Seanad Éireann - Volume 130 - 14 November, 1991

Liability for Defective Products Bill, 1991: Second Stage.

Question proposed: “That the Bill be now read a Second Time.”

Minister of State at the Department of Industry and Commerce (Mr. Leyden): The objective of the Bill is to give effect in Irish law to European Communities Directive 85/374/EEC on liability for defective products which was adopted on 25 July 1985. The Directive is an integral part of the Community's policy of reducing distortions in trade between member states by the process of harmonisation of laws in a wide and diverse range of economic and commercial areas.

The Bill will introduce into Irish law the remedy of damages, in respect of injury to a person or damage to his property, from faulty or defective products, based on the principle of strict or no-fault liability. This means that where damage is caused to a person or his property from the use of a defective product, the producer is liable, irrespective of whether he is negligent in its manufacture or production.

[746] The directive is without question the most significant measure to emerge so far in the Community in the area of consumer protection. Equally, the changes in our national law, resulting from this Bill, will have important implications for the legal process in the area of product liability. Thus the position of Irish consumers will be advanced in a very significant way by providing additional legal redress to those already available under existing tort and contract law.

While the present measure is aimed primarily at improving the position of the consumer — and this it does in a very considerable way — I would emphasise that it is not intended as being either antienterprise or business development. In fact, for many Irish manufacturers the directive is not something new, as they already have to meet its requirements in their principal EC markets. Our manufacturing sector now sells about 70 per cent of their production in markets which are predominantly within the European Community. In 1990 our exports to other EC countries were valued at nearly £11 billion which represents overseas sales of £30 million a day. Currently 2,500 manufacturing companies in Ireland — half the total — are now engaged in exporting.

The remaining 2,500 manufacturing companies continue to rely on the home market for the bulk of their business. The Irish market is highly competitive and it will be in industry's interest that quality assurance and safety standards are maintained at the highest international levels. The message then to industry is that quality production, a desirable end in itself, helps to guard against the risk of damage and liability, and consequently costly claims.

Any company operating to the highest quality standards in their management and production processes will have no grounds for apprehension from the enactment of the new legislation. The competitive challenges associated with the Single European Market make it imperative that Irish manufacturers employ strict quality control in the production of their goods. Furthermore, I believe that [747] as many companies as possible should strive to achieve certification by the National Standards Authority of Ireland. The attainment of their quality standard is an invaluable tool in marketing Irish products overseas. To date, 320 Irish companies have been awarded ISO 9000 certificates. It is predicted that there will be 380 before the end of the year.

There has been widespread consultation with industry, as well as with consumer and trade interests, in the course of preparation of this legislation. Industry should now be very familiar with the aims and requirements of the EC Directive as a result of this and also through seminars arranged over an extended period and wide geographical area.

The present measures offer extensive remedies which are — and I would like to stress — additional to those in existing tort and contract law. Liability in tort exists where, because of a defect in a product resulting from its faulty manufacture, damage is caused to a person or his property. But to succeed in such cases at present the plaintiff must prove negligence on the part of the manufacturer, supplier or dealer. For this reason many potential claims never get to court and the injured party does not even get a hearing.

The Sale of Goods and Supply of Services Act, 1980, incorporates two main implied conditions which are (i) that the product or goods are of merchantable quality; and (ii) that they are reasonably fit for the purpose for which they are intended.

A consumer can take action for damages against the supplier — generally the retailer — if the goods are not of the necessary quality and damage or loss ensues. Of course, if such an action is successful in recovering damages from the supplier, then that supplier can seek indemnity from the person who supplied him with the product or goods. Taken together, the expanded law of tort and contract law will offer the consumer a comprehensive and complementary set [748] of measures providing wide ranging protection in the area of product liability.

The Bill follows quite closely the wording and the provisions of the directive. I would emphasise that in the few instances where the Bill diverges from the wording of the directive its aim and intent are to provide for greater clarity. The EC Commission have had sight of the Bill and regard it as an admirable effort in transposing the directive into national law. In transposing the directive into national legislation member states are permitted to exercise a number of options. These are as follows: first, member states are allowed to include in the scope of implementing legislation primary agricultural products, including fish and game, which have not undergone initial processing; second, member states are allowed to exclude from the defences that are available to the producer the socalled “development risks” or “state of the art” defence; and third, member states may put a limit on the total liability of a producer for damage resulting from death or personal injury and caused by indentical items with the same defect.

In giving effect to the directive, the Government have decided not to avail of any of these options. I will explain the reasons for this approach presently, which in the Government's view represents the best balance for all interests.

Following is a description of the provisions of the Bill. The definitions of certain of the terms used in the Bill are contained in section 1. Many of the provisions of this section are self-explanatory but some warrant comment. Damage within the meaning of this Bill comprises death or personal injury or loss of, damage to or destruction of property. Thus in this regard it follows very closely not alone the wording of the directive but also the definition of damage contained in the Civil Liability Act, 1961. The directive provides that damage to the defective product itself and to property that is used other than for private consumption is excluded. We have no discretion to deviate from these requirements. An injured person is defined as one who has suffered [749] the damage or his personal representative or dependants. Products covered by the Bill are all movable except primary agricultural products, which include fish products and game, except where these products have undergone processing of an industrial nature. Included are component parts of or raw material used in the manufacture of a finished product even though that final product may be an immovable. An example of this would be building materials used in the construction of a house, which is an immovable. Also included is electricity, irrespective of what means of generation is used.

Primary agricultural products have been excluded from the legislation for sound practical reasons. The average producer of such products is small in economic terms and would have considerable financial difficulty in monitoring many potential fault areas such as feed, vaccines and drugs. A further example of the difficulty of including primary agricultural products is in the area of animal health. For example, there are cases where cattle may have been free of disease at time of first sale and subsequently contracted the disease on the second farm. In such instances, tracability would present insurmountable problems.

Primary agricultural products are also prone to hidden defects caused by environmental factors beyond the control of the producer. These products, however, will still be covered under fault-based tort and contract law. Where they are processed, the responsibility will reside with the processor, who will be considered as the producer under the terms of this Bill. It is his responsibility to detect defects and failure to eliminate them could expose him to risk. It is interesting to note that all member states, with the exception of Luxembourg, which have implemented this directive have excluded primary agricultural products from the scope of their implementing legislation; for us to do [750] otherwise would be to unfairly disadvantage our own farm sector particularly with regard to insurance costs.

Section 2 contains the principal provision of the Bill, imposing liability in damages in tort on the producer for damage caused wholly or partly by a defect in his product. A producer is defined in considerable detail and may be (a) the manufacturer of a finished product; or (b) the manufacturer of a component or of a raw material used in a finished product; or (c) in the case of processed agricultural products, including fish and game, the processor thereof, or (d) any person who, by using his name in connection with a product, represents himself as the producer of that product; or (e) any person who imports a product into the European Community for business purposes; or (f) in the unlikely event that none of the abovementioned can be identified, any other person in the chain of supply.

I am confident that this section provides adequate scope for the identification of a liable producer where a defective product has caused damage. Where a defective product is imported into this country from outside the European Community, the importer will be held liable. A very important safeguard from the point of view of the consumer, is that where he has difficulty in identifying the producer and where, simultaneously, the supplier of the defective product fails to identify the manufacturer or his supplier, then that supplier can be held liable. In my view this represents a powerful incentive to Irish importers, wholesalers and retailers to refrain from dealing in faulty goods, particularly those originating outside the EC.

In order to discourage the possibility of an excessive number of cases entailing very small claims, section 3, in accordance with the provisions of the directive, provides that damages not exceeding £350 claimed in respect of property are excluded from the provisions of the Bill. But this restriction relates only to damage to property. Where damages are awarded, only that amount in excess of £350 can be recovered, but I would stress [751] that we do not have the power or discretion to vary this amount unilaterally. Article 18 (2) of the directive — and it is very clear — states that “every five years the Council, acting on a proposal from the Commission, shall examine, and if need be, revise the amounts in this Directive, in light of economic and monetary trends in the Community”. To cater for such revisions and to avoid the necessity for primary legislation, the Bill will empower me to effect the revisions by the making of an order under section 3.

The directive allows member states to provide for a limit on the total liability of a producer resulting from death or injury caused by identical items with the same defect. Where a member state decides to avail of this option the limit cannot be less than 70 million ECUs (approximately £53 million). This Bill does not include such a limit. It is considered that the minimum financial limit is pitched at such a high level that there would be no material difference from that of a system of unlimited liability.

Section 4 concerns the burden of proof on the injured person. I indicated in my introduction that in actions under the existing law of tort, the injured person is required to prove negligence on the part of the producer; in actions brought under this legislation the injured person must prove only the damage suffered, the defect in the product and that the defect caused the damage.

Section 5 provides the criteria for determining the defectiveness of a product. Under this Bill, a product is defective if it does not provide the safety which a person is entitled to expect taking all circumstances into account. This criterion must, for example, take into account the way that the product was used — some products are capable of being used for a purpose for which they are clearly not intended. In such cases a product may well not be considered to be defective. Additionally a product cannot be regarded as defective solely because a better product has subsequently been put into circulation.

I have already mentioned that the Bill [752] makes available to producers a number of defences. These are contained in section 6. A producer will not be liable if he can prove any of the following: that he did not put the product into circulation; or that the defect probably did not exist at the time the product was put into circulation by him or that the defect arose afterwards; or that the product was not produced for an economic purpose or in the course of business; or that the defect was as a direct result of compliance with any legal requirement of national or European Communities law; or that in the case of a defect in the raw material or component part the defect was due to the design of the finished product or the instructions given by its manufacturer; or that when the product was put into circulation the state of scientific or technical knowledge was not such as to enable the existence of the defect to be discovered; this is commonly known as the “development risks” or “state of the art” defence.

As I have mentioned, the directive does provide for the exclusion of the “development risks” or “state of the art” defence. This option has not been exercised in the Bill. The Government are of the view that this defence should be allowed as the cost of insuring against this risk could be extremely high and the effect could well be to stifle innovation in some of our most progressive industries. Also, it is apparent that the amount of research undertaken in this country is not on a par with many of our competitors. It is important, therefore, that we encourage more investment in research, particularly of the kind which produces life saving drugs to deal with cancer, AIDS, heart disease and other unanswered medical questions. Senators, I am sure, will also accept that many young people are seeking post-graduate work in research and development in the pharmaceutical, electronics and other high technology areas but are, at present, required to leave the country in order to find work in this sector. We simply do not devote enough resources to research. It is worth noting, however, that where development risk is a factor in causing [753] damage, a cause of action for liability based on fault may exist.

There are two very important time limits specified in section 7 of the Bill. First, it stipulates that an action for recovery of damages can be brought within three years of discovery of the damage rather than the date of sustaining such damage. Second, right of action will expire after a period of ten years from the date on which the actual product which caused the defect was put into circulation by the producer. If, however, judicial proceedings are pending at the end of this period, liability does not expire but runs until a final decision is made. If the damage is discovered during the ten year limitation period but proceedings are not initiated before this period expires, an injured person will have no right of action subsequently. Another purpose of this section is to ensure alignment and consistency with the limitation-of-actions provisions of the Statute of Limitations, 1957, and the Statute of Limitations (Amendment) Act, 1991.

Section 8 provides that joint and several liability will apply where two or more persons are liable for the same damage. In such circumstances an action for damages may be brought against each and every liable person. This provision is in line with the Civil Liability Act, 1961. This enhances the prospect of the injured person securing full recompense.

It is reasonable that, if the injured person is responsible to any degree for the damage, the producer should not be liable for all the damages. Section 9 provides that where any damage is in part due to the fault of the injured person, or to the fault of any person for whom the injured person is responsible, the producer will be enabled to reduce his liability under the rules of contributory negligence as provided for in the Civil Liability Act, 1961. These rules, however, will not apply where the damage is a result both of a defect in a product and by the act or omission of a third party.

An important practical measure of protection for the consumer is provided for in section 10. This section prohibits the [754] limitation or exclusion by the producer of his liability contractually or by any notice or by any other provision. If a producer does attempt, by, for instance, the inclusion of a clause in a contract, to limit or exclude his liability in this way, such clause will have no legal effect.

Section 11 provides that any existing rights of an injured person are not affected by these provisions. Rights under contract law or in tort, therefore, are unaffected. Indeed, there may be instances where an injured party would wish to avail of either of these avenues of redress rather than that being introduced by this Bill. These new provisions, therefore, will complement existing domestic law in the area of product liability.

Section 12 provides that section 1 of the Courts Act, 1988, which relates to the abolition of juries in certain actions in the High Court, shall apply to an action for damages for personal injuries taken under this Act.

Section 13 provides that this legislation shall not apply to any products put into circulation within the territory of any member state before the commencement of this legislation.

Section 14 provides for the bringing into effect of this Bill. I intend to introduce these measures immediately, once passed.

These are two provisions of this Bill. I am confident that it will improve considerably the position of persons injured by defective products. I also believe that whatever burden this imposes on producers is balanced to a reasonable degree by the defences available and by some other provisions of the Bill. I am sure that the Bill will accordingly be welcomed by Senators on all sides.

I commend the Bill to the House.

Mr. Staunton: I welcome the opportunity to speak relatively briefly on the Liability for Defective Products Bill, 1991. It is certainly not a controversial Bill and it did not engender much heat in the Lower House, nor should it. This Bill is before the House essentially because of our membership of the European Community. I have no doubt whatever, [755] due to the conservative attitude we have been adopting in legislation in recent years that were we not a member of the Community and not pushed to implement this type of legislation which is demanded in mainstream Europe we would not have this Bill before us today.

The fact that there has been such a delay in introducing this legislation is a reflection on the way we run our Legislature. This legislation has its origins in European Community Directive 1985/374 at which point it was obviously desirable that member states should start implementing in national laws the effects of the directive. We are now in the dying days of 1991, six years later. The extent to which legislation is delayed, partly because of all kinds of other events of a political nature, is a major reflection in this House, as is the fact that this matter is before us only because there is a European Community directive involved. Because of our Community membership, we must implement this directive in view of the imminence of the Single European Act and 1992.

My understanding is that this country is one of the last member states to incorporate in national legislation what is already part of the mainstream consumer protection legislation in the European Community, certainly since 1985. In a sense, the people concerned with this Bill on the producing side, the manufacturing industry, for example, were probably way ahead of the legislators. I think the Minister referred to the matter in his speech, that the vast majority of major manufacturing companies here are exporting. In the commercial world the reality is that these exporters have already had to deal with the matters dealt with in this Bill in that this type of legislation has been in force throughout European countries prior to this. This wind of change was blowing through the manufacturing sector for many years before the Legislature has caught up, and that would not be for the first time. The Bill enhances the existing legislation in the sale of goods area and should be an incentive to Irish consumers to complain when [756] necessary. We need higher standards, we need a heightened consciousness of quality and we need to condemn shoddy products and shoddy services much more often than we do. As a people we are a little bit too nice when we avail of services and buy products. We do not complain as much as we should.

There is immense scope for complaints. There is scope for complaints in using airlines, in consuming food in restaurants, in purchasing household goods, availing of all kinds of other services. We do not do the producer or the economy a good turn by not complaining because if people do not complain the manufacturers, the producers, the sellers of these goods can continue to get away with selling shoddy merchandise or providing shoddy services. If one visits a restaurant and orders food to be cooked in a certain manner and if it is not served as requested what is the point in eating such food and not complaining? I know from visiting the United States and continental Europe that people there are much more forceful in demanding what they believe to be their rights as consumers. This legislation will be very useful in addition to the legislation we already have as it helps to increase consumers' awareness of their rights.

There has been some controversy about food produce and food processing. The Minister takes the view that he should exclude primary agricultural products and fish products and points out that this is apparently the consensus in the European Community among member states, with the exception of Luxembourg. Like some of my colleagues in the Lower House, I do not agree with the view the Minister is taking on this issue. Just because Luxembourg is the only country enshrining agricultural products within the scope of this legislation does not necessarily mean that we should not do as they are doing.

At present there is a huge image problem for Irish agriculture and the Minister will be conscious of this, travelling abroad as he does frequently to Irish trade events. It is a fact of life, whether [757] we like it or not, that because of shenanigans in the past two to three years in the meat sector which has been broadcast very widely in the international media our image, to say the least, is not good. I would see nothing wrong with the Minister introducing elements of agricultural produce gradually within the scope of this Bill so that the Coras Tráchtála people — or the Trade Board people, as they now call themselves — and the export marketing people would have quality standards with an imprimatur for Irish produce abroad. There should be a continuing monitoring of this Bill with a view to gradually including some of these food products and processes and fish.

I agree with the decision of the Minister in the Bill to exclude issues such as development risks and state-of-the-art issues because obviously there has to be a limit and if you want to encourage an entrepreneurial spirit, if you want to get people keen on manufacturing products you cannot stifle that entrepreneurial spirit. If you attempt to stifle it you are going far too far in the opposite direction; therefore, balance is absolutely necessary here. I know a little bit about manufacturing industry. It is very hazardous by its very nature; it is much easier to earn an income in other areas of activity such as selling insurance, practising law or doing something of a more sober nature. It begs the question that if one can earn an income in other avenues which are virtually risk-free, why get into a very hazardous type of activity? At the same time, where the State is concerned or where the economy is concerned, unless companies and individuals develop these entrepreneurial skills, unless they establish manufacturing industries, unless they produce goods and services and unless they export these goods and services, we will have an appallingly bad Irish economy. The other side is ensuring that there is balance here and that it is not over-restrictive for those who are in the vanguard of what may hopefully make this a good economy some day. For that reason, I approve of this business of exclusion of development risks and state-of-the-art issues.

[758] The other matter that is going to arise is that this Bill makes it relatively easy for the consumer to complain and to win a case. It puts the manufacturers and the sellers of goods on the defensive. Commercially they are going to be covered through the insurance sector and through a system that will operate in product liability and other forms of such cover. Obviously there is a danger here, now that there is going to be a much more heightened awareness of the necessity for product liability insurance cover. Given the fact that the cost of insurance cover in his country has been traditionally much higher than in other member states of the European Community, I would hope that the Minister and his Department will monitor these issues. It is one thing to protect the consumer and to put the onus on the sellers and manufacturers who, in turn must cover themselves through product liability cover and other such cover but there is a danger that within the insurance sector there might be a rip-off because it is a captive market. Hopefully the winds will blow through the insurance sector as well with the imminence of 1992 but the Department will need to take time to monitor what is happening in the insurance sector relative to such product liability cover to ensure there is a fair and equitable situation.

I do not have very much more to say. I have made the contributions I wanted to make in this area. In summary, this legislation has nothing new; it has been enshrined in the European Community since 1985. The vast majority of our manufacturers have been producing to these standards since that time because of the fact that they are selling into the European Community. I am not necessarily saying this to the Government, but this legislation is a reflection on the way we run our affairs here. We like to think we are good Europeans and good members of the European Community. We are certainly good at grabbing the lolly whenever we can, whether it is coming through the Social Fund, the Common Agricultural Policy, the Regional Fund or other funds, but we have been abysmally slow when it comes [759] to being a little dynamic and giving effect to and enshrining in our own legislation the will of the European Community. This is a classical example. In the dying days of 1991 we are enshrining in Irish law a 1985 EC Directive. Let this be a lesson to us in the future. We should try to deal with what is coming to us from Europe in a more progressive and dynamic manner than the way this issue is being handled today.

Mr. McKenna: May I welcome the Minister to the House and compliment him on bringing forward this major legislation. This is one of the most significant measures that has been introduced in the area of consumer protection in recent times. As a result, the protection of the Irish consumer will be advanced considerably as this Bill will provide additional legal redress to what is already in place under existing laws. It is also important to emphasise that the requirements in this legislation have to be met by Irish manufacturers already in EC markets. This means the vast majority of Irish manufacturers are already operating under stringent regulations in terms of quality control and standards. Apart altogether from the legislation, it is in the industry's interest that quality assurance and safety standards are maintained at the highest international level. We are in a fiercely competitive position on the international front, and on the home front as well, and if our people maintain quality standards in management and production processes, they should have little to fear from this legislation.

I spoke some time ago in this House on the ISO 9000 certificate of standards. It is interesting to note that by the end of the year it is expected that upwards of 400 Irish companies will have been awarded these certificates of the highest standard. That is very good. It shows the attitude of Irish companies towards aiming for quality and excellence in the standards of their products. It is only fair to state that it is in the interests of the industry itself that it should aim for high standards in the manufacture of products and design [760] and that they realise in this fiercely competitive market that their only hope for survival is to produce goods that are flawless and extremely attractive.

In effect, a lot of the industry in this country has developed a keen sense of consumer awareness and the realisation of the need to invest in marketing and research. One of the difficulties in the past with many companies was that they produced products for sale and the money spent on marketing and research was seen as something outside the normal business practice and it was only when companies had funds to spare that they would invest it in marketing and research. In effect, one of the prime movers in relation to the development of a company at any time has to be marketing and research. It is very welcome to note that most Irish companies now realise that to compete on a subsistence level in the international field which is now part of this country anyway, would involve substantial amounts of money in marketing and research.

The fact that under this legislation negligence must no longer be proved puts greater pressure on manufacturers to ensure that their products are up to the highest standards and of such quality that they will not attract claims. This is extremely welcome. Low standards should not be accepted in the case of any product. In relation to the low standards of debate that took place in the other House yesterday on another matter, I think it would be highly appropriate if a Bill could be introduced to say that the type of personal attacks made on Members of the Oireachtas——

Acting Chairman (Mr. Finneran): Senator I cannot allow you——

Dr. Upton: A private members' Bill is the answer.

Mr. McKenna: It was an absolutely deplorable attack, and if one could bring in a law to stop this happening I think it should be done.

Acting Chairman: The Bill before the [761] House is the Liability for Defective Products Bill, 1991.

Mr. McKenna: I suppose it is part of our make-up as a people that we accept standards and designs in products and services that are not up to scratch. We are very slow to complain when we are not satisfied with goods or services. Senator Staunton referred to the person who complains in a shop or restaurant but this is the exception rather than the rule. It has struck me forcibly from time to time that people who complain are regarded as eccentrics or as people who have a chip on their shoulders. We become quite embarrassed if we find ourselves in the company of someone who makes a complaint about either a product or a service. We feel we have two heads if we are in the company of somebody like that. We wish the ground would open up and swallow us if somebody complains about something even when they have a legitimate cause for complaint. This has contributed to inferior products and services but that cannot continue.

There has to be a balance and I sincerely hope we do not go to the other extreme as is the case in the US where, particularly in the service industries, the aim to please has definitely gone overboard. They use expressions such as: “Have a nice day” when people do not have an notion of what the expression means. The latest phrase in America when you are leaving a restaurant or shop is: “Miss you already”. They use this expression even if they never met the person before and the meeting lasts for less than 30 seconds. Things have gone to the other extreme.

There is a notion that when a complaint is made the manufacturer resents it and there is difficulty in getting satisfaction. It should be standard practice that where a customer finds fault with a product, the manufacturer or retailer ensures that the complaint is dealt with fairly and any inconvenience or damage done to the consumer is rectified as quickly as possible. This Bill will help to awaken the consciousness of the Irish consumer to his or her rights. It puts all consumers on [762] an equal footing and for that reason it is extremely welcome.

Does the Minister intend to set up a small claims court where consumer complaints could be dealt with? A consumer will still be required to go to court with all the trauma that experience entails for an individual who would not be au fait with court procedures, not to mention the expense. I recognise that the Bill lessens the burden of proof on the consumer by introducing the concept of strict or no-fault liability but the consumer still has to face the intimidating and potentially expensive avenue of the courtroom. Given the apparent reluctance of the Irish to complain, the Minister should consider setting up a small claims court. Is it envisaged that the Director of Consumer Affairs and Fair Trade would have an input in this legislation as he is seen as the person specifically charged with ensuring that consumers' rights are protected?

Notwithstanding those two queries, the Bill is extremely welcome. Every day we hear of cases where defective products cause injury or damage but because the injured party in many cases did not feel confident of success in bringing forward a case they just let the issue die and no further action was taken.

The Bill will impose liability on the producer of defective products irrespective, and this is extremely important, of whether any negligence was intended in the manufacture of the product or a component of it. The principle of strict liability is different from fault liability where the negligence of the producer has to be proved. Producers will be extremely careful that their products are up to the highest standard. At present there is a debate on a Private Members' motion in relation to insurance and it is most opportune in the context of this Bill. I fear greatly that insurance companies, who never miss an opportunity to increase their take from the public, would use this very positive legislation to increase their cost of cover. The insurance companies claimed for many years that a change in our court system would lower the cost of the premiums [763] paid by the general public but that did not happen. We are all too well aware of the enormous difficulties young drivers have in obtaining insurance and of the extremely high cost they pay for it. When the Bill becomes law rigorous investigations should be carried out on a regular basis to ensure insurance companies do not use the Bill to hike up their prices once again. It is extremely important that does not happen.

This is well balanced legislation. In the US, consumer legislation has really gone overboard and there are huge claims for the most spurious reasons. People think up all sorts of gimmicks in order to take manufacturers, producers and people who provide services to court for the most ridiculous reasons. This Bill does not go overboard in that direction.

I commend Senator Staunton and agree with much of what he said in relation to the Bill. In relation to this country being a little behind in terms of introducing legislation, we have progressed towards becoming Europeans, Irish first and then Europeans. Twenty or 30 years ago when the Treaty of Rome was first signed anyone who suggested that in 1991 we would be a full member of the EC would have been laughed at. As a student I remember debates in relation to when this country would be in a position to join and we were seen as one of the Third World countries. Enormous progress has been made in the interim.

To a large extent, the industrial revolution passed us by and we were no more than a producer of food for our near neighbour at that time. Since we took control of our own destiny we have made enormous strides forward. Acknowledging the fact that maybe in some cases we are a little behind in introducing specific legislation, at the same time 90 per cent of our companies, because of the fact that they are operating in the international field, have introduced these standards. I commend the Bill to the House.

Dr. Upton: Where has this Bill been for the past six years? The directive on [764] which it is based was introduced on 25 July, 1985. There is an inordinate time lag. It is legislation which derived from the European Community. It comes from the same broad stable as the Competition Bill and it falls into the same category as the Sea Pollution Bill. Most of the legislation which has gone through this House in recent times has derived from obligations placed on this country in relation to international agreements and so on. I wonder what use was made of those heavy tomes produced by the Law Reform Commission and I wonder why we do not see more home-based legislation coming through the House.

The Bill is welcome because it will make manufacturers responsible for loss and damage caused by defective products. Unfortunately, it has come too late for the haemophiliacs who have suffered AIDS through defective drugs or blood products made available to them. If this legislation had been enacted those unfortunate people would have been spared the trauma of protracted negotiations with the Department of Health, although I am glad to say there has been a happy solution.

While this legislation confers rights on individuals, these rights will be quite useless unless individuals have the capacity to exercise and pursue those rights and they will need sufficient money to do so. Unless they have an adequate amount of money, they will be unable to benefit from the changes in the law. There are large numbers of people who do not have adequate amounts of money to pursue the rights which this Bill will give them and I am interested to hear what the Minister is going to do to help them.

As has already been said by a number of Senators, business must meet the needs of the consumer and ensure that their products are of the highest standard. There is no future for people who produce shoddy goods and it is very important that everybody fully understands that. The unfortunate reality is that many people benefit to quite a significant extent in the short term from the production of shoddy, inadequate and defective products.

[765] Many of the claims made under this legislation will be, in all probability, for small amounts. It is essential that some type of small claims court or board be established to deal with these claims, otherwise much of the benefit in this legislation will be lost. I understand there are plans to establish a small claims court on a pilot basis and I would be interested to hear from the Minister the state of those plans, when we can see the introduction of these courts and the extent of their function.

We have many consumer affairs problems. I understand that last year 20,000 calls were made to the office of the Director of Consumer Affairs and Fair Trade. I was not one of them but on a number of occasions I sought to be added to that list by unsuccessfully telephoning that office only to find the number engaged. If that is indicative of what happens to the average person, then there must be many people for whom the facility provided by the office of the Director of Consumer Affairs and Fair Trade is really quite useless.

Given that most problems relate to small, insignificant claims, I imagine people would give up if they were unable to get through when they telephoned the office.

There is quite a difference between writing a letter and going to the bother of getting postal stamps and simply picking up the phone and ringing the office of the Director of Consumer Affairs and Fair Trade. It is a matter of great regret that the office is not more accessible by telephone. I tried to contact that office as many as ten times last year, all without success. When I did get through to the office in the past, I found them very helpful. They could not have been more obliging and kind. My regret is that I was simply unable to get through to that office by telephone.

I am disappointed that agricultural and some food products are exempt from the Bill. That was a great mistake. It will not do anything to enhance our reputation on the export markets as a producer of wholesome food. It leaves the suspicion that we have something to fear [766] from setting high standards. It is imperative that we set the highest standards possible. We should create the pace and take the initiative particularly when it comes to food standards. Our reputation as a producer of clean, wholesome, healthy food is invaluable and I cannot over-emphasise the extent to which we need to take every action possible to preserve that image and to leave consumers, particularly in European markets, in no doubt that when they buy Irish produce they are buying the very best.

There may be some reason to be concerned about the exclusion of agricultural produce given the recent experience with angel dust, the problems relating to food poisoning and the abuse of pesticides. One does not need to have any knowledge of pesticides nor does one need to read the label, to use them. In practical terms, there is effectively no come back for the consumer who is exposed to that type of food produced by the reckless people.

There is the recurring problem of the abuse of growth promoters. There is also a problem with the residues of antibiotics which have been improperly used. These are very serious problems. The initiatives which have been taken are very welcome but it is a pity this Bill does not apply to agricultural produce because it would improve standards. That is essential. The opportunities for Irish food products, are at the top of the European and world markets, and that is here we should aim. Anything less means that in the long term we will not be in the race; we will simply be brushed aside by the big producers in other countries with whom we will not be able to compete effectively.

Undoubtedly this legislation will create new demands on manufacturing industry. Quality control is an essential part of modern business. There is no escape from it and any progressive business would see investment in quality control in that light. It is vitally important that we improve quality control standards. A considerable amount of progress has already been made but we still have a long way to go. The food industry must be consolidated and if this legislation [767] helps to encourage and promote that it will be very welcome.

In many ways I agree with the Minister when he spoke about the need for greater research and development. I hope he will take every action open to him to encourage research and development and encourage Irish industry to develop many new products. I share the sentiments mentioned by Senators Staunton and McKenna in relation to the tendency not to complain. I am as guilty of this as anybody. In the last fortnight I was in a hotel where the standards were absolutely appalling, but in the fine old Irish tradition I shrugged my shoulders and said I would not start a row and off I went. Pleasantly made complaints can only be positive but I would not like to see a development where inadequacies in services were turned into an opportunity to exploit somebody.

I could not agree more with the remarks made by Senator McKenna in relation to American consumerism and what he said about “have a nice day” and “miss you already”. That type of remark is, for the most part, insulting rubbish. “Miss you already”, coming out of the mouth of someone who met you only five seconds earlier is tantamount to them regarding you as some type of imbecile. Given the values in America and the importance of money, this kind of comment is really offensive and should be taken in that light.

Mr. Farrell: I welcome this Bill. It is very important for Irish industry that we, to use an old cliché, get our act together. At first I thought this Bill was unnecessary but the more I studied it, the more I realised it was very important. The market for our products is not just in Ireland. It if were many industries would go out of business. For that reason it is very important that the products we send abroad comply with the EC laws.

This EC Directive was introduced in July 1985. We have had a long time to study it. I am pleased to say that, by and large, industry has implemented much of [768] what it contained. There is no question about that.

I spoke last night on the problems young drivers and those in specific types of employment experience when applying for motor insurance. I made the point that we have become litigation-minded. I always felt it was unfair that, as the law stood, whoever was selling the article was in the first line of fire. It is imperative that when people buy a product they know exactly who the producer is because very often wholesalers buy from big American or European companies and sell to retailers who may not know the origin of the product. In those circumstances it was difficult to send defective products back to the producer, but under this Bill, there is an onus on them to learn the identity of the producer.

I am pleased the Minister said that while the present measures aim primarily to improve the position of the consumer, they are not intended to be either anti-enterprise or business development. If they were it would be defective legislation. He said that for many Irish manufacturers the Directive is not something new as they already have to meet its requirements in their principal EC markets. Our manufacturing sector now sell about 76 per cent of their production in markets predominantly within the European Community. In 1990 our exports to other EC countries were to the value of £11 billion, or £30 million a day. Currently 2,500 manufacturing companies, half the total, are now engaged in exporting. Those are very good figures and my village, Grange, contributes in a small way to those figures because we have a few small companies which export quality goods to the American and continental markets.

When one thinks back to a few years ago, everything we bought was imported. It was said we can do nothing in Ireland; we can make nothing; what is wrong with us? I started business in the industrial estate in Grange. I own one industry there and my son owns another; all the young entrepreneurs are students of the local vocational school. The vocational schools did a great job and it was a pity [769] they were amalgamated with comprehensive and secondary schools. Vocational education committees were the first schools to give students who were not academically minded an opportunity to develop and express themselves in the technical field.

There are six factories in the village of Grange, employing 950 people and with the exception of one, all are graduates of the local technical school. This is an example of what a technical school did and could do again if given a chance. I am the product of the local technical school, and proud of it. There would be more employment if AnCO had been linked to the vocational schools. We were very lucky to have a good teacher, Mr. Forde. I am sure he would be delighted to support this legislation because his great phrase was, “small things make perfection, but perfection is no small thing”. This Bill is all about perfection. We must make sure that the day is gone when, to use the phrase used on building sites, “leave it or lump it” no longer prevails. I am delighted that day is over.

We are now returning to what used to be when I was a gossoon; if it were only thatching a house, the thatcher took pride in his work. If a man was making a donkey cart in a workshop he took pride in his work. If a person was doing a bit of tillage in his garden, it had to be as straight as a ruler. These people took pride in what they did. A neighbour of mine once did a bit of ploughing and another neighbour came along and said “You know, those are good drills but they are very crooked”; the reply was, “If I made them straight they would not fit the field”.

We then entered an age where that pride was lost and a “leave it or lump it” attitude developed. Now EC directives and this legislation will remind us that if we do not take pride in our work the law will penalise us to ensure that work is well done and is subject to strict quality controls.

Senator McKenna said that small courts should be established to oversee [770] the enforcement of quality control legislation and I support him; a procedure like the Ombudsman office could deal with many difficulties without going through the law courts. This area of law will become a profitable minefield for the legal profession unless we set up an expert body to tackle problems with products, conduct surveys, establish where the fault is and how many products are affected. We have become a litigation-minded country. It could be easy for somebody to switch a couple of wires in some electrical product or to add the wrong ingredients to some mixture and thereby make a claim. Something like the Ombudsman's office could check out the complaint and check other switches in the same batch and if only one was defective it is most probable that the damage would be accidental. This would afford protection to consumers and facilitate enforcement of the law.

I am delighted long and detailed discussion with industry took place before this legislation was produced. In the past legislation was sometimes enacted which the people concerned knew nothing of until an inspector arrived on the factory doorstep. Such neglect of public relations can cause problems; some firms closed their doors and said they had enough. In this case full discussions were held with industrialists and they had an input in the legislation.

Many producers for the export market have received generous grants which have helped them to raise their standards. Many small companies produce for the home market as a first step with a view to getting into the export field eventually but unless their product is an import substitute and unless they are exporting they get no financial assistance. This situation has long been a bone of contention for me. A neighbour of mine in the meat factory buiness employing up to 50 people now has to comply with EC directives but because he is only supplying the home market he will receive no grant aid. When small abattoirs were closed down because small butchers could no longer keep up their standards, [771] certain people built abattoirs that qualified and which supplied supermarkets and now they, unjustly, have to come up to EC standards with no grant aid.

Some fund should be established in the EC to help small farmers meet EC standards, there is an old saying that the halfpenny is the seed of the pound. Small industries employing a father, son, or a couple of neighbours may give good training and young employees may graduate into the export business or open their own businesses but they are being disadvantaged now by the requirement to meet EC standards and compete with those who got grants because they were big enough to qualify. There is an imbalance here and I would like to see some assistance for small industries since they are all creating much needed jobs. It would be sad if some of our small industries were forced, under pressure to comply with EC directives, to close their doors. It would be a loss of enterprise, jobs and service.

We should certainly aim to implement all EC directives but we must get some financial assistance to do so for enterprises at the bottom of the ladder. It may be the seed that will produce an oak tree in ten years time and if we do not nurture the seed we cannot hope to develop enterprises in the future.

I am delighted that agriculture is not included under this legislation as it could cause significant problems for that sector. Last week I heard of someone who sold bullocks where the cards were in order; the animals passed their test but for some reason the man who purchased them had them tested again within 60 days and they failed it on that occasion. The original farmer who sold them has now been locked up. If this directive were applied to farmers the repercussions would be disastrous as responsibility for a defect might be very difficult to establish.

In order to discourage the possibility of an excessive number of cases entailing very small claims section 3 of the Bill provides for claims for damages not exceeding £350 in respect of property to be excluded from the provisions of the [772] Bill. I support Senator McKenna's comments in respect to frequent small claims. There should be a simple way of dealing with them. When a product is put into circulation if the state of scientific or technical knowledge is not such as to enable the existence of the defect to be discovered, there is the consequent risk commonly known as the development risk or state of the art defence. If that clause were not included the work being done in regional technical colleges by young students working on inventions and improvements would be at great risk. This Bill has been well thought out; this possibility would not normally be thought of and I am delighted with the way in which the Bill has been framed.

Section 7 stipulates that the action for recovery of damage must be brought within three years of discovery of the damage from the date of sustaining such damage. Second, right of action will expire after a period of ten years from the date on which the product which caused the damage was put in circulation. I am somewhat worried about that provision because the lifetime of many articles sold would not be much more than three years. It may be asked when cars are checked and tested after the accident if the defect caused the accident or if the accident caused the defect? That principle would apply here. If something works perfectly well for up to three years, then develops a fault, was wear and tear responsible for the damage? If a bearing goes in a machine it is necessary to establish if it was properly lubricated and serviced in accordance with the manufacturer's recommendation and so on? Three years is a long period of protection since most products offer only a 12 months guarantee. I have slight reservations about this provision but I am sure the Minister will set my mind at ease.

I welcome this commendable legislation which will improve and enhance our share of the export market significantly. The manufacture of items that will be product tested and bear a mark of perfection, will raise national standards even though we would not be in the [773] export market at all if we were not already producing excellent quality goods.

Our peripheral location creates difficulties for exporters, particularly in the West of Ireland. Products must be hauled to Dublin and put on a boat or plane. Our products must already be excellent and our prices competitive when we are able to compete against Japan, Taiwan, etc., who are producing many of the same articles as ourselves. It is a great credit to our indigenous industry.

It is a pity that we seem to have educated our young people down the years for either the academic life, the white collar life or the dole queue, we have neglected the technical field although our vocational schools did fill that gap effectively and efficiently. I hope the Minister will consider the plight of small industries which may not export but have to comply with various EC directives and should get something to put them on a par with those who work for the export market.

Professor Raftery: I welcome this long overdue Bill; the directive was introduced in Strasbourg in 1985. I do not understand the delay but then our record in implementing European law is the second worst in the Community; only Italy is worse. I am sorry that we did not have this Bill much earlier.

The primary purpose of the Bill is to harmonise minimum standards of products legislation across the Community. Many people wonder why we need so much harmonisation in the Community but without it we will have distortion of trade with the advantage going to producers who spend less on ensuring safety and quality of products. Without standardisation there will be problems.

When the lawnmower directive was going through the European Parliament, it was a source of much fun to the public, the media and various commentators, but there was good reason for it. Producers of lawnmowers who took less care to silence their lawnmowers to a certain number of decibels enjoyed a competitive price advantage. Hence the need [774] for standardisation, addressed by this Bill.

The Bill will introduce into Irish law the remedy of damages in respect of injury to a person or damage to his property from faulty or defective products, based on the principle of strict or no fault liability. This means that where damage is caused to a person or to the person's property by the use of a defective product the producer is liable, irrespective of whether the producer was negligent. The directive is without doubt the most significant Community measure to date in the area of consumer protection.

Some producers will see this as discrimination legislation, penalising them in some way, but that is a negative view of the Bill. This Bill will also require changes in our national law with implications for the legal process in the area of product liability; the protection of Irish consumers will be advanced significantly by the provision of additional legal redress to measures already available under existing tort and contract law, in respect of which I have two things to say.

The £350 limit under which one cannot claim against a manufacturer is not low enough. The prohibition on claims after three years may be appropriate for some products, but how about house materials which could cause an accident if, for instance, timbers in a roof failed after three years? I am concerned about that area and perhaps the Minister should have a look at it again. Most household products, such as foodmixers, are lower in value than £350 anyway.

Senator Upton said the Irish do not complain readily and I believe he is right. If we look at the figures however, we find that about 20,000 complaints are lodged with the Director of Consumer Affairs and Fair Trade annually. We are a people who do not complain lightly and one could draw the conclusion that the number of complaints might have been twice as high. That statistic gives cause for concern about the quality of the products we are buying.

We must bear in mind that we are primarily an exporting nation. We export a higher percentage of our products than [775] any other country in the Community, with the possible exception of Belgium. We export more of our agricultural products than any country, with the exception of New Zealand. I will refer to agricultural products later. The point I am making now is that if we do not have products that are competitive, not only in price, but also in quality, in reliability and in presentation, then we are not going to succeed in the marketplace.

I am tired of people saying that the answer is to buy Irish. It is not the answer because we must export up to 80 per cent of what we produce. Buying Irish, of course, is a help but let us not kid ourselves. Buying Irish simply because it is Irish is doing no great service to producers who are not trying to produce quality products. Buy Irish by all means if the Irish product is comparable to the foreign product. One is doing no great service to a manufacturer if one buys a product simply because it is Irish and one does less service to oneself as a consumer.

I note from the Minister's figures that in 1990 our exports to other European Community countries were valued at £11 billion which represents, as he said, overseas sales of £30 million per day. Currently 2,500 manufacturing companies in Ireland, or half the total, are engaged in exporting; the remaining 2,500 are engaged in supplying the home market. With the onset of the Single European Market, the home market will become European; in other words, all outsiders will be competing with those 2,500 who are now producing exclusively for the home market. It will be in industry's interest to raise standards and to keep striving for excellence. Anybody who feels that there is sentiment in the marketplace and that the consumers will buy because they know the producer or because it is Irish, are kidding themselves.

If we want classical evidence of how consumers put their own interest first, we need only examine the success of Japanese and German industry since the Second World War. Japan and Germany were the two most hated countries in the [776] universe after that great war but that did not stop the Dutch, Belgians, French and Danes all of whom suffered grievously under the Germans, from buying German cars when they realised they were of better quality than those of other manufacturers.

I remember a time when one would be ashamed to admit that the biro in one's pockets was Japanese because being Japanese was synonymous with being shoddy and of inferior quality. Today, Japanese products are synonymous with quality in every item produced and as a consequence they are winning customers handsomely. A war ravaged country with no great tradition in industry and no friends in the outside world has become the most successful exporting country in the universe. It is an incredible achievement and is based on striving for excellence.

I read a book recently by the chairman of Sony Corporation. It is one great read and there are some messages in it which we should all take to heart. In his book the chairman pointed out that after the war the Japanese read a book by an American professor on quality control and they then implemented the recommendations of this American academic. Meanwhile, the Americans ignored this absent-minded professor, or whoever he was. Today the most prestigious award in Japan for quality is named after this American academic who made his recommendations on quality. The Sony chairman went on to give an example of different approaches in different countries. Comparing the American and Japanese car industries he said “The American car manufacturers strove to produce good profits; the Japanese strove to produce good cars and the Japanese are winning”, and so they are. Thirty years ago or less one would not find a Japanese car in the United States. Today in California, Japanese cars make up something like 40 per cent of all cars registered and about 25 per cent of all cars in the US.

We talk of our problem of distance from the marketplace; think of the Japanese problems. Today almost 50 per cent of the cars in this country are [777] Japanese. We are concerned about having to cross the Irish Sea and the English Channel with our products; the Japanese are crossing two oceans and a contintent to get to our market, and are winning. Their success is based on quality. I am not a promoter of Japanese cars; if fact, on principle I would not buy one because they are so protective of their home market particularly in relation to agricultural products. My point is that manufacturers here should not look at this Bill as an anti-producer measure. It will be a friend to the producer and manufacturers should look closely at what has happened on the world stage to see who is winning. They are the Japanese and the Germans.

Price is a factor in their success, but let us look at the upper end of the market. The German Mercedes company, the richest company in Europe, make cars which by any standards are exceedingly expensive. Any Mercedes model costs from 70 per cent to 100 per cent more than similar cars. If one wants a Mercedes car one may have to wait months for it, whereas every garage is flooded with cheaper models. A market exists for high quality products, even if the price is at a premium level.

I am pleased to note from the Minister's statement this morning that Irish companies are becoming more concerned with quality and it is encouraging that 320 Irish companies have now been awarded the ISO 9000 certficates. Yet it is only 320 out of 2,500 companies who export and 2,500 additional companies producing for the home market.

With regard to liability the present measures offer extensive remedies in addition to those in existing tort and contract law. Liability and tort exist where, because of a defect in a product resulting from faulty manufacture, damage is caused to a person or to their property. To succeed in such cases at present the plaintiff must prove negligence on the part of the manufacturer, supplier or dealer. It is not easy for most people to go into court and prove negligence and this Bill will remove that onus from the plainitiff.

[778] Another part of the Bill which concerns me and which has already been mentioned by Senators Upton and Fallon, is that in transposing the directive into national legislation member states are permitted to exercise a number of options. These are as follows: First, member states are allowed to include in the scope of implementing legislation primary agricultural products including fish and game which have not undergone initial processing; second, member states are allowed to exclude from the defences that are available to the producer, the so-called development risks or state of the art defence; third, member states may put a limit on the total liability of a producer for damage resulting from death or personal injury caused by identical items with the same defect. I want to comment on two of these. I agree with member states being allowed to exclude from the defence that is available to the producer, the so-called development risks. We have to encourage companies to take risks, but on the question of the agricultural products, the Minister said:

Primary agricultural products have been excluded from the legislation for sound practical reasons.

He goes on to say:

The average producer of such products is small in economic terms and would have considerable financial difficulty in monitoring many potential fault areas such as feed, vaccines and drugs. A further example of the difficulty of including primary agricultural products is in the area of animal health. For example, there are cases where cattle may have been free of disease at time of first sale and subsequently contracted the disease on the second farm. In such instances, traceability would present insurmountable problems.

He goes on to say:

Primary agricultural products are also prone to hidden defects caused by environmental factors beyond the control of the producer. These products, [779] however, will still be covered under fault based tort and contract law. Where they are processed, of course, the processor becomes liable.

I am concerned about excluding agricultural products.

I have spoken already about our industrial exports. No country in the Community is as dependent upon agriculture as Ireland. No country exports more of its agricultural products than Ireland, with the single exception of New Zealand. Forty two per cent of our net exports come from agriculture. We are sending out a message with this legislation that we are not going to go for the highest possible quality. I recognise that there will be costs involved.

There will be difficulties but we are living in a world where there is surplus food both within the Community and outside it in the developed world. Our only real hope of succeeding is to give the consumer the highest possible quality on a continuous basis presented in the best form and with absolute guarantees of quality. We have no other course if we want to succeed. To argue that it will present us with difficulties is not a valid argument for excluding agricultural products in a country that is so dependent on agriculture. This is not just a matter for farmers: this is a matter for everybody depending on farming, such as those working in processing and in servicing the industry. It is a matter for the entire economy on which we are so dependent. That matter ought to be looked at again seriously.

Where difficulties arise, it is up to the Government, the farming organisations and, perhaps, Brussels also to give assistance, but to take any other course of action at a time when consumers are so discriminating and there is a large question mark over our food due to the bad publicity about angel dust, mad cow disease, salmonella and various other things, would be wrong and would send a very wrong signal to consumer organisations, distributors and marketing [780] people on the continent of Europe, particularly.

Finally, I am happy to see that where products are imported from outside the Community the importer will be held responsible. As a country, we have our fair share of cowboys — perhaps every country has them — ready to make the quick buck at the consumer's expense. This legislation will be a very powerful incentive to Irish importers, wholesalers and retailers to refrain from dealing in faulty goods, particularly those which are being imported from outside the European Community. I welcome that. Importers will have to be more careful. In the long run not only the consumers but all of us will be winners from that kind of protection.

Mr. McGowan: I welcome the opportunity to say a few words on this important legislation. Coming from my part of the country I have a particular interest in this legislation. My county has suffered very severely. It has lost jobs and business through lack of standards and control on the quality of goods.

It is no secret to anyone that County Donegal was one of the counties, with Derry, where we had a tradition of producing garments and shirts. The garment industry was very important and provided many jobs in that region. It is very hard for a small country to keep abreast with what is happening elsewhere while at the same time promote free trade, which we are doing now. We have been vulnerable for a long time. Irish people must realise the importance of standards and quality goods. In the past people would only have thought about how much water someone put in the whiskey, how much water they put in the milk, or some such frivolous thought. Now our very survival is at stake in the industrial area and in the provision of jobs.

I am aware that sub-standard imported goods are responsible for the wholesale loss of jobs in this country. Goods are imported from Taiwan and from every corner of the earth where there are no standard wages, or standards of quality. [781] Production and sales are the two guidelines. There are relabelling factories in the North of Ireland, and have been for a long time. These factories label goods and sell them in this country under attractive brand names.

I sincerely hope the new legislation will be implemented and policed. I have very strong views about this. Every time we introduce new legislation I ask how well are we organised to implement and police it. I realise this is a very difficult area. Who conducts the tests even on the tarmacadam that goes into our roads? Will the tests carried out today be valid tomorrow? Success can only be achieved in this area if we are prepared to put effort into it. That costs money, but it is money well spent. Ultimately, it will pay off if we have standards that must be recognised by those sending goods into this country.

I am mainly concentrating on those who have to sell goods in Ireland. It has been all too easy to sell or to dump goods in this country. We have not had enough protective legislation. I strongly support the Bill. I would like to hear the Minister tell the people of Ireland, whose jobs and future are at risk, what resources will be put into the policing and implementation of this legislation. That is the question which those who are interested and who strongly support the introduction of the legislation should ask. I make my first observations on the clothing industry and the sub-standard quality of cloth. It is a vast industry. There is much imitation and copying in the world today, whether of clothing or toys. The legislation will be welcome but only if we are in a position to implement it.

The importation of plant and equipment of various kinds, types and brands, everything from a torch to a bulldozer, must be subject to quality control. Standards are necessary in the equipment and in the material used. It frightens me to think how we will monitor such a vast area. Fairly strict legislation must be enacted.

There is vast dumping here of secondhand plant, equipment, cars and products of every kind. There was a slogan at one time, “paint it green and [782] send it to Ireland”. I am quite sure we have got away from that mentality. My hopes and aspirations are very high. The introduction of the legislation will make the public more aware. All of us in the country — large and small manufacturers — and those who import goods must make an effort. It is nearly an impossible task to police this legislation successfully. It will have to be done by making the public — the consumer, in the first instance — those who import and those involved in manufacture — aware of the importance of standards if we are to compete in the world. We have succeeded in some areas. It is a case of advising those who are in business that there is no place in the world for sub-standard goods and that Ireland is no longer a place where anyone can dump such goods.

Every country in the world has control and standards. There are quite good communications between countries. Cooperation between various countries must be consolidated, first on a European basis and, secondly, on a world basis. Europe has to trade outside its own area. There is no point in talking about goods that are dumped from a third country into Europe. They are automatically free to trade in Europe and in Ireland. The magnitude of the problem makes the mind boggle.

The people will welcome the opportunity to look very closely at the new legislation. I am not happy that agricultural products are excluded. In respect of junk food, whether it is burgers or whatever else, there is so much going into those products that it is very hard to monitor standards. We will have to come back very soon and include agricultural products. The make-up of fast foods and foods that are presented to young children at school for lunch must be of good standard. We have regulations under separate legislation regarding additives and colourings. I hope the two measures will comprehensively cover the situation and I welcome the Minister's assurance on this aspect.

In the main the people who produce fast food, junk food, or whatever it is called, are importing it by the container [783] load. Where it comes from and what it contains is very important. I strongly urge the Minister to look at this area and reconsider the wisdom of excluding agricultural products. I welcome the Minister's assurance that he will arrange for a campaign to make the public, the consumer and the manufacturer, aware of the position. I do not know how the Minister intends to treat the importation aspect. It is all very fine to say that the importer is responsible but all too often it is very hard to make an importer responsible. There will have to be some way of identifying the importer of packaged food because there are so many importers and so many distributors, small and large. This will be a major task.

I look at the major campaign of international companies who spend millions of pounds on advertising. Without mentioning companies, I was extremely interested in the frightening amount of money which a breakfast cereal manufacturer was spending on advertising. They give out gimmicks to children, whether cards or reflectors. If that manufacturer of cereals concentrated on convincing the public that the little dark blobs in a cereal did not come from pests it would be more beneficial. We must make the public aware of the importance of controls and standards. On the home front we have to produce quality goods.

Somebody mentioned Japan. It is recognised now that in the past 25 to 30 years Japan has achieved a complete transformation. In earlier years it was recognised that Japan had inferior quality goods but that has been completely transformed. In fact, the minute you look at a Japanese product you know it is of good quality. Quality control must be a very important part of their production.

The whole area of quality control is so vast that I can only welcome the Bill. I welcome the initiative taken in the hope that there is back-up legislation and resources to police its implementation. We must take this step forward to restore some of the jobs we have lost as a result of allowing dumping by people who have no standards.

[784] Mr. Kennedy: Is mian liom ar dtús fáilte a chur roimh an mBille seo, Bille go bhfuil sé mar chuspóir agus aidhm aige éifeacht a thabhairt don treoir ó Chomhairle na gComhphobal Eorpacha maidir le chomhaontú a dhéanamh ar dhlíthe, rialacháin agus forálacha rialacháin ball stáit na gComhphobal Eorpacha i dtaobh dliteanas i leith táirgí fabhtacha.

It has been truly said that the best protection for consumers lies in a free and fair market. It is in that context that I welcome this Bill — the Liability for Defective Products Bill 1991 — the objective of which is to provide consumers who are injured by defective products with a new mechanism for seeking compensation, thereby implementing the directive of the European Communities on liability for defective products, the Council Directive 85/374/EEC of the 25 July 1985.

It has been well observed by Alex Schuster, a lecturer in law in Trinity College, Dublin, that a defective products Bill was not inspired by the denizens of either Dáil or Seanad nor, indeed, by the Minister for Industry and Commerce or the Minister of State, but it is a response to the obligation imposed upon this State by the terms of the product liability directive of the European Communities, a piece of legislation which is designed to achieve a measure of uniformity as between the different product liability laws of the member states of the EC.

This new regime ought to have been put in place three years ago, on 25 July 1988. The European Commission has initiated Article 169 proceedings against Ireland on the basis of tardy implementation of this directive. The passage of this legislation will enable this State to avoid the embarrassment of an Article 169 ruling against this country by the European Court of Justice.

The principal effect of this Bill will be to introduce into Irish law the remedy of damages for negligence based on the principle of strict or no fault liability. It does not use, for example, the word “absolute” as distinct from the word “strict”. This Bill is, indeed, primarily [785] designed to provide the victims of defective products with a new remedy against different producers involved in the manufacturing process. Thus, section 2 creates a strict liability tort which may conveniently be described as, indeed, a European tort, or a Euro-tort, in so far as it effectively owes its existence to the European directive which spawned it. It was Lawson in an article in Product Liability International entitled “Liability for Defective Products 1987” who stated — and I quote briefly:

The product liability directive by supplementing the law of negligence consolidates the existing trend and is, therefore, not quite the innovation it is sometimes seen to be.

This comment seems to me to be a useful corrective to the over-reactive and, indeed, the over-anxious reaction that have often marked the progress of the directive since the original preliminary draft emerged in Brussels in September 1976.

Irish law, as it stands, provides injured consumers with two avenues for seeking redress — the law of tort and the law of contract. There are, of course, deficiencies in both of these avenues. Under the law of tort compensation can be gained directly from the manufacturer only if the injured person can show that the manufacturer has been negligent. Thus, in tort where damage is caused to a person or property because of faulty product, the manufacturer or supplier can be sued for negligence but negligence must be proved on a balance of probabilities and the burden of proof thus rests on the consumer.

Under the law of contract only the purchaser may be compensated by the immediate supplier. Under the law of contract section 14 of the Sale of Goods Act, 1893, is amended by the Sale of Goods and Supply of Services Act, 1980, and provides that there are two main implied conditions in every contract of sale, namely, that the products or goods are of merchandable quality and that they are reasonably fit for the purpose for [786] which they were intended. These anomalies in our existing product liability law were addressed in a number of reports.

The Pearson Commission, under the chairmanship of Lord Pearson, examined the law on civil liability and compensation for personal injury. They reported in 1978. The English Law Commission and the Scottish Law Commission examined the law on loss and damage caused by defective products. All three commissions recommended that manufacturers should be strictly liable for death or personal injury arising from a defect in their product, irrespective of whether the manufacturer had been negligent but subject, of course, to certain defences which are outlined in the Bill.

The European Community considered the matter over a period of ten years, beginning in 1976. On 25 July 1975 it adopted a directive requiring member states to make provisions which followed, indeed, many of the recommendations of the three commissions to which I have referred. Accordingly, under this Bill any person who can show that he was injured as a result of a lack of safety in a product will be able to secure compensation from the manufacturer or, if appropriate, the importer into the European Community. He will not have to show negligence and he need not be the purchaser. Under this Bill the plaintiff will be required only to prove that the damage caused was the result of a faulty product. The benefit to consumers is, I believe, clear. It will also assist retailers who are liable under the law of contract by tending to channel claims for compensation towards the manufacturer who introduced the defect.

Before analysing the main provisions of this Bill, it is necessary to give consideration to the development of a common law for two reasons. The first reason is that this Bill will not supplant or repeal the existing civil law on product liability, but it will supplement and augment the existing law on product liability in the areas of tort and contract law. Thus, for example, an injured purchaser of a car with defective brakes will, with the arrival of this new legislation, have at least three remedies open to him: an [787] action against the car retailer, who is strictly liable under the law of contract, a possible claim in negligence against either the manufacturer of the car or the producer of the brakes or both, and by courtesy of this 1991 legislation a remedy against different producers involved in the production process all of whom will purportedly be subject to strict liability.

Moreover, I think it bears emphasis that the notion of strict liability is not peculiar to this legislation. It has been embedded in the law of contract for centuries. Indeed, except in cases where the victim of a defective product is unable to establish privity of contract, the protection bestowed upon the consumer by the law of contract is, in my view, far superior to that afforded by this legislation. But the 1991 Bill recognises the interests of manufacturers by granting them a number of statutory defences. Of course, there are various other primary defences, several defences which will be pleaded in the courts. The retailer, however, rarely enjoys the luxury of a defence to a product liability claim. Most retailers evade liability by passing the buck to other parties in the contractual change of liability.

The second reason it is necessary to give consideration to the development of the common law is that the deficiencies in the common law were a factor which influenced the pressure for reform in the product liability area of the law.

Sitting suspended at 1 p.m. and resumed at 2 p.m.

Mr. Kennedy: As I was saying earlier, in the 19th century the courts in Ireland and elsewhere in the common law world showed considerable reluctance in recognising the right of persons injured by products to recover damages in negligence against those with whom there was no privity of contract. The most often quoted example of the so-called contract fallacy is the case of Winterbottom v. Wright in 1842. In that case the defendant was a coach builder and he had a contract [788] with the postmaster general to deliver a coach for the delivery of mail and to keep the coach in a proper state of repair. The plaintiff was the driver of the coach and he was seriously injured when he fell off the coach due to a latent defect in the construction of the coach. The court held that the plaintiff could not recover damages from the defendant because he was not privy to the contract between the defendant and the postmaster general. The Judges of the English Court of Exchequer took the view that to allow such an action would impose too severe an obligation on the defendant. Lord Abinger stated and I quote:

Unless we confine the operation of such contracts to the parties who entered into them, the most absurd and outrageous consequences to which I can see no limit would ensue. By permitting this action, we should be working this injustice, that after the defendant had done everything to the satisfaction of his employer, and after all matters between them had been adjusted, and all accounts settled on the footing of their contract, we should subject them to be ripped open by this action of tort being brought against him.

Alderson B. contended that: “The only safe rule is to confine the right to recover to those who enter into the contract”. In Corry v. Lucas in 1868 the Irish Court of Common Pleas took a similar approach when a worker was killed by an allegedly defective boiler supplied by the defendant to his employer. Gradually, however, the courts became less reluctant to extend the liability beyond the privity nexus of contract law. A false representation of safety in the knowledge that a product was dangerous was recognised, even before Corry v. Lucas (1868) as a basis for recovery in the case of Langridge v. Levy (1837).

Eventually in all common law jurisdictions the contract fallacy was exploded and the privity limitation was set aside in favour of a more general principle of liability in relation to the negligent manufacture and supply of defective products. [789] In the United States the seminal decision was McPherson v. Buick Motor Company (1916). In that case the New York Court of Appeals held that the category of “inherently dangerous things” should include “anything which would be dangerous if negligently made”. In Canada general liability for negligent manufacture was imposed four years later in the case of Buckley v. Mott (1920).

In Britain the law on defective products was radically altered in the hallmark case of Donoghue v. Stevenson (1932). In that case the old contract fallacy upon which Winterbottom v. Wright was based was swept away and the classification of chattels into dangerous and non-dangerous chattels appeared less important. That case, of course, established the basic principle that in certain circumstances the manufacturer or seller of goods owes the ultimate consumer a duty to be careful. In that case the plaintiff and her friend had gone into a cafe in Paisley in Scotland and the friend bought some refreshments for both of them. The refreshments consisted of ice-cream in a tumbler with ginger beer poured over it. The ginger beer had been manufactured by the defendant and sold by him to the cafe proprietor. It was contained in a stoppered bottle of dark opaque glass. When the ginger beer was being poured on the plaintiff's ice-cream the remains of a decomposed snail emerged and as a result of seeing this the plaintiff alleged that she had suffered severe shock and also gastro-enteritis. The House of Lords held in that great seminal decision by a majority of 3:2 and we are told, a Chathaoirligh, that Lord Atkin was indeed stigmatised and ostracised by some of his follow judges for this decision.

Professor Conroy: Was the gastroenteritis from seeing or swallowing the snail?

Mr. Kennedy: The suggestion is that she did not actually swallow it. It was held by a majority decision in any case that there was a duty of care although [790] there was no contractual duty between the plaintiff and the manufacturer.

The manufacturer of an article of food or medicine or the like is under a legal duty to the ultimate consumer or purchaser to take reasonable care so that the article was free from defect likely to cause injury to health. Lord Atkin set forth the broad “neighbour” principle relating to the duty of care and he also expressed the obligation owed by a manufacturer of chattels to the consumer. The broad “neighbour” principle he stated as follows:

You must take reasonable care to avoid acts or omissions, which you can reasonably foresee would be likely to injure your neighbour. Who then, in law, is my neighbour? The answer seems to be — persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.

The obligation owed by the manufacturer of chattels to the consumer was expressed by Lord Atkin as follows:

A manufacturer of products, which he sells in such form as to show that he intends them to reach the ultimate consumer in the form in which they left him, with no reasonable possibility of intermediate examination, and with the knowledge that the absence of reasonable care in the preparation or putting up of the products will result in an injury to the consumer's life or property, owes a duty to the consumer to take that reasonable care.

This then is the hallmark case of negligence for two reasons. First, it did away with the so-called “contract fallacy” of Winterbottom v. Wright (1842) by recognising that a duty to take care may arise even though the plaintiff and the defendant are not in a contractual relationship. Second, having thus opened “the floodgates of litigation”, as it was termed at the time, the court sought to create a device, the duty of care device, by which [791] the law could restrict and control such litigation. The Atkinian test is no more then a statement of principle which the courts have since applied with notions of public policy very much in mind, and not every act or omission causing harm to another is, therefore, redressable.

Perhaps the wisest words were spoken by Lord Macmillan. He stated and I quote:

In the daily contacts of our social and business life human beings are thrown into or place themselves in an infinite variety of relations with their fellows; and the law can refer only to the standards of the reasonable man in order to determine whether any particular relation gives rise to a duty to take care, as between those who stand in that relation to each other. Grounds of action may be as various and manifold as human errancy; and the conception of legal responsibility may develop in adaptation to altering social conditions and standards. The criterion of judgment must adjust and adapt itself to the changing circumstances of life. The categories of negligence are never closed.

Although the statement of principle in Donoghue v. Stevenson (1932) represented a major step forward in the development of the law, it is the subject of a number of important restrictions. The first is that the statement as originally explained by Lord Atkin was only applicable to manufacturers. However, the Atkinian test has since been extended to other categories including repairers, erectors, installers, assemblers and builders. In the Irish case of Power v. Bedford Motor Company (1959) Justice Lavery in the Supreme Court stated that the Donoghue v. Stevenson principle “must now be taken as settled”, and he continued:

It is clear in principle that the obligation is not confined to the manufacturers of goods, but extends to persons undertaking repairs to articles, which will be dangerous to users, who [792] should be in contemplation if there is a want of reasonable care in the work. It must also apply to persons doing work on an article, which they foresee would be used by others without examination.

It is clear from this passage that a repairer of goods may be liable under the Donoghue v. Stevenson principle. Accordingly in the Power case liability was imposed on the defendant garage for the negligent repair of a motor car which left the steering mechanism in a dangerous state after the repairs had been completed. In the case of Haseldine v. Daw Limited, (1911) due to negligent repair of a lift a block of flats fell and injured the plaintiff who was inside. On the liability of the repairers Lord Justice Goddard said:

Does the principle of Donoghue v. Stevenson apply to a repairer of chattels as it does to a manufacturer, when there is no reasonable possibility of intermediate examination after repair.

It is clear that the likelihood or absence of inspection is central to liability. If this is so, there is no logical distinction between a manufacturer and a repairer. However, it must be noted that the repairer of a chattel is only liable to those whom he can reasonably foresee would be likely to be injured by it. The liability of a car repairer is thus potentially very wide. Erectors, installers, assemblers and builders have been held liable in a number of cases.

An unusual application of the principle was made in Brown v. Cotteril (1934). In that case liability was imposed on a tombstone erector when the tombstone he had erected fell on a little girl who was placing flowers on her grandmother's grave. The court held that the erector could not shift liability from himself onto the person who had contracted with him for the erection of the tombstone because:

persons who employ monument masons to erect tombstones rely on the mason's skill, and not on their own examination, and there is, therefore, [793] nothing in the acceptance of the mason's work to exempt him from liability for the defective work, which he has erected in a place to which the public have access.

The category of persons to whom the principle has been extended is characterised by the fact that they created the danger or were responsible for the creation of the danger. The difficulty then arises whether the principle should be extended to the retailer of defective goods. Here the situation is different because the vendor has not created the danger but has simply sold the product to the consumer. It is clear that the supplier of a chattel for reward is under a duty of care in respect of the safety of persons who are likely to use it when so supplied.

In the case of Keegan v. Owens (1953) the Supreme Court held that the supplier for reward of swing boats for a charity carnival owed a duty to protect a worker employed by the carnival committee from injury in the operation of the swing boats. It seems that a supplier may be liable in tort where he fails to inspect the goods and he is under a duty so to inspect them. Such a duty to examine the goods does not arise in every case and it only arises where the supplier could reasonably be expected to carry out such an examination. Winfield and Jolowiz in their book The Law of Torts have put the issue in the following terms:

A second-hand car dealer may be expected to discover a patent defect in the steering mechanism of one of his cars, but a retail grocer, for example, cannot be expected to discover whether his tinned food is contaminated.

In specialised trades a retailer will be expected to carry out such inspections to goods as a retailer who sells those goods would be expected to make. In the case of Andrew v. Hopkins (1957) the court held that a car dealer could be expected to examine the steering system of a used car. However, the obligation imposed upon suppliers does not arise in every [794] case, and even where it does arise, it is not an onerous obligation, and it can even be discharged by selling goods “as seen and with all its faults and without warranty”. (Hurley v. Dyke (1979)).

A further question of some importance arises in relation to the liability of a manufacturer or supplier in respect of a product supplied to him by an outside contractor. Is he liable for damage caused by it? If so, in what circumstances? In Fleming v. Henry Denny & Sons Ltd. (1955) Kingsmill-Moore J. stated:

It is, I think, impossible to lay down a universal rule. The nature of the material purchased, the reputation of the dealer from whom it is purchased, the obligation imposed by law on a vendor, the processes through which the materials have already passed in the hands of the manufacturer dealer, the past experience of the purchaser and the general experience of mankind; all these have their bearing on the remoteness or otherwise of the contingency. The manufacturer is not bound to take precautions against any contingency however remote and the nature of the precautions which he is obliged to take must bear a relation to the probability or improbability of the risk. A manufacturer of cakes may well be bound to take great care that stones are not incorporated in the currants which he uses, for the occasional presence of such stones is notorious, but it does not follow that if he purchases flour from millers of unblemished reputation he is bound to test it for the presence of Ergot, and still less would he be bound to examine the sugar, which he purchases from reliable sources, to see that it is not contaminated with strychnine or other poisonous crystals.

In Fleming's case the Supreme Court held that the manufacturers of black pudding were entitled to rely on the firms that supplied them with oatmeal and rusk meal and spices which form part of the ingredients of that pudding to take care that what they supplied to them was free from hidden dangers, such as a piece of [795] metal. Kingsmill-Moore J. stated that it seemed to him that:

A manufacturer whose duty is to take reasonable care not to send out food containing any harmful substance may, in so far as the ingredients of the food are concerned, discharge this duty by obtaining the ingredients from firms of high repute, who have a like responsibility to see that the ingredients are free from any harmful substance. It may not be so in every case. The defect may be so obvious that it is a failure of reasonable care not to observe it. There may be special facts which require special precautions.

The second qualification in Lord Atkin's judgment is that it only applies to products. However, the principle as interpreted is not confined to items such as food and drink. It has been applied to motor cars, as in the case of Andrews v. Hopkinson; Power v. Bedford Motor Company and Brown v. Cotteril.

The third qualification is that in the Donoghue v. Stephenson case Lord Atkins described the duty as being owed to the “ultimate consumer”. The courts have taken a broad view of this element of the duty and have extended its scope significantly. Clearly “consumer” in the narrowest sense of the word: namely the user of a retail product, will come within the scope of the definition. Various cases demonstrate that: Kirby v. Burke and Holloway (1944); Grant v. Australian Knitting Mills Ltd. and Fleming v. Henry Denny and Sons Ltd. However, the broader view has been taken in Power v. Bedford Motor Company and in case the purchaser of a car from another person was killed as a result of the negligent repair work done by the defendants for the former owner and liability was imposed on the repairer. Lavery J. in the Supreme Court again stated:

The deceased did belong to that class of persons whom the defendants should have contemplated as being exposed to the danger, if the work was done wrongly.

[796] That class of persons included “any person who might drive, or be a passenger in the car, and perhaps others who might be injured if the car went out of control, though it is unnecessary to consider them”. The Supreme Court has since recognised in O'Sullivan v. Noonan (1972) that the supplier of a car with a defect that renders it dangerous may be liable for resulting damage not only to passengers in the car but also to “other users of the highway or other parties who would foreseeably come into proximity with the motor vehicle”. In any other decisions this ultimate consumer test has also been broadened.

In Barnett v. Packer (1940) a confectioner was injured by a lump of metal protruding from a sweet which he ate from his own stock and he was permitted to sue in the court, though quite clearly the goods in question were never intended for the ultimate consumer. Similarly, as I said previously, in the case of Brown v. Cotteril (1934) the child in the churchyard was entitled to recover when hit by a tombstone, Lawrence J. considered that the mason was under a duty “To every member of the public, who might lawfully enter the churchyard and be injured by the fall of the tombstone”.

In Stennett v. Hancock and Peters (1939) a garage owner defectively fixed a flange on a lorry wheel and a pedestrian was stuck by the flange when it fell off a passing lorry. Liability was imposed on the garage owner.

In the interesting case of Grant v. the Australian Knitting Mills (1936) the plaintiff contracted dermatitis as a result of wearing underpants manufactured by the defendants which contained an excess of sulphite. The Privy Council held that the defendants were liable to the plaintiff on the principle of Donoghue v. Stevenson. Lord Wright stated in that case that the defendants' manufacturing process was very thorough and careful but the fact that the chemical was present raised an inference of negligence on their part which they had not rebutted. The principle of Donoghue's case can only be applied where the defect is hidden and [797] unknown to the consumer. Thus, the snail in the sealed opaque bottle could not be discovered so, here was the presence of the chemical undiscoverable. The garments were not intended to be the subject of intermediate examination. It is irrelvant here that the pants were sold in unsealed packets, whereas the ginger beer was in a sealed bottle.

The essence of Donoghue's case was not that the bottle was sealed but that it was intended to reach the consumer in the same condition it left the manufacturer. Not only may res ipsa loquiter, or a variation of it, assist the plaintiff, but also the duty appears to be a very high one. In that case the evidence showed that the Australian Knitting Mills had sold pants to over five million happy customers and that Dr. Grant was the first casualty. However, as Lord Wright said, it was not their system of manufacture which was at fault and even one in five million did not rebut the inference of negligence.

The fourth qualification then in the Atkinian tests is that the manufacturer must intend the goods to reach the consumer in the form in which they left the manufacturer. This is not to say that they must be in exactly the same form. For example, in the Grant case, the defendants argued that they were not liable to the plaintiff because the underwear left the factory in packets of six, and as only two had been sold to the plaintiff somebody could have tampered with them when they were in the shop being unpacked. This argument, however, was rejected by the Privy Council who held that the mere possibility of someone else tampering with the goods was insufficient to discharge the liability of the defendants. However, the Privy Council did concede that where there was the possibility of someone else tampering with the goods, the difficulties of proof may be greater for the plaintiff because the plaintiff must provide sufficient evidence that the defect existed when the product left the possession of the defendants.

In the case of evidence against Triplex Safety Glass Company Ltd., (1936) P., the plaintiff, bought a new Ford car with [798] a Triplex toughened windscreen. A year after the purchase, when the car was being used, the windscreen suddenly shattered for no apparent reason and injured the plaintiff. The court held that D, the manufacturer, was not liable to P because P could not show that the defect was in the windscreen when it left D. It was possible that the defect occurred in the motor assembly plant after the windscreen had left D or in the period of one year while P had been using the car. Porter J. stated in that case:

Given the amount of time which had elapsed since the windscreen had left the manufacturers, negligence could not be inferred. Damage may have been caused when the screen was fitted, or in the course of one year's driving. Furthermore, there was an opportunity for intermediate examination of the screen by the car makers.

The fifth qualification to the Atkinian test is that it has confined to the case where there was no real possibility of intermediate examination by the consumer. Thus, it was held that the defendant was not liable where the defendant was actually aware of the danger and disregarded it or where an examination was so carelessly carried out as not to reveal the defect.

In the case of Kuback v. Hollands (1937) a manufacturer sold chemicals to D2, with an express warning that the chemicals had to be tested before use. D2, the second defendant, then mistakenly sold the chemical to D1, the first defendant, a school laboratory, but did not supply the warning relating to the need to test before use. P, the plaintiff, a schoolgirl, was injured when the chemical exploded in an experiment. P was unsuccessful in her attempt to recover damages from D1 but she did succeed against D2. D2 then sought an indemnity from the manufacturer. The court held that the manufacturer was not liable because they had given adequate warning to D2 of danger and D2 had chosen to ignore it. However, it is not the case that the mere fact that there was a possibility [799] of intermediate examination is sufficient of itself to exonerate the defendant.

In Griffiths v. Arch Engineering Company (1968) P borrowed a portable grinding tool from the defendant. The tool was in a dangerous condition as an incorrect part had been fitted to it at some time by a servant of D. P was injured while using the tool. The court held that although P had an opportunity to examine the tool, D had no reason to suppose that the examination would actually be carried out and therefore, D was liable to P. If the manufacturer can reasonably anticipate intermediate examination he will, nevertheless, be liable if the defect is one which the examination would not ordinarily reveal.

In the case of Herschtal v. Stewart and Arden (1940), D, a garage owner sold a second-hand car to P. They had, in fact, fitted wheels on the car in a careless manner and one came off injuring P. The court held that although it was reasonable to expect intermediate examination of the car wheels, the defect was one which would not have been revealed on examination. In the case of Andrews v. Hopkinson (1957), P bought a car on hire purchase from D. The car was secondhand and D had taken no steps to ensure that the car was roadworthy, although the car had been in his possession for a week. The car had a defective steering mechanism and as a result P was involved in an accident shortly after he took possession of the car. The court held that this was the type of defect of which P should have been warned by D, and that this was not the type of defect which P was expected to discover upon reasonable examination of the car. Accordingly, D was held to be liable to P in that case. If P knows of the dangerous nature of a chattel and disregards it, then the defendant is not liable unless he should have foreseen that P was bound to disregard the danger, the case being Farr v. Britters Brothers in 1932.

If the danger is known to a third party whose duty it was to withdraw the chattel from circulation, then D is not liable, the case being Taylor v. Rover Company [800] Limited in 1966. In that case a chattel had been negligently manufactured and its defect was known to P's employers who had done nothing about it but let P continue to use the car until he was injured by it. The court held that there was a break in the chain of causation between the manufacturer and P's injury because the employer had a duty to withdraw the article from circulation. Thus, the courts in keeping with the general trend to favour the injured plaintiff have gradually relaxed their attitude regarding intermediate inspection.

Section 34 (2) (f) of the Civil Liability Act, 1961 went no further than what the courts have already done and have already decided in providing that where an action is brought for negligence in respect of a article that has caused damage, the fact that there was a reasonable possibility or probability of examination after it had left the hands of the defendant does not, by itself, exclude the defendant's duty but may be taken as evidence that he was not in the circumstances negligent in parting with the article in a dangerous state. A technical approach to the issue has been set aside in favour of an approach that makes the issue a jury question, to be determined according to common sense, albeit with the likelihood of sympathy for the plaintiff.

In the case of Colgan v. Connolly Construction Company (Ireland) Limited, 1980, Justice McMahon went so far as to express the view that section 34 (2) (f) of the 1961 Act has shifted the onus of proof to the defendants in product liability cases. These defects led to strong arguments for reform. Advocates for reform included the Pearson Commission, the English Law Reform Commission and the Scottish Law Reform Commission. The European Community produced a directive on product liability, Directive 35/374 EC which gave member states three years from 23 July 1985 to introduce national laws which complied with the terms of the directive. It is this directive which is the main source of influence on this Bill which is intended to bring Irish law into line with the provisions of [801] the directive. The essence of the measure is contained in Article 1 of the directive and in section 2 (1) of this Bill. Section 1 (1) provides that the producer shall be liable in tort for damage caused wholly or partly for a defect in his product.

There are some important qualifications to this statement of principle but the main notion is clear: liability is based not on wrongful conduct by the producer which in theory is the hallmark of negligence but merely on proof of a fact that a defect in the product caused the plaintiff damage. However, it seems that normative considerations enter into the picture when deciding what constitutes defectiveness in this context. The range of liability under the directive is not radically different from that under common law principles.

The statement of principle contained in section 2 (1) of this Bill can be broken down into a number of separate elements. The first element is that the principle contained in section 2 (1) only applies to a product. A product is defined in section 1 (1) as including all movables with the exception of primary agricultural products which have not undergone initial processing, even where the movables are incorporated into other movables or into immovables whether by virtue of being a component part or raw material or otherwise.

Primary agricultural products are also defined in section 1 (1) as meaning the products of the soil, stock farming and fisheries and game including such products and fisheries which have undergone initial processing. The dividing line between products which have undergone initial processing and those which have not may sometimes be difficult to draw. What about the use of hormones, antibiotics and other additives in feeding-stuffs? What about the use of pesticides and fertilisers on fruit and vegetables? The English Law Reform Commission and the Scottish Law Reform Commission have observed:

...even fresh vegetables which at first sight would seem to be a good [802] example of unprocessed natural products may have been sprayed by chemicals and the land in which they grew artifically fertilised.

It is doubtful whether the concept of initial processing ranges quite so far but the point is worth noting as McMahon and Binchy have stated, that the exception relating to primary agricultural products is a good deal narrower than might first appear.

Sir Gordon Borrie, Queen's Counsel, Director General of Fair Trading in the United Kingdom in an article entitled “Product Liability in the EC” published in the Dublin University Law Journal, 1987 is of the view that none of these arguments removes the exemption in regard to primary agricultural products. The UK Government's view of the intentions of the directive and of the way that it has been embodied into domestic legislation is that the exemption for agricultural products is lost only where there is alteration in the essential characteristics of the product through the use of machinery on a continuous basis. Thus, the exemption, is lost when, for example, fruit, vegetables and chickens undergo the process of freezing in a factory or meat is turned into meat pies.

Any member state may by derogation exempt itself from article 2 of this directive. It may provide for this in its own domestic legislation. Products are to include primary agricultural products and game. There is a general exclusion of immovables, buildings or land. In the law of negligence immovables tended to remain outside the scope of a full duty of care. It is only in recent years that the exemption from liability for owners and builders has gradually been swept away. The leading Irish case on this is Ward v. McMaster in 1985.

The directive will not apply, for example, to a defective house which collapses except to the extent that any movable incorporated into the house is defective. Thus, if a girder installed in a house is defective and this brings about the collapse of the house the directive will apply. Since most immovables are [803] composed of movables which are incorporated into the home, the range of application of this section cannot be ignored. However, McMahon and Binchy in their book The Law of Torts in Ireland suggest that in such cases it would be necessary to show that the particular movable or movables were defective. In other words, a defective combination into an immovable, or movables which themselves are not defective, would not appear to fall within the scope of this legislation. Alex Schuster, lecturer in law at Trinity College, Dublin, considers that this provision will have important implications for the building industry in so far as a producer of cement or steel joists used in the construction of a building, could find himself legally responsible if a defect in his product triggers a major catastrophe.

Section 1 (1) (b) also provides that electricity is a product for the purposes of this legislation but liability is restricted to those instances where danger is caused as a result of a failure in the process of generation of electricity. Finbar O'Mahony, Secretary of the Electricity Supply Board, in a recent article entitled “Customer Policy — The New EC Trading Environment. The ESB Position” states that electricity is mentioned in the directive because under many laws electricity is deemed to be energy and not goods. However, the inclusion of electricity in the definition of products is intended solely to cover defects which are due to a failure in the process of production of electricity and not to defects which are due to external agents intervening after the electricity has been put into the network, nor to damage resulting from a failure to supply.

He also observed that each EC country was required to adapt its laws to give effect to the directive by 25 July 1988, and that Ireland had not done so at that time. However, in the case of Foster v. British Gas (1980), it was held that an EC directive can have direct effect against a nationalised company, such as the ESB, even if domestic legislation does not implement the directive. Therefore, an individual can rely on it in a claim for [804] damages against the body responsible for providing a service under the control of the State. Such bodies must comply with the EC directives even though the State has not implemented them.

The second element contained in the statement of principle relates to the persons to whom section 2 (1) apply. Section 2 (2) reads:

In this Act, “producer” means—

(a) the manufacturer or producer of a finished product, or

(b) the manufacturer or producer of any raw material or the manufacturer or producer of a component part of a product, or

(c) in the case of the products of the soil, of stock-farming and of fisheries and game, which have undergone initial processing, the person who carried out such processing, or

(d) any person who, by putting his name, trade mark or other distinguishing feature on the product or using his name or any such mark or feature in relation to the product, has held himself out to be the producer of the product, or

(e) any person who has imported the product into a Member State from a place outside the European Communities in order, in the course of any business of his, to supply it to another, or

(f) any person who is liable as producer of the product pursuant to subsection (3) of this section.

Section 2 (3) provides that where the product cannot be identified each supplier of the product is treated as its producer unless he informs the injured person within a reasonable time of the identity of the producer or of the person who supplied him with the product. Alex Schuster observes that this extension of the parameters of liability carries important implications for all the major players in the distribution process. It will encourage the keeping of comprehensive records to enable both the wholesale and [805] retail industry to pass the burden of liability to the manufacturer of dangerously defective products.

It is scarcely surprising that the manufacturers of finished products, the producers of raw materials and the manufacturers of component parts should be treated as producers for the purposes of this legislation and this directive, nor should it be a matter of serious debate that those who present themselves as producers by putting their names, trade mark or other distinguishing feature on a product should also be treated as producers. This practice is particularly common among large retail organisations and has been part of Irish merchantile life for many years. It would be curious if, having presented products as their own to the public, retail organisations should be later allowed to disclaim strict liability on the basis that the articles were not really their own products. Indeed, it will not produce an appreciable increase in exposure to legal liability for firms such as Quinnsworth, Dunnes Stores, etc. All these firms are already liable under the law of contract in respect of both dangerous and qualitative defects in their products. Therefore, there is no reason to suggest that the new legislation will lead to significant increases in insurance premiums payable by such firms, but they would be well advised to keep comprehensive records of all their suppliers to enable them to pass the burden of liability further down the distribution chain.

Importers will also fall within this catchment area of new legislation. For example, the Irish victim of a defectively wired television set manufactured in South Korea might in the past have found himself without an effective remedy if the retailer who supplied it had absconded or had gone into liquidation. Although there would have been nothing to prevent him from suing abroad, the expense involved in what would have been a risky undertaking and the difficulties inherent in suing in a foreign language would have militated against this course of action.

The new legislation will vest Irish consumers with a remedy against the [806] importer where a dangerously defective product emanates from outside the Community. If the product has been imported from another member state, the importer will not be subjected to liability under this legislation. However, in this event the consumer who finds himself bereft of a domestic market for damages can sue the manufacturer directly by harnessing the redress mechanism provided by the Jurisdiction of Courts and Enforcement of Judgments (European Communities) Act, 1988.

So far as imported products are concerned, it is only the person who imports the product in order, in the course of any business of his, to supply to another who is deemed to be a producer. Thus, for example, there is no question that the directive will apply to non-commercial importations of food or gadgets purchased abroad by holidaymakers. This was a fear that troubled the English Law Commission and the Scottish Law Commission. The argument in favour of imposing strict liability on the commercial importer is that his business involves exposing consumers within the Community to the risk of being injured by imported products. Realistically, therefore, consumers will be grateful for being presented with a relatively easy target within the Community rather than having to face the prospect of expensive and uncertain litigation in some foreign jurisdiction outside the Community.

Where the producer cannot be identified there is much to be said for effectively treating the supplier as the producer, unless he discloses the identity of the actual producer. The English Law Commission and the Scottish Law Commission have observed that it assists the injured person in tracing the anonymous producer in circumstances where assistance is needed; it encourages retailers and other suppliers to keep records from which it may be possible to establish the identity of the supplier or producer of the product in question; and by making it harder for the producer to remain anonymous, it encourages him to reveal his identity by labelling his products where practicable. The third element contained [807] in the statement of principle is that the product must suffer from a defect.

Section 5 of this Bill defines defectiveness in the following terms:

(1) For the purposes of this Act a product is defective if it fails to provide the safety which a person is entitled to expect, taking all circumstances into account, including—

(a) the presentation of the product,

(b) the use to which it could reasonably be expected that the produce would be put, and

(c) the time when the product was put into circulation.

Section 5 is concerned with the circumstances in which a product is defective. Under existing Irish law a person, in some circumstances may be liable in negligence for producing a defective, non-dangerous product. However, under section 5, defectiveness does not have this wider meaning. Thus, products that are safe but shoddy will not fall within the scope of this legislation. The key word in section 5 is “safety”. A product is defective when it does not provide the safety which a person is entitled to expect taking all the circumstances into consideration.

Section 5 (1) mentioned three specific circumstances, giving them no particular weight relative to each other or relative to other unspecified circumstances. What weight each should have must depend on the facts of the particular case. The first of these is the presentation of the product. If, for example, a product is represented in advertising literature or in the detailed descriptive literature accompanying its sale as being of a particular quality a consumer who is injured or suffers damage as a result of the product's dangerousness in lacking this quality may have a right of action. Thus, where a hot water bottle, for example, is represented as being capable of taking boiling water and it is not, an injured user who relies on this representation may [808] well succeed on this account on showing that the hot water bottle did not provide the safety which he was entitled to expect.

McMahon and Binchy suggest it would appear that presentation of the product includes an omission to provide information which should have been given to protect the user from harm. Thus, the failure of a producer to refer to an allergic reaction which was known to the producer to affect the product, could in some circumstances be relied on by the injured consumer.

The second circumstance specified in section 5 (1) is the use to which it could reasonably be expected that the product would be put. Clearly, there are limits to what reasonably may be expected. It is unreasonable, for example, to expect that a hammer should be capable of being successfully used as a car jack. Moreover, a competent adult who deviates widely from specified instructions as to the use of a product may have no right to complain about injuries resulting from his or her failure to comply with those instructions. It remains to be seen how the courts will interpret that phrase “could reasonably be expected”. McMahon and Binchy have observed as follows: On one interpretation it would extend to all cases that might reasonably be anticipated. On another view it excludes unreasonable but nonetheless foreseeable misuse. This difference is important because products are sometimes used for purposes which they were not meant to serve in circumstances where the practice of misuse may be perfectly forseeable by the producer. If the phrase “could reasonably be expected” excludes such foreseeable instances of misuse, the range of liability under this directive will be restricted in a very significant respect.

The third circumstance specified in section 5 (1) is the time when the product was put into circulation. This factor may operate in one of two ways, first the passage of time may be relevant as throwing light on what a person is entitled to expect and, second, to take an obvious example, one would not be entitled to expect that a chocolate cake would be edible after a [809] year. Indeed, one should surely expect that a consumer product after sufficient wear and tear will eventually become likely to be unsafe. This is one of the reasons we change our cars and our electrical appliances periodically.

The second way the time factor specified in section 5 (1) operates is somewhat different. It relates to the fact that safety standards may change over a period of time. This change may be as a result of a development in the state of scientific and technical knowledge. Such a case is also covered by section 6 (e). Safety standards may also change without direct reference to such scientific and technical developments. What may have been an acceptable risk from a product 20 years ago may simply cease to be acceptable to the community over this period. For example, there is a greater sensitivity to questions of hygiene and road safety today than there were some years back.

The thrust, therefore, of section 5 is to seek to ensure that producers will not suffer unduly from these changes in attitude. Section 5 does not give the producer an absolute defence to show that the product complied with the standards of the time when the product was put into circulation. However, this will be merely a factor to be considered as one of a number of circumstances in determining whether the product was defective.

These are the specific factors to which the courts are directed to have regard in this legislation. It is not yet clear whether the courts will have regard to the cost of making the product here or the cost of the product itself. The passage of time since the product was put on the market may also be relevant to the question of proof. Prosser and Keating have noted that the older the product the less likely it is that the evidence of malfunctioning will suffice as an inference of a construction flaw, although some courts would permit the plaintiff to negative misuse and overuse in such a case.

Finally, in this context section 5 (2) provides that a product shall not be considered defective for the sole reason that a better product is subsequently put into circulation. This recognises the fact that [810] the production processes are inevitably subject to constant technological change and that to stigmatise as defective merely because a better product has later been produced would be unfair and impractical. However, in some cases later circulation of a better product may be potent evidence that greater safety could have been achieved earlier. Section 5 (2) does not prevent this inference.

The fourth element to note is the factor of causation plays a crucial role in determining the ambit of liability. The plaintiff must show that the damage was caused wholly or partly by a defect in the product. There is no requirement that the loss be a foreseeable one; simply that it was caused by the defect in the product. Nor need the defect be the sole cause of the damage to the plaintiff. It is sufficient that it was partly responsible for the damage which occurred.

Section 4 provides that the onus shall be on the injured person concerned to prove the damage, the defect and the causal relationship between the defect and the damage. The onus of proof is thus clearly on the injured person, the consumer. What must be proved in less conceptually encumbered than what is necessary to establish in a negligence action.

There is no need to establish any breach of a duty of care on the part of the defendant. All that need be shown is that the product was defective, that the plaintiff suffered damage and that the causal relationship between the defect and the damage existed.

One or two questions arise about this approach. First, to what extent if at all may the doctrine of res ipsa loquiter or some analogue apply? This is a formidable issue under the present law in Ireland since it is less than fully clear what precisely this doctrine means at the moment and what are its effects to the onus of proof.

Secondly, what is meant by the phrase “the causal relationship between the defect and the damage”? Obviously if there is no causal relationship the plaintiff cannot succeed but the converse is not necessarily the case, as the doctrine [811] of proximate cause or remoteness of damage makes clear. In tort law, not every case involving causal relationship will be sufficient to impose liability on the defendant. This limitation aplies even in cases of strict liability. Section 4 specifies no similar limitations. McMahon and Binchy have observed: “Perhaps it should be interpreted as implicitly imposing liability. Alternatively, it could be read subject to implicit limitations to be filled by judicial exegesis”.

Another element to note is that the Bill only applies to certain types of losses which are suffered by the plaintiff. Two heads of damages are recoverable as damage under this new regime. Section 1 (1) provides that damage means (a) death or personal injury or (b) loss of, damage to or destruction of any item of property other than the defective product itself provided that the item of property (i) is of a type ordinarily intended for private use or consumption and (ii) was used by the injured person primarily for his private use or consumption. This definition of damage is subject to the proviso that the claim exceeds the qualifying threshold of £350 in respect of property.

It is important to stress that the new regime only covers unsafe products; products which cause death or personal injury automatically fall within the parameters of the new regime. It is important to point out that damage to or destruction of property will only fall within the ambit of liability if the property is of a type ordinarily intended for private use or consumption.

To succeed, therefore, in this type of claim the injured party must also prove that he used the defective product primarily for his own use or consumption. If, therefore, an unscheduled interruption of an electricity supply caused major economic loss to a computer firm the commercial nature of the computer firm would effectively preclude it from initiating a statutory action against the ESB. There would be nothing to prevent the firm in question from pursuing a claim [812] in negligence but claims in respect of interruptions in the electricity supply have not met with great success in recent years.

The legal position would be different if, for example, a computer company designed a programme for consultants in a hospital and a glitch in the programme caused important diagnostic information to disappear from a patient's medical record which might prevent consultants from identifying a curable tumour. If the patient subsequently died as a direct result of the uncontrollable proliferation of the tumour, it would be open to personal representatives of the plaintiff or the consultants to argue that the computer company should bear the brunt of strict liability under this new regime, subject, of course, to the state of the art defence and the defences afforded by this legislation. The company might also be liable under tort of negligence but the plaintiff would have an uphill struggle to establish fault in this category of case.

Section 11 implements Article 9 of the directive but Article 9 specifies that it shall not prejudice national provisions relating to non-material damage. Thus recovery of consequential economic loss is left to the existing rules of both contract and tort. The Minister of State in his reply could elaborate why the legislation has not dealt in specific terms with the recovery of consequential economic loss.

Doubts have been expressed as to whether damages for pain and suffering fall within the field of liability introduced by the directive. This uncertainty has been removed by the interpretation section in this legislation which defines personal injury as including “any disease and any impairment of a person's physical or mental condition”. So far as property damage is concerned, section 1 (1) requires first that the damage be to any item of property other than the defective product itself. Thus if an electric kettle self destructs and burns to a cinder but causes no damage to other property, no liability accrues under this new legislation. Section 1 (1) requires, secondly, that the item of property damaged by the defective product be of a type ordinarily [813] intended for private use or consumption and that it had been used by the injured person mainly for his own private use or consumption.

Clearly, the directive is seeking to exclude damages to property used in the course of a trade, business or profession. McMahon and Binchy consider, however, that the language used in this section is perhaps unfortunate. It would seem in its expressed terms to exclude property damage sustained by an innocent party as a result of an accident brought about through the innocent use of an unsafe product by its owner. For example, if X buys a car with defective brakes and smashes through Y's front window leaving X physically unscathed, Y is surely morally entitled to compensation for property damage but it cannot be said that the car was used by the injured person, Y, mainly for his own private use or consumption. Y never used the car and he first became acquainted with it in his livingroom after the damage was done.

This legislation creates a statutory right of action and proof of specific matters. However, a number of defences will be open to a defendant sued under this legislation when it becomes operative. I notice that the only defences mentioned by the Minister of State are the statutory defences contained in the legislation but other defences are open to the defendant including primary defences where the defence may contest the primary facts. The defence of contributory negligence is open to a defendant sued under this legislation but it is unclear to me how this apportionment is to be determined.

The legislation provides that the producer as defined in the Bill has a number of defences to claims brought under this legislation. He will not be liable if he is able to prove any one of six defences. I hope that on Committee Stage we will be able to deal more specifically with the statutory defences outlined.

There are many other defences such as the defence of novus actus interveniens open to the defendant. This legislation constitutes a significant improvement on [814] the common law and is a real improvement for consumers. However, the Bill does not remove the difficulty of recovering in respect of the defect in the product itself nor does it make it significantly easier for a consumer to recover from a supplier.

The inclusion of the state of the art defence may undermine to a considerable degree the claim of this legislation to have introduced a regime of strict liability applicable to defective products. The inclusion of this state of the art defence in this Bill may prove a significant flaw in the legislation and is likely to lead at some time in the future to further calls for reform in his area of the law.

I appreciate that Senator Conroy has been waiting for a long time. I intended to deal with other aspects of the Bill but I will do that on Committee Stage.

Professor Conroy: I thank Senator Kennedy for his courtesy and I would have been happy to go on listening to his erudite contribution. Admittedly, he lost me many times on points of law and various Latin quotations. If I understood the Senator correctly, he was talking at one stage of wear and tear on a chocolate cake over the period of 12 months. He also spoke of self-destructing electric kettles. I find it fascinating to think that a chocolate cake could last 12 months; it certainly would not last 12 months in my house.

We are really discussing a no fault liability Bill rather than a defective products Bill. We are introducing, as Senator Kennedy indicated in great detail, a major Bill with very significant implications. Once this Bill is introduced—and I know the Minister intends to bring it into law immediately — a plaintiff, somebody who feels they have suffered injury, will be required only to prove that the damage was caused as the result of a faulty product. This may sound very simple but it has enormous implications for manufacturers and the range of persons defined in this Bill as producers.

It is a wide ranging and crucial Bill imposing liability on a producer for damage caused wholly or partly by a [815] defect in his product. It defines very widely the notion of a producer. The manufacturer of a product and any person putting his name or trade mark or any distinguishing feature to a product will now find themselves liable. I welcome this excellent and necessary Bill which will greatly extend consumer protection but, nonetheless, it has significant implications for industry, for manufacturers and for all those engaged in production or product description.

I am very glad to note that the Confederation of Irish Industry welcome this Bill. Over the past two to three years the CII arranged a number of seminars to explain and indicate the importance of the Bill and to emphasise the implications for our manufacturing and associated industries.

The Bill raises the question of safety expectation. This safety expectation as indicated in section 5 defines a defective product as one which does not provide the safety which a person is entitled to expect taking all the circumstances into account. This may sound simple but in practice it is an extraordinarily wide ranging section which includes the presenation of the product and uses to which it could reasonably be expected to be put. That is a wide ranging definition and I am sure, as Senator Kennedy indicated, that it will become the subject of intense legal debate regarding the interpretation “reasonably expected” and the question of time from when the product was put into circulation. This section is perfectly correct but it does have a number of implications.

The Bill raises the question of defect in a product by an act or omission of a third party. I suspect that implications of this provision have not yet been fully appreciated by our manufacturing and associated industries. This section is also likely to give rise to considerable discussions and a great deal of case law.

The Bill provides also for exclusion of liability which I welcome because there was a tendency among some manufacturers, not necessarily in this country — it applied particularly blatantly at one [816] time to motor manufacturers to find all sorts of exclusions in warranties or other documents signed in relation to a car. Under this Bill an injured person shall not be limited or excluded by any term of contract, any notice, or by any other provision, but will still enjoy full rights. It is fair and proper that that should be so and this is consequently an important and sweeping provision to be welcomed.

Rights which a person already had to claim damage for injury or otherwise are not excluded by this Bill; it is appropriate that existing rights be retained. I note an interesting provision under section 12 providing that the abolition of juries in certain actions in the High Court shall apply to an action for damages taken under this Bill. One might explore that a little further since the circumstances and expectations under which a corresponding section was introduced in the 1988 Courts Act have not turned out as people predicted and I am not convinced of the relevance and appropriateness of that section.

Marked shortcomings prevail in existing law. These have been described in many documents and discussions and were particularly well put in the Confederation of Irish Industry newsletter. I quote from Volume 50/3, 29 November 1988:

Despite an increased tendency of the courts to recognise the difficulties an injured party may have in proving negligence on the part of a producer the legal situation under tort law in most European States was that the burden of proof rested with the injured party.

That establishment of proof could be difficult as Senator Kennedy in his wide ranging discourse indicated. Some of the points in existing law referred to by the CII include the fact that an injured party might not have the necessary technical or detailed knowledge of the product to realise the relevance. This is exacerbated by the fact that an injured party might have great difficulty proving negligence and it also means that if the producer is able to substantiate that due care was taken in production then effectively there [817] is no redress. These are grave shortcomings in existing law and it is appropriate that they should now be removed, giving rise to major change which we shall take into account.

There is provision in the Bill for inappropriately called defences because I do not think there should be defence as such if strict liability applies, with the possible exception of the state of the art defence. The so called defences mean that liability, very properly, is not regarded as arising. In order to prove that liability does not arise comprehensive and detailed identification of products would be required to prove that the specified part was, in fact, manufactured by the defendant and to able to identify one's own products.

Many fake watches, for instance, are produced in other jurisdictions, which illegally bear the name of a reputable manufacturer. Product liability for such a product should not be the responsibility of the genuine manufacturer. Under this Bill it will be necessary for the producer to identify products by appropriate records.

A defect can occur after a product leaves the hands of the manufacturer. A number of aspects mentioned are not defences as such; they may be a defence to an action but we are considering in this Bill the principle of no fault liability and in the above cases there was no liability on the part of the manufacturer.

The so-called state of the art defence as Senator Kennedy pointed out raises difficulties. The Minister in his speech introducing the Bill focused welcome attention on the question of research recommending that we encourage more investment in research particularly in the kind which produces life-saving drugs used to treat cancer, AIDS, heart disease and other unanswered medical questions. I agree with the Minister's statement that in this country we do not devote sufficient resources to research and we need to review that practice if we hope to compete effectively at high industrial levels with high quality products.

Research is a very neglected area of our economy and consequences could be [818] damaging if we do not take steps to correct that, given that we are attempting to sell to, roughly, the top ten per cent of the quality market. Research and development are essential components of continued success in that market. We have an enormous export market of £11 billion and those products are all meeting the extremely stringent requirements implied in this Bill. What we are doing today with this legislation is including the 2,500 Irish domestic manufacturers to ensure that they meet the high standards of export manufacturers.

Given the Leas-Chathaoirleach's background and my own which is not all that different, one is a little concerned in relation to the agri-business. I fully accept the exclusions of the Bill but I think that this matter must be reviewed. Agricultural exports, as the Leas-Chathaoirleach knows better than anyone else in this House, are an essential part of our economy and we must ensure that they enjoy and maintain the high reputation for quality they rightfully deserve. I am glad to see the imposition of regulations in relation to importation but I would not underestimate the enormous implications of these regulations for importers. How can importers who import perhaps 300, 400, or 500 different products during the course of a year from different countries, ensure that those products meet these standards? In practical terms this is virtually impossible and under this legislation we will be forced to reduce importation of many products from Third World countries because we could not be certain that necessary standards were being met. That is an unfortunate consequence of this essential part of the Bill.

This Bill and the associated Bills in other countries and the European Community directive which underlies these Bills are, I understand, to be examined every five years; a report was to be published in 1990 but I am not aware that that report is available. It would be interesting to read a review of the first five years operation of this directive.

[819] I am glad that this Bill has been welcomed by our manufacturing confederation, the Confederation of Irish Industry. It would have been very easy for them to adopt an obscurantist attitude and to struggle against this Bill but instead from the date of introduction of the European Community directive there has been considerable effort on their part to ensure that the implications of this Bill are widely understood. In January 1988 the following headline statemnet appeared in the CII newsletter — “It is essential that all those involved in the marketing of goods be aware of the provisions and implications of the new EC product liability legislation and that they take action to minimise the incidence of personal injury arising from the use of these products”. Considerable detail of the various measures required was also supplied.

A comprehensive education programme has been undertaken by the Confederation of Irish Industry providing a very good example of Government, industry and unions all working together for the benefit of industry and consumers. It gives me pleasure to quote the words of Gerry Shield, Secretary of the Confederation of Irish Industry who, instead of complaining of the cost of these new procedures, said:

The cost of the new procedures could well be recovered in the maintenance of goodwill, your products not causing personal injury, by being able to identify quickly the real producer responsible and by producing products which your customers can buy and use with cónfidence.

That is an excellent attitude on the part of the confederation and manufacturers and I am delighted to welcome this Bill to the house.

Mr. Costello: I welcome the Minister and this legislation to the House. Last week we discussed the Sea Pollution Bill, legislation that was introduced in the House to implement an international [820] protocol and convention that had originally been drafted in 1973 and which eventually got its final form in the MARPOL Convention of 1978 and is in the process of being introduced into domestic law now. It still has to go back to the Dáil and it has certainly taken a long time to wind its way through whatever avenues exist in Departments dealing with the environment and international affairs before it reached the Oireachtas.

This legislation has also been quite some time in gestation. It provides for the implementation of an EC directive and we have been waiting since 1985 for it to come to the Seanad. I do not understand the delay. An annex to the Bill virtually outlines in legislative form what the Bill proposes to do and indeed much of what is stated in the Articles there is repeated in the terminology in the Bill. I think it would have been a simple matter for the parliamentary draftsman to compile this legislation and issue it within 12 months of its passage through the EC so that EC directives could be implemented immediately. Under international law we are bound to ensure that international protocols and conventions are implemented and we should be less lethargic in dealing with such matters. The Minister could take this advice and convey it to the Cabinet to ensure that all legislation that does not emanate domestically would be produced and implemented with greater speed.

The current enactment of EC directives reflects also the dearth of domestic legislation coming before this House; no domestic legislation has been introduced since we came back after summer recess. Neither the Sea Pollution Bill nor the Liability for Defective Products Bill emanated from the domestic front; and this trend indicates the level of political turmoil currently prevailing and the absence of any clear political direction. This legislation is intended to standardise the industrial situation in EC member states and, as such, it is welcome.

The situation operating largely on the European mainland is far preferable to the situation that operated here in respect [821] of liability. The obstacles that that placed before the ordinary person in the street to ensure that justice could be done in relation to a defective product effectively meant that it just was not done. The end result was that the ordinary consumer could not get redress for damage caused to him or to her as a result of a defective product. We placed a very heavy burden of proof on the consumer that, first, the defect in the product had to be determined, second, the damage that was caused and, third, to show that there was negligence on the part of the producer. Those steps were very hard to follow by any ordinary consumer to ensure that he would get redress in relation to the damage done by the defective product.

It certainly is a much tighter procedure from the consumer's point of view — and I would argue also from the retailer's point of view — to change the situation round and ensure that there would be strict liability or that there would be no-fault liability rather than placing the burden on the consumer to prove negligence on the part of the producer or the manufacturer. That essentially is what it is. It is a form of consumer protection. It does streamline, at least theoretically and in law, the avenue to redress by the consumer.

We know that has been a very major issue in this country because of the colossal number of complaints made to the Director of Consumer Affairs and Fair Trade — roughly 15,000 to 20,000 per annum. That is a very large number. This reflects the many people who are frustrated by damage and defective property; they could be frustrated by damage to themselves about which they would not be able to do anything or they might feel there was no process whereby they could do anything.

We have all listened to the “Gay Byrne Show”, the “Pat Kenny Show” and the various other chat shows, where the person in the street has a problem because of buying a particular item, whether it was a faulty washing machine, a car or whatever, and not being able to get any redress from the producer or the manufacturer. I appreciate that it is the [822] intention of this Bill to provide an easier avenue for the consumer and ensure that there is quality control on goods produced. That is very important. Once you shift the burden of proof so that you cannot prove it on the basis of negligence but there is a simple strict liability, then there is renewed emphasis on the manufacturer, the producer and the supplier to ensure that his or her product is not defective in any way. Straightaway, the focus of attention and responsibility comes back to the person who supplied the defective product. That is as it should be.

Our other system in tort was very reasonable in many ways but quite cumbersome. In practice, it was very difficult to implement or to get redress. That was why people were not taking action even though they had just cause for action.

This legislation is well intentioned but updating it does not effectively displace the existing system. We still have the tort system but this adds to it. It is not displacement or substitution-type legislation, though I think, in practice, it may operate as a substitute to our existing system. However, it is intended to be an addition to what is there and not to displace the contractual responsibilities that operate in the relations of consumer, trader and client.

I would like to address the question of how we are going to implement this legislation. How are we going to ensure that somebody does get redress? The road to success for a consumer who has a defective product, who has suffered damage in a personal or in a property capacity, is simpler now but it still requires a legal process. There is very little reference to the legal process in this legislation. We all know just how difficult it is to get through a legal process.

Yesterday we were discussing the estimates for the City of Dublin. We found that there had been an enormous increase in public liability in relation to the city council and claims that had been taken against the city council. The manager stated that 40 per cent of the cost this year — £5.4 million in liability terms in claims — was accounted for by legal [823] costs. That is a very considerable sum. It is hard to know how many other cases might have been taken if the route had been easier to follow because by contesting, the corporation make it quite difficult for cases to be successful. That is part of the process. Once they go through the courts and are processed, there is enormous legal expenses. That still remains a major problem for the consumer. That is something that should be addressed, and is not being addressed, in the legislation.

What support will the Government give the consumer travelling that road to redress? What support can the free legal advice service extend in taking up these issues? If we are going to streamline the system, we need to streamline the system of implementation. People get very frustrated when they have to get legal representation. In terms of going to court and implementing this legislation, we must then ask where and what court are we going to go to? Now that we have simplified the law can we not have a simpler court system for dealing with claims? Would it be possible to set up a small claims system? It would be an excellent idea if that could be done. The key to successful legislation is the method and effectiveness of implementation and the personnel involved. At present, our judicial system is very cumbersome and costly. Certainly it is not geared towards the needs of the ordinary citizen, whether it is in this area or in a whole variety of areas that I will not go into now.

I notice in section 3 (2) there an excess limit imposed of £350 and that any amount granted over and above that will still be subtracted from the limit of £350. I really do not know if that is a desirable limit. It would be better to have no limit. It could be said that it is too low on the one hand and, on the other hand, that it is too high. I would simply say that we should not specify any limit on it. It is a small sum. If we are going into any legal examination of it the sum is really very low.

I would be concerned in relation to the [824] specific exclusion as set out in the annex to the legislation:

Whereas liability without fault should apply only to movables which have been industrially produced; whereas, as a result, it is appropriate to exclude liability for agricultural products and game, except where they have undergone a processing of an industrial nature which could cause a defect in these products;...

Looking at that, one would say that this was not written by anybody from a beef producing country, or from any country where there are crops force fed, or animals force fed because it says “where they have undergone a processing of an industrial nature” because there have been processes which may not be exactly of an industrial or manufacturing nature but they are of a chemical and of a growth-promoting nature and that certainly means there has been an initial interference with the product. Whether the interference has taken place with the product subsequent to it coming off the ground or off the grass, or out of the ground, or whether it has come in the form of unacceptable growth promoters, fertilisers or hormone enhancers I think that should be covered by the legislation also. However, we should go a step further. We should not be satisfied with the Council of the European Communities provisions in relation to this aspect. Where processing takes place prior to the product coming off the hoof in terms of beef and before it is harvested in terms of grain and other cereal products it should be included. Its exclusion is unacceptable particularly in the light of the dreadful damage that has been done to our beef industry with BSE, with the angel dust problem and with our failure to eradicate bovine TB.

When we realise this directive was under consideration in the 1970s and 1980s, and became the basis of the Bill we can understand there were not the same developments that are now the scourge of our agricultural industry. We may not get the opportunity again, and it would be no harm if we explored for a [825] while the possibility of introducing some amendments to this legislation so that we could tighten it up and improve it from the point of view of ensuring that liability extends to this area.

I would like to emphasise the importance of our own export trade — £11 billion to Europe and to the world. For the European market alone that is colossal. I emphasise the importance and extent of our own import trade as well. There are implications on both sides. It has enormous implications all around, including for research and development. We have been most lax in that area in Irish industry and that is part of the reason we find ourselves struggling from time to time in the international industrial market. I hope this legislation helps in that respect; improves the quality of our goods, tightens the discipline of our producers and improves our exports. I hope that the Minister will be prepared to accept some amendments to Committee Stage.

Minister of State at the Department of Industry and Commerce (Mr. Leyden): I would like to express my appreciation to the Senators who have participated in this debate and I will refer to contributions made by Senators. There were references to the delay in introducing the provisions into Irish law. This was caused by a number of unavoidable factors, the chief being a lengthy consultation process with a wide range of interested parties. The drafting of the legislation, which required much detail and painstaking research, took longer than expected. Another reason was the heavy workload in my own Department and the Office of the Attorney General, and there were quite a few general elections in the interim also.

Based on the latest information available nine member states have, so far, implemented the provisions of the Council directive and of these nine only three managed to meet the deadline of 30 July 1988. They are the UK, Italy and Greece. France and Spain have yet to incorporate the directive into national law.

Senators Staunton, Upton and Raftery [826] spoke on the Bill. One aspect of the Bill's definition of “product” is that it exempts primary agicultural products which have not undergone initial processing. Senator Costello also referred to this issue. Such products were also exempted by the directive but it allowed member states under Article 15 the option of bringing such products within the scope of the regime of no-fault liability. The Government have decided not to avail of this option. There were calls by a number of Deputies during the Second Stage in the Lower House to have such products included within the scope of the Bill. They contended that their inclusion would enhance the image and reputation overseas of Irish food products. This contention is poorly based on a number of grounds: of the nine member states which to date have implemented the directive, only Luxembourg has included primary agricultural products. Agriculture does not loom large in Luxembourg's gross domestic product at 2.6 per cent compared with 10.2 per cent in the case of Ireland. Equally, Luxembourg accounts for only 0.1 per cent of total Community production whereas for Ireland this figure is 2 per cent. Thus in the other eight markets, the UK, Germany, Italy, Belgium, Denmark, Holland, Greece and Portugal, primary agricultural products are excluded from the implementing legislation. If we were to include them, it could send the wrong signals to consumers in other European markets by unwittingly giving the impression that our primary agricultural produce was in some way suspect. The principal reasons the Government decided to exclude them were that such products are particularly prone to hidden defects caused by environmental factors beyond the control of the producer, that is, acid rain, nuclear fallout and industrial pollution of rivers and seas.

Producers of primary agricultural products, however, continue to be liable under tort and contract law. Under the law of tort the consumer has rights against the producer for damage caused if negligence can be proven. Under contract law goods are required to be of [827] merchantable quality and fit for the purpose intended.

There is also in place a variety of legislation which controls various aspects of quality in agricultural production. Some examples of this type of legislation are the European Communities (Classification, Packaging and Labelling of Pesticides) Regulations, 1985, as amended. These regulations prescribe various conditions which must be complied with in relation to the placing on the market of pesticides; the Animal Remedies Act, 1956, which regulates the import, manufacture, sale and advertisement of animal remedies; and the European Communities (Veterinary Medicinal Products) Regulations, 1986. These regulations control the licensing and manufacture of veterinary medicinal products. In accordance with these regulations all such products sold must have an authorisation granted by the Minister for Agriculture and Food. These authorisations are granted on the recommendation of the National Drugs Advisory Board who test the preparations in question with particular regard to quality, safety and efficacy.

Regarding primary agricultural products which have been subject to initial processing, even in cases where a defect in these types of products was not caused by the processing operation itself, the onus is on the processor to discover any hidden defects, no matter how they were caused.

In an attempt to clarify what constitutes “initial processing” we have included a definition — “any processing of an industrial nature which could cause a defect” — drawn from the recitals to the directive. It is accepted, of course, that it will be ultimately a matter for a court to decide whether liability applies in any particular case.

The Department of Agriculture and Food, the Irish Creamery Milk Suppliers' Association, the Irish Insurance Federation, the confederation of Irish Industry and the Industrial Costs Monitoring Group concur with our thinking in [828] respect of the exclusion of primary agricultural products. In view of the fact that the vast majority of other member states have excluded such products from their implementing legislation, it would be extremely inadvisable for Ireland to take any measures which would put our farmers at a disadvantage in respect of their Community counterparts. To include primary agricultural products in the scope of the Bill would mean that farmers would be obliged to carry product liability insurance, a development which would add substantially to their production costs and have a negative effect on their competitiveness in respect of other EC members. This is particularly unnecessary when 99.9 per cent of all farm products are of the highest quality. The cost of insurance would be a major burden on small farmers today, particularly in difficult times.

I am quite convinced — I have debated this in the Dáil as well — coming from a rural constituency, how essential it is that this particular provision would not have been implemented by the Government. I would have lobbied against such an implementation at this stage because of the effect it would have on the farming community. The burden would be very onerous on the farmers. It is very hard to calculate the exact amount it would cost, but you can take it that it would be expensive for farmers to have such cover. It would be totally unnecessary. Anybody from a farming area is aware of the quality of the product and would not need to have this type of cover.

“Product” as defined in the Bill will be very wide in coverage. Any question of whether a particular product is covered by the legislation will ultimately be determined by the courts.

Senators McKenna, Upton, Farrell and Costello mentioned the small claims courts. Earlier this year the Minister for Justice, Deputy Ray Burke, announced his intention to set up with the District Court a special procedure for dealing with small claims. In the light of the remarks made by several Senators earlier [829] today, I have checked the current position with the Minister for Justice and he has informed me as follows.

The procedure will provide a quick, informal and inexpensive forum for resolving disputes which may involve small amounts of money and will be consumer orientated. Where a claim does not exceed in value the sum of £500 and is not related to personal injuries, damage arising from a traffic accident or hire purchase, leasing or other loan arrangements, the client may apply to have the claim processed through the small claims procedure.

A committee was set up to organise and oversee the implementation of the pilot scheme and has made considerable progress in setting up the arrangements for the new procedure. The District Court Rules Committee have now formulated a set of court rules for the operation of the procedure.

The scheme will be operated within the District Court structure and initial staff training has commenced. The location for the introduction of the procedure on a pilot basis include two venues in the Dublin Metropolitan District and Cork city and Sligo. Arrangements are at an advanced stage for the commencement of the small claims procedure in the near future and it is hoped to make an announcement on this matter before Christmas.

Insurance costs were raised by Senator McKenna. The views of the Irish Insurance Federation are of interest. They claim to represent the views of companies who transact over 96 per cent of all liability insurance business in Ireland. Although it is expected that the number of claims will increase as a result of the implementation of the Directive, the Irish Insurance Federation expect this increase to be gradual, particularly in relation to products having a long shelf life, that is, products whose ingredients, parts, etc., would not be expected to deteriorate during prolonged storage. Another factor which is likely to contribute to an increase in claims is the expected increase in claims consciousness [830] resulting from the publicity attending implementation.

I am, indeed, particularly delighted that the Minister for Justice has brought in the new Solicitors Bill, which I believe will be very important in relation to the legal profession having the “no fee, no foal” philosophy.

The IIF concur with my view on the necessity for industrial education programmes designed to highlight the need for adequate quality control systems. Although the IIF feel that insurance costs will increase as a result of implementation, these costs are, at present, unpredictable and can only be estimated in the light of experience of the workings and effect of the new system.

With regard to the point made by Senator Farrell, the three year period specified in section 7 (1) refers to the period within which an injured person must bring an action for damages in respect of the damage caused by the defective product. Section 7 (2) (a), on the other hand, relates to the defective product itself and in particular the life expectancy of the product, that is, right of action in respect of any product expires ten years after that product has been placed on the market. Obviously some products will have a much shorter safe working life while others would be expected to last much longer. During discussions on the directive, however, the ten-year period was generally considered to be a good average standard safe working life.

Senator McGowan mentioned the policing of the legislation. Already, the aims of the legislation are well known to consumers, industry and trading interests. This will be achieved by the long but necessary process of consultation that has already taken place over an extended period. As a result, I am satisfied that the consumers are well aware of their rights under the new legislation and, therefore, will not be slow to resort to the courts to enforce these rights.

Senator Raftery mentioned the £350 limit. Member states have no option but to apply this lower limit. I wish to make it clear that the figure applies not to damage [831] done to the defective product itself, which is covered by contract law, but to damage to other property caused by some malfunction in the defective product. For instance, if an electric kettle or some other appliance burst into flames due to some defect in that appliance, then any damage caused to, say, the kitchen furniture, fittings, etc., in excess of £350 would be covered.

Senator Kennedy referred to consequential loss. I have already consulted with the Office of the Attorney General in this matter. His view is that the most effective manner to translate Article 9 (a) into domestic Irish law is by means of the definition of damage in section 1 (1) of the Bill. This accords with the approach contained in the definition of damage in section 21 of the Civil Liability Act, 1961, the principal statute governing civil liability in this country which reads as follows: “ `damage' includes loss of property, loss of life and personal injury”.

Section 2 (1) of the Bill provides that the producer shall be liable in damages in tort for damage caused wholly or partly by a defect in his product. This is sufficient, in my opinion, to make applicable the domestic Irish rules concerning the assessment of damages, including pain and suffering, consequential loss, etc., subject only to the limits expressly imposed by the directive which are reproduced in the Bill.

Senator Conroy mentioned the five year review. He rightly points out that Article 21 of the directive provides for a five year review and to report to Council on its application. This review has not taken place although it was due in mid-1990.

Senator Costello mentioned the lower compensation level of £350. This provision is designed to discourage litigation in an excessive number of cases. Claims for allowance below the lower level of compensation will still be recoverable under tort law. The amount is fixed in Article 9 of the directive and we have no [832] discretion or flexibility in relation to this section.

I wish to express my appreciation to all the Members of the Seanad who contributed to this Bill. We are taking into account all the points raised. I commend the Bill to the House and I look forward to Committee Stage which, I understand, is proposed for next week.

Question put and agreed to.

Committee Stage ordered for Wednesday, 20 November 1991.