Seanad debates

Tuesday, 7 July 2009

Enforcement of Court Orders (Amendment) Bill 2009: Second Stage

 

12:00 pm

Photo of Jim WalshJim Walsh (Fianna Fail)

I welcome the Minister of State to the House again. This short but none the less important Bill has arisen because of the case taken by Ms McCann against the Monaghan District Court justice with regard to an infringement of her constitutional rights and in particular the fact that the Enforcement of Court Orders Act 1940 was incompatible with the Constitution. The High Court decision was on three grounds: that the debtor was not required to be present in court; no provision was made for legal aid for the debtor, especially one at risk of imprisonment; and the onus of proof was on the debtor, which could lead to a situation where imprisonment evolved because the debtor was unable to prove that his or her failure to pay was not a result of wilful default.

In addressing these issues, this short Bill amends sections 6, 7 and 8 of the 1940 Act. It will have the effect of ensuring that where a debtor does not appear, the court can issue a summons to ensure he or she appears. If the debtor still fails to appear, the court can issue an arrest warrant. The Bill enables the court to hear the debtor and be satisfied the debtor has wilfully defaulted or otherwise and that all possible steps have been taken to recover the debt, including instalment orders and mediation, which is an innovation within the structure of this legislation. The Bill safeguards the debtor in that the court will not imprison him or her unless it is satisfied he or she has the means to pay. The Bill will ensure the debtor will be aware of the risk of imprisonment and that his or her entitlement to legal aid is also made known to him or her.

We can all cite hardship cases in response to people who appear before the courts. However, like any legislation, especially in this area, it is a fundamental question of balancing the rights of the debtor with those of the creditor. I think we would all agree, as many Senators have said, that imprisoning debtors is extremely costly to the State. In fact, their imprisonment does nothing to satisfy the payment of the debt to the creditor. We must also be aware that for every genuine person who finds him or herself in difficulty, there are those who are quite happy to play the old soldier and exploit the legal system to the umpteenth degree. In this regard, perhaps the Minister of State can clarify a point. When a person is imprisoned for non-payment of a debt, does the obligation to pay the debt continue after their release or is it expunged with the prison sentence?

With regard to balancing the rights of debtors and creditors, the Courts Service statistics clearly show that the threat of imprisonment is an effective deterrent to encourage people to pay where they have the resources to do so. It is imperative such deterrents are in place. Creditors are now finding it increasingly difficult to recover debts. It is only right and proper that their rights must be protected.

I note from the Minister of State's speech that the Law Reform Commission is examining this area and is expected to publish its report in September. The commission has had wide-ranging consultations on debt enforcement. To me, the concept of attachment is a good one in that it obviates the need for imprisonment and the costs that go with it. Senator Quinn illustrated that cost clearly when he said that the recovery of a debt of €1,700 would cost the State and taxpayers approximately €23,000 when the debtor was imprisoned. Obviously that does not make sense for the State or the creditor. Attachments to income, whether earnings or social welfare payments, are highly desirable.

With regard to the entitlement to free legal aid, I note that some negotiations are being entered into in that regard. I am a long time critic of exorbitant legal fees which arise from a lack of competition within the legal profession, particularly the Bar. This has given rise to fees that unfortunate clients are bound to pay, yet they are not in a position to negotiate a price as one would do in the normal commercial world. That area must be tackled effectively because up to now the State has failed miserably in that regard. In some ways we have probably compounded the difficulties with the arrangements we made for tribunals. We are still paying tribunal barristers €2,250 per day for basic, mediocre administrative work. I do not think that is sustainable or defensible, especially in a situation where others have to step up to the plate, given the economic difficulties that we have.

I was taken with some of the recommendations in the submission made by FLAC, especially the recommendation on the new section 6(2). This provides that the summons requiring the debtor to attend would ask why the instalment order is not being complied with and would set out that the debtor has failed to comply with the order, that imprisonment is a possibility and that the debtor may be arrested if he or she fails to appear at the hearing. FLAC makes the point that the provision does not inform the debtor that the committal hearing may be used as an opportunity to vary an existing instalment order. That might be a useful addition to the Bill and perhaps the Minister might look at it.

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