due to an inability to pay before making an order for arrest or imprisonment is not only futile in terms of securing the creditor's remedy, it imposes unnecessary expense both on the creditor and the State. If the warrant for the imprisonment of the plaintiff had been executed, the plaintiff would spend a month in Mountjoy Prison. The credit union, however, which its counsel described as a not-for-profit co-operative financial service provider governed by the Credit Union Act 1997 as amended, would not have received €5,658 or even one brass farthing from the plaintiff. The credit union would have borne the cost of the proceedings for the instalment order and the application for the order for arrest and imprisonment. The State would have borne the cost of two District Court sittings, the execution of the warrant and the accommodation of the plaintiff in Mountjoy Prison for one month. That is the main defect in the Bill. It still does not provide for an attachment of earnings procedure. In that regard, it fails to adhere to the provisions of the judgment.

Section 6 as originally enacted breached Article 40.4.1° of the Constitution in that there was no process similar to order 46(b) of the District Court rules requiring personal service of an order with the penal endorsement before attachment and committal could take place. The failure to require such a process of attachment and committal for the enforcement of a judgment was, according to the judge, unacceptable because it did not represent as minimal an impairment of the debtor's right to liberty as was possible. Order 46(b) of the District Court rules concerns attachment on a committal on foot of a failure to comply with an order other than a monetary judgment. To comply with that procedure, a person with the benefit of such an order must serve the person in breach of that order with a copy of the order personally with the penal endorsement thereon, yet this requirement does not apply to the enforcement of monetary judgments.

It is not germane to this Bill that there is a similar problem with Order 44 of the High Court rules, in that it contains a similar distinction between the enforcement of a judgment for an amount of money on the one hand and orders generally on the other. That is a matter I will invite the Minister of State to address, although it is not central to this Bill.

The Bill attempts to deal with this requirement of personal service of an instalment order with a penal endorsement, and that is acknowledged. The new concept in the Bill is welcome. There are various stages one can go through in terms of dealing with the issue of payment and individuals meeting their debtor obligations. The new section 6(7) introduces the concept of mediation where appropriate as well as the making of an order fixing a term of imprisonment and the postponement of the execution of that order until such time and under such conditions, if any, as to the payment of the outstanding debt and costs, as the judge thinks fit. The lack of a further intermediate step of attachment of income from earnings or social welfare payments is the flaw in the legislation. If the emphasis was placed on attachment of income or other payments which may accrue to the debtor, this would obviate the need for imprisonment. When one considers that in a single year 2,000 people might be sent to prison for failing to pay fines or debts - I do not have the breakdown of these two categories - one can see that the notion of attachment is far more preferable. It is also vital to adhere to the provisions of the judgment with regard to prison being an option of last resort.

The Bill deals with the defects in the Enforcement of Court Orders Act 1940 concerning the constitutional right to fair procedures. Jurisdiction is conferred on the district justice to take various steps to ensure that no order is made without the engagement and presence of the debtor, unless he or she decides not to engage in the process, and a right to legal aid for suitable persons is established. Furthermore, the onus of proof in establishing that the debtor's failure to pay is attributable to the debtor's wilful refusal or culpable neglect is on the creditor rather than the debtor, which is welcome. The standard of proof is that of a criminal trial - that is, beyond reasonable doubt.

With regard to the issue of personal liberty, the requirement of the new section 6(8)(b) that the creditor establish beyond reasonable doubt that the debtor has no goods that could be taken in execution under any process of the court by which the judgment, order or decree for the debt was given does not include a garnishment or attachment-type option, which is a flaw. This option is precisely the form of alternative order referred to by the plaintiff and Ms Justice Laffoy in the judgment as being necessary to ensure that imprisonment is a last resort. Providing for this - we have tabled detailed amendments in this regard - would obviate the need for imprisonment of people who are unable, or at least not immediately able, to pay their fines or debts. I refer again to Order 44 of the Rules of the Superior Courts; this issue should be addressed.

In the current economic context, we are opposing this Bill because it provides no real alternative to imprisonment for debtors struggling to repay their debts. Many people are under increasing pressure to pay their debts in the current downturn, and with more than 400,000 people unemployed and living off social welfare, the chances of such people finding themselves in difficulties increases significantly. Our prisons are becoming more and more overcrowded and it is costly to the State in terms of court time and expense. Creditors gain nothing from people being sent to prison for non-payment of debt. The attachment of earnings procedure should be followed to address this.

We do not wish to send to prison those who are unable to pay their debts. The current procedures allow for them to be put in prison in such circumstances without providing a mechanism to allow them to meet their obligations over a reasonable period and within their capacity to pay. That is where this Bill fails on grounds of efficiency and fairness. Ms Justice Laffoy highlighted in her judgment the constitutional provision of proportionality. Prison should be a last resort. If the proposals on attachment which we intend to put forward on Committee Stage are accepted, this would obviate the need for imprisonment in practically all circumstances.