Seanad Éireann - Volume 130 - 20 November, 1991

Liability for Defective Products Bill, 1991: Committee Stage.

An Cathaoirleach: I welcome the Minister to the House and regret he was delayed because of the debate of the Order of Business.

SECTION 1.

Mr. Kennedy: I move amendment No. 1:

In page 2, subsection (1), to delete line 20, and substitute the following:

“(a) damage caused by death or by personal injuries, or”.

I welcome this Bill, 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 of 25 July 1985. I also welcome the fact that this directive, which is being implemented by this Bill, is indeed attached to the Bill.

In its definition of damage in section 1 (1) of the Bill the drafting, I believe, has moved away from the wording of the directive although normally, and particularly in this case, we should be at pains to follow exactly the wording of the [862] directive. The definition of damage has been changed from that contained in the final draft of the EC directive of 25 July 1985. Indeed it adopts the wording of the British legislation contained in section 5 (1) of the UK Consumers Protection Act, 1987 and the wording contained in the original EEC Draft Directive of 9 September 1976.

Section 1 (1) of this Bill states 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. Thus, if a person is injured by a defective product, this Bill provides that two categories of damage arise and arise only. The injured person can get compensation for that injury and he can also get compensation for any item of property. However, it would appear to me at least that the whole area of consequential and economic losses arising from damage caused is excluded by this Bill.

It is an inherent and basic principle of our law, and has been indeed for many years, that if damage is caused a person can get compensation for injury, damage to property and consequential and economic loss. Thus, for example, a defective steering mechanism in a motor car may cause it to crash and serious injury may result which causes a person to be out of work for a considerable length of time. These consequential losses, loss of earnings and the loss of the use of the car, are excluded, because of the wording of this Bill.

When the word “damage” is used on its own and is not subject to interpretation in any particular legislation it includes a wide range of items, damages for personal injuries, pain and suffering, damage to property and consequential and economic losses. Consequential damages are not provided for in this Bill. I believe all a court can do, therefore, under this legislation is to look at the definition of “damage” contained in section 1 (1) of the Bill and decide if the injured person is entitled to damage. It seems to me this matter could be effectively dealt with (a) by adopting this [863] amendment and reverting to the definition of damages contained in the final draft — I stress the final draft — of this directive or (b) by adopting amendment No. 4, which we will be dealing with shortly. Indeed, an abridged version of amendment No. 4 would be my preference.

The obligation on the Houses of the Oireachtas so far as this directive is concerned, is to bring in, as a minimum, what the directive requires. There is nothing to stop us from being more generous to the consumer in certain areas than this directive requires. What we cannot do, and what the restricted definition of damage in this Bill is doing, is giving the consumer less than the directive provides. Indeed, we could find ourselves in more litigation on this issue as to whether we are in default in regard to this directive.

This area of compensation for injury and death was examined in great detail by the English Law Commission and the Scottish Law Commission. They concluded that under existing law a person who sustains personal injury may be awarded damages under two main heads — in respect of pecuniary losses and in respect of non-pecuniary losses. Under the heading of pecuniary losses he is compensated for his financial loss, such as loss of wages and out of pocket expenses; and, as far as non-pecuniary losses are concerned, it is usual to award compensation on a more general basis for pain, suffering and loss of amenity that result from the injury. They also concluded that it would be inconvenient procedurally. If an injured person wished to recover full damages, he would have to set up two distinct causes of action within the regime as recommended, one based on strict liability and the other on his rights in tort. The third conclusion was that both commissions stated:

We recommend, accordingly, that compensation for death or personal injury should be assessed in the same way under the scheme for strict liability as where the claim lies in tort and that, [864] in particular, non-pecuniary losses should be compensated for.

These two commissions and the Pearson Commission examined these matters in great detail and there is a lot to be said in these various recommendations.

As has been said by a Member of the other House, litigation is indeed the art of making argument. There is no doubt that legal energies will be consumed following the passage of this Bill if this particular section remains as it is, by people trying to draw an inference and an importance from the fact that there is a different definition of damage in this Bill from the definitions contained in the directive and from the definition of damages contained in the Civil Liability Act, 1961. Many cases, indeed, end up in the High Court and in the Supreme Court because Ministers and Governments are not sufficiently responsive to nonpolitical points made at the formative stages of legislation. The Minister of State, speaking in another place, has indicated that non-material damage, such as pain and suffering, will fall outside the scope of this Bill. However, Alex Hewster, director of ICEL — the Irish Centre for European Law — and a man with a wide range of experience in this area, takes a contrary view. He takes the view that any uncertainty as to whether damages for pain and suffering fall within the scope of liability introduced by this directive has been removed by the interpretation clause in section 1 (1) of this Bill which defines personal injury as including any disease and any impairment of a person's physical or mental condition.

I would like, therefore, if the Minister would take this opportunity to clarify again the situation as to whether items which are so important today in Irish law fall within the scope of this definition. The Minister has said, in another place, that all wisdom does not exist on the Government side, even with the best advice of the Attorney General, and that includes, of course, the new Attorney General. I, therefore, urge the Minister to accept this amendment, the wording [865] of which is based on the direct wording in the directive.

Mr. Costello: I support this amendment. As I indicated on the Order of Business, I have basic objections to all Stages of a Bill being taken on the same day. It is most appropriate that we should not discuss Committee and Report Stages on the same day. When dealing with legislation we need time for reflection to ensure that further amendments arising out of existing amendments can be put down and discussed. It is a bad precedent to start taking all Stages of legislation on the some day. It is the equivalent of imposing the guillotine. I regard this as an unsatisfactory procedure.

I compliment the Minister and his officials for including in the legislation for the first time, the directive itself. That is a good precedent and should be followed in future so that we can see precisely what is the thinking and the formulation of the directive which is the essence of the Bill before us.

As the directive has been printed as part of the Bill, we can see what the compilers of the directive intended and what we have done. We have not included in the definition of damage in this legislation the full intent of the directive. We have, as Senator Kennedy said, the British wording rather than the wording of the European Community. We should have the broadest possible wording; we should cast the net wide. It seems that what are presented here are loopholes or exceptions that will not be covered by the legislation — the first relates to consequential matters arising out of the defective product, which will be covered by another amendment and the second relates to limiting it to the private sector, to the idea of personal injury rather than professional and business.

We have a narrower definition of strict liability than was intended in the legislation as originally envisaged. That will give rise to a variety of problems for our courts in that we will be proceeding on the one hand with strict liability in relation to that particular definition of damage as death or personal injury and, [866] on the other, we will be dealing with it by tort. While this is not supposed to be a substitution for existing legislation or existing judicial procedure, nevertheless it will result in confusion where we will have one type of approach to deal with it in one particular area and because the definition is not broad enough to include the other area, we will find ourselves having to make a separate application. I do not see why we cannot cover the two in the same legislation and expand the provisions in relation to liability for defective products to a wider range than is here. It would ease the problem and provide greater protection for the consumer.

Mr. Howard: I support the points made by Senators Kennedy and Costello on amendment No. 1. I also endorse the point made by Senator Costello in regard to the inadvisability of going further than Committee Stage today. I make that point for an added reason. If my information is correct, the other House ran out of time both on Committee Stage and the remaining Stages of this legislation. The conclusion I draw from reading the reports of the debate in the other House is that there was not time to give attention to the detail of the later sections of the Bill. I believe it would be very inadvisable for the Minister to insist that this Bill pass the Seanad without giving detailed consideration to all the sections of the Bill.

In a sense I find this extraordinary legislation and quite difficult to come to grips with parts of it. I am in favour of the concept of the Bill and indeed I am in favour of consumer protection where defective products are concerned but I have a worry that the protection the Bill provides with one hand it removes with the other. That is part of the reason I am anxious that this House be given all the time that is required to go into the detail of the legislation.

With regard to the amendment before the House, I support strongly the arguments that have been made by previous speakers. I cannot find the justification for changing the wording from what is in [867] the directive. The new definition which the Minister has introduced as opposed to the wording in the directive has given rise to the concern that has been expressed here. It has given rise to the belief that damages to a consumer injured or disadvantaged in some way by a product are being restricted by the change in wording. There is doubt in relation to the whole question of consequential loss. As Senator Kennedy said, there is a major question whether the matter of pain and suffering endured by a person is also outside the scope of the Bill.

For these reasons, I add my support to what Senator Kennedy and Senator Costello have said. I urge the Minister to adopt what I believe is a very well thought out and a worthwhile amendment. I am satisfied they have advanced justification as to why this amendment should be accepted.

Minister of State at the Department of Industry and Commerce (Mr. Leyden): In reply to amendment No. 1 and the point made by Senators Kennedy, Costello and Howard, I emphasised in my speech during Second Stage that the wording of the Bill for the most part follows closely on the wording of the directive itself. In the small number of cases where there are deviations or departures, the aim is to provide for greater clarity while achieving the same purpose and intent. As I also mentioned on that occasion the EC Commission had sight of the Bill and it had no difficulty with the definition of damage as provided in section 1 (1) of the Bill.

I would add that I have consulted with the Office of the Attorney General on this matter. That office is of the opinion that it is the result to be achieved under Article 9 of the directive, which contains the definition of “damage”, rather than its exact drafting, which is mandatory on the State. Article 9 (a) is correctly translated into domestic Irish law by means of the definition of “damage” in section 1 (1) of the Bill. The definition used in the Bill is entirely consistent with [868] the approach contained in the definition of “damage” in section 21 of the Civil Liability Act, 1961. That Act is the principal statute governing civil liability in this country and the definition contained in that Act is as follows:

“damage” includes loss of property, loss of life and personal injury.

The relevant section should be read in conjunction with section 2 (1) of the Bill, which provides that:

The producer shall be liable in damages in tort for damage caused wholly or partly by a defect in his product.

When examined in this manner, the provisions relating to damage are sufficient, in my opinion, to make applicable domestic Irish rules concerning the assessment of damages, including pain and suffering, consequential losses etc. subject only to the limits expressly imposed by the directive which are reproduced in the Bill.

The reason, therefore, for departure from the wording of the directive in relation to this definition, is to align the meaning of “damage” with the accepted principles of Irish law. In the circumstances, I cannot accept the amendment.

Mr. Kennedy: Is it now the Minister's opinion that pain and suffering comes within the ambit of this Bill because he said the opposite in his contribution in the Dáil.

Mr. Leyden: We had discussion on this matter in the other House and, as a result, I consulted with the Attorney General's office and that office is of the opinion that it is the result to be achieved under article 9 of the directive, which contains the definition of “damage” rather than its exact drafting, which is mandatory on the State. The Civil Liability Act, 1961 is the principal statute governing civil liability and the definition contained in that Act is as follows:

“damage” includes loss of property, loss of life and personal injury.

[869] That is relevant and important. I have consulted with the Attorney General in that regard and I am satisfied that in the circumstances we cannot accept the amendment. I accept the points put forward by the Senators that it is a change from the actual directive itself but it is only changed on the basis of bringing it more in line with existing Irish legislation.

I emphasise that this Bill has been viewed by the Commission who have accepted our wording and are quite satisfied with it. I believe the explanation I have given is satisfactory and should be accepted by the House as the best advice available to me from the Attorney General's office. Although I respect the views expressed by Senators Kennedy, Costello and Howard I cannot accept their amendment.

Mr. Kennedy: I hate to push the matter any further with the Minister but I am asking him a specific question. Is pain and suffering within the ambit of this Bill or is it not? He now seems to be saying that on further advice it is within the ambit of the Bill but I must bring it to his attention that in the Dáil Official Report Vol. 411, No. 5, column 1397, he clearly informed the other House that pain and suffering do not fall within the ambit of the Bill. It seems to me that if the Minister has got it wrong in regard to such a matter as pain and suffering he may very well be getting it wrong in regard to consequential and economic loss. I am not satisfied with the Minister's assurance that the Commission had sight of this Bill and are satisfied with it. I know the European Commission are quite happy to have their own exact wording incorporated into this Bill. For that reason we will have to press this amendment if the Minister is not more forthcoming.

Mr. Costello: I do not think the Minister has replied to the points raised. Is the damage caused by death or personal injuries included in the definition or is it not? Senator Kennedy has referred to pain and suffering as typical consequential damage that would follow [870] damage caused by death or personal injuries. A simple “yes” or “no” will answer that question. What the Minister has said in relation to quotation from the Civil Liability Act, 1961, confirms the point we have made because he refers to the definition of “damage” as including loss of property, loss of life and personal injury but there is no exclusion, there is no strict defintion of it, so it includes that whatever else. If the Minister had simply left “damage” its original definition without narrowing it down to exclude areas, which this seems to be doing, then we would be quite happy. What is intended by this amendment is to ensure that the consequential effects of death or personal injury are not omitted and that the consumer is covered.

Mr. Leyden: I am very pleased Senators have read the Lower House's deliberations on this particular Bill because I received further advice since the debate in the Lower House which is what you expect when issues are raised at a particular time. It was necessary for me to get further legal advice on this Bill and I will tell the House exactly what the advice was from the Attorney General's office arising from the debate in the Lower House:

The relevant section should be read in conjunction with section 2 (1) of the Bill, which provides that: “The producer shall be liable in damages in tort for damage caused wholly or partly by a defect in his product”. When examined in this manner, the provisions relating to damage are 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 directives which are reproduced in the Bill.

I think that clarifies the concerns expressed here today in relation to this section. At the end of the day it will be the decision of the judge or jury in the case to decide on the section and to [871] decide on the question of pain and suffering. I do not want to prejudge their decision but I am clarifying the position from the information I have received from the Attorney General. That may be contrary to the views available to me when this Bill was going through the Lower House. As a result of the concerns expressed by Deputies I sought further clarification from the new Attorney General on this Bill and that is the advice I got and I am giving it to the House. I cannot accept the amendment, on the basis of the information available to me from the chief law officer.

Mr. Howard: Arising from what the Minister has just said, and I do not doubt him because I regard him as a very conscientious Minister and I believe he did go back to the Attorney General for further advice on the matter. As I understand his reply, the advice he received from the Attorney General was that if section 1 (1) is read in conjunction with section 2 (1) the matters that concern us at this stage are taken care of. That is the advice of [872] the present Attorney General. Am I to understand it was the previous Attorney General who advised the Minister that we should use a different wording in this Bill from the wording in the directive?

Mr. Leyden: No, the actual wording in this Bill is the same as under the previous Attorney General. What I was getting was a clarification of the liability in this Bill which was sought in the Lower House. That was obtained from the present Attorney General but the wording itself was not changed by the parliamentary draftsman's office or the Attorney General from the Bill I circulated.

Mr. Howard: But he changed the words from those in the directive?

Mr. Leyden: Parliamentary draftman's office, in consultation with my Department and indeed verified by the Attorney General's office, changed the wording from that in the directive.

Question put: “That the word proposed to be deleted stand”.

The Committee divided: Tá, 22; Níl, 14.

Bohan, Eddie.

Byrne, Hugh.

Cassidy, Donie.

Conroy, Richard.

Cullen, Martin.

Dardis, John.

Finneran, Michael.

Fitzgerald, Tom.

Foley, Denis.

Haughey, Seán F.

Honan, Tras.

Kiely, Dan.

Kiely, Rory.

McKenna, Tony.

Mooney, Paschal.

Mullooly, Brian.

Ó Cuív, Éamon.

O'Donovan, Denis A.

O'Keeffe, Batt.

Ormonde, Donal.

Ryan, Eoin David.

Wright, G.V.

Níl

Costello, Joe.

Doyle, Avril.

Howard, Michael.

Jackman, Mary.

Kennedy, Patrick.

Neville, Daniel.

Norris, David.

Ó Foighil, Pól.

O'Reilly, Joe.

Raftery, Tom.

Ross, Shane P.N.

Ryan, Brendan.

Ryan, John.

Staunton, Myles.

Tellers: Tá, Senators Wright and Fitzgerald; Níl, Senators Howard and Costello. [873] Question declared carried.

Amendment declared lost.

Mr. O'Kennedy: I move amendment No. 2:

In page 2, subsection (1), line 22, to delete “other than” and substitute “including”.

In respect of property damage “damage” will mean—

(b) loss of, damage to, or destruction of, any item of property including the defective product itself.

In so far as property damage is concerned section 1 (1) of this Bill requires that the damage be to any item of property other than the defective product itself. Thus if an electric kettle, for example, self destructs but causes no damage to other property, no liability accrues under this Bill. If a motor car self destructs and crashes into a wall and the car is wrecked, the damage to the wall is recoverable but the damage to the car which was defective is not recoverable under this Bill. The Minister, of course, will point to the two conditions built into every contract of sale — sections 14 and 15 of the Sale of Goods Act, 1893, as amended by the Sale of Goods and Supply of Services Act, 1980. However, as was pointed out in the other House, there may be circumstances where a person might not be in a position to avail of the sale of goods legislation 1893 to 1980. It might not be possible to establish certain facts under the sale of goods legislation whereas it would be possible to come within the scope of this Bill which breaks new ground and sets up new circumstances.

Under the existing law if a person buys a product which turns out to be defective and causes damage and the vendor is not available or amenable or has not money, or if the company has gone into liquidation, the consumers' rights under the sale of goods legislation is based on contract and would be confined to the vendor of the goods. If such a consumer wants to succeed against anybody higher up the [874] chain he would have to prove negligence. However, in a situation where the contract or the tort remedies may not be open to the consumer, if we extend the terms of section 1 (1) of this Bill by including compensation for the defective item itself it would meet the situation. There is nothing to stop us if we are so minded from going beyond the minimum requirements of the directive.

The purpose and intent of this Bill is to introduce the new concept of strict liability without having to prove the very often impossible requirement of negligence. It seems strange, inconceivable and illogical that the very first item that should be included within the ambit of this Bill should be the defective item itself. In fact, the defective item itself is the first item to be excluded from this Bill. Thus if a vendor, as indicated previously, is gone, has no money or the company has gone into liquidation, the customer will have no effective remedy under the sale of goods legislation. Since such a customer cannot prove negligence if he is in this category he will have no remedy in contract or tort. He will have no remedy under this legislation unless we extend the definition as contained in section 1 (1). I urge the Minister in the clear interests of the consumer to accept amendment No. 2.

Mr. Costello: I concur with the sentiments expressed by Senator Kennedy. Our intention in tabling the amendment is to extend the definition of damage in terms of liability to ensure that we broaden the net rather than leave loopholes and to ensure that we do not create a situation whereby one set of circumstances in relation to a defective product is dealt with by strict liability and another is dealt with by the normal procedures of negligence and tort. We want to ensure that the burden of evidence remains on the producer as far as possible and to change the situation from the present one of caveat emptor to one of “let the producer beware”. It is difficult to see how there can be an argument against including the defective product in the definition of “damage” meaning loss [875] of, damage to, or destruction of, any item of property. There is nothing in the directive that prohibits us from extending the scope of the directive.

We should not be minimalist in this respect. Too often our legislation giving effect to directives is late and minimal. In the EC annual report that was issued last week it was stated that the incorporation of Community provisions into national law within the prescribed period is the exception rather than the rule. This was with direct reference to Ireland. National legislation is often adopted when proceedings initiated by the Commission are already at an advanced stage. That is the context in which this Bill has been introduced. We have been slow in producing it and minimal in implementation of the provisions outlined in the directive.

Why make it more difficult for a consumer to establish negligence in relation to the product itself? It is not satisfactory for the Minister to point to section 2 (1) and say that is already covered by “the producer shall be liable in damages in tort for damage caused wholly or partly by a defect in his product”. That is the existing situation. The whole purpose of the directive is to amend the existing situation, to improve the lot of the consumer so that not just the consequential damage or the liability arising from a defect but the actual defective product itself is covered.

I cannot see why the Minister has been presenting section 2 (1) as a satisfactory conclusion. Let us take for example the whole issue of haemophiliacs and the infection that resulted from contaminated blood plasma. We all know the difficulty and hassle there was for years before the Government accepted any responsibility. Negligence had to be proven. The Government simply refused to accept any responsibility in the matter until eventually they had to but they did so with very poor grace. If we had strict liability in relation to that defective product which was the cause of further damage, we would have avoided all the hassle that went on with people who were [876] in very serious ill-health suffering injury and, in some cases, death.

All products should be covered by this legislation and the defective product itself should be subject to the same liability. No doubt we could give other examples — the tablets that gave rise to thalidomide or the situation that exists at present in relation to mad cow disease or angel dust itself, insecticides or the so-called nutrients or hormone promoters.

A broad extension of the definition would be better than an exclusive one. I would be much happier if we did not have the definition as outlined in the Bill but simply left it to the dictionary definition of damage. We would be able to do business a lot better. The essence of this amendment is that strict liability should be extended to include the defective product as well and the Minister in pointing to section 2 (1) is not giving an adequate response to our concerns.

Mr. Howard: I support the amendment the objective of which is to extend the definition of damage in the interests of the consumer. The Bill states that “damage” means (a) death or personal injury; (b) the loss of, the damage to or destruction of any item of property other than the defective product itself. What this Bill appears to give with one hand it takes back with the other. It goes on: “Provided that the item of property — (i) is of a type ordinarily intended for private use or consumption,”. I would like the Minister to clarify that. Section 1 (b) (ii) states: “was used by the injured person mainly for his own private use or consumption;” There is a spirit of good neighbourliness throughout the country and that is good. Suppose for example, I purchase a defective product but the defect does not manifest itself during my very limited use of it but I oblige my neighbour by giving him or her a loan of the product and it explodes or disintegrates and causes damage. My reading of the section is that my neighbour has no comeback whatsoever because the appliance was intended for my private use or consumption. The safeguards that [877] are built into the Bill could eliminate the intention to protect the consumer.

Rather than repeat the very good arguments made, I will simply say I support the amendment. Very good arguments were made by Senators Kennedy and Costello and I encourage the Minister to accept the amendment. I would like him to comment on the example I gave.

Minister of State at the Department of Agriculture and Food (Mr. Kirk): At the outset, I wish to pass on the apologies of the Minister of State, Deputy Leyden. He has other legislation to deal with in the Dáil and I have been asked to deputise on his behalf.

I thank the Senators who spoke on this amendment. Article 9 (b) of the directive provides that damage shall not apply in relation to the defective product itself. In this regard we have absolutely no discretion or flexibility. In line with the general overall approach, the wording in the Bill in this case is the same as that of the directive. We had no option but to comply when transposing this provision into Irish law.

It is important to point out that damage to the defective product itself is already covered in Irish contract law under the Sale of Goods and Supply of Sevices Act, 1980. Section 14 of that Act provides for two very important implied conditions for the consumer in every contract sale: first, that the product or goods are of merchantable quality and, second, that they are reasonably fit for the purpose for which they are intended. If a product is defective when purchased it is almost certain not to comply with at least one, and in most cases both, of these criteria.

The purpose of the Bill and the directive is to provide remedies and redress over and above those already available under the existing contract and tort law. Accordingly the interests of the consumer is already well safeguarded. We have no discretion in this matter and for that reason I simply cannot accept the amendment.

[878] Mr. Costello: We have now two contradictory positions. On the first amendment we were told that we were implementing the directive, that the matter was covered by section (2) (1) and that it was being dealt with adequately because it had been brought to the attention of the EC Commission. On the second amendment we were told we had to stick to the terms of the directive. In section 1 (1) (a) the Minister has stuck to the directive and he is quite satisfied that he does not have to, so he lessens the scope. In the second instance, the Minister sticks to the directive and he is quite satisfied because he says he has no discretion in the matter. Would the Minister please explain why he seems to have had absolute discretion in relation to the first amendment and has no discretion in relation to the second amendment as in both cases we seek to broaden the scope of the definition of damage? It is scarcely good enough to say that the remedies and redress here are over and above that in existing tort law. What we seek is to provide strict liability to protect the consumer. Everything that is in the area of strict liability must be, of its nature, over and above what is in existing law. Why can strict liability not be extended to cover other areas like the defective product itself or the damage caused by death or personal injury? I have not heard a satisfactory explanation from the Minister. He is more or less giving excuses instead of explanations. I would like him to address the issue more effectively than has been the case to date.

Mr. Kirk: It is a matter of departing from the wording if that achieves the purpose in a better way. We simply cannot depart from the requirement of the directive. As I understand——

Mr. Costello: The Minister has already done so.

Mr. Kirk: As I understand the thrust of amendment No. 2, the result which Senators are endeavouring to achieve is adequately catered for under existing law, as I stated in my initial reply. Are [879] Senators advocating that we should have overlap or duplication? If we are satisfied that the existing legislation is adequate, why make the further provision proposed in amendment?

Mr. Howard: I wish to pursue the point I made. The definition of damage is:

“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

[880] (ii) was used by the injured person mainly for his own private use or consumption;

That covers me if I am the primary purchaser or owner of the product, but if I loan it to another person, from my reading of this section, damage does not apply in relation to whatever happens to the product in the possession of another person. Is that interpretation correct?

Mr. Kirk: I refer the Senator to the next amendment. Perhaps the observations he has just made would be more relevant to that amendment and we will have an opportunity to deal with them at that stage.

Question put: “That the words proposed to be deleted stand.”

The Committee divided: Tá, 21; Níl, 14.

Bohan, Eddie.

Byrne, Hugh.

Cassidy, Donie.

Conroy, Richard.

Finneran, Michael.

Fitzgerald, Tom.

Foley, Denis.

Haughey, Seán F.

Honan, Tras.

Kiely, Dan.

Kiely, Rory.

Lydon, Don.

McGowan, Paddy.

McKenna, Tony.

Mooney, Paschal.

Mullooly, Brian.

Ó Cuív, Éamon.

O'Donovan, Denis A.

O'Keeffe, Batt.

Ormonde, Donal.

Wright, G. V.

Níl

Cosgrave, Liam.

Costello, Joe.

Doyle, Avril.

Harte, John.

Howard, Michael.

Jackman, Mary.

Kennedy, Patrick.

Neville, Daniel.

Norris, David.

Ó Foighil, Pól.

O'Reilly, Joe.

Ross, Shane P. N.

Ryan, Brendan.

Staunton, Myles.

Tellers: Tá, Senators Wright and Fitzgerald; Níl, Senators Howard and Costello.

Question declared carried.

Amendment declared lost.

Mr. Kennedy: I move amendment No. 3:

In page 2, subsection (1), line 27, after “consumption” to insert “or for a business occupation or profession”.

This amendment will extend somewhat the principle being established by the Bill and admittedly it goes beyond the minimum requirements specified in the directive. However, as we have said on other [881] amendments, there is nothing in our Constitution or in our laws which says that we may not provide more genersously for consumers than we are obliged to do under the minimum requirements contained in this directive.

Why should a person who produces a defective product which causes injury to a small businessman during use be excluded from responsibility? Are we to be placed in a lottery situation? If a defective product explodes during use for private purposes the producer is caught by this legislation but if the product is being used by a small businessman when it explodes, then the producer escapes liability. It seems logical and fair that the principle being written into our law by this Bill should not be compromised by confining it to private user consumption as opposed to business and other consumption. The European Community would be quite satisfied if we applied this principle in its minimum content but there is nothing to stop the Oireachtas from providing further protection for small business people. Therefore, I urge the Minister to accept this amendment.

Mr. Costello: I support this amendment. The same principle was enunciated in relation to the two previous amendments; we want to extend the definition of damage and also extend producers' responsibility beyond private use or consumption to include business, occupational or professional use. Again, we do not want a minimal introduction of the directive. We should be as generous as possible in the application of strict liability to safeguard the consumer and by doing so we are ensuring a better quality product, better quality control and, ultimately the product is enhanced and its market value increased. The economy as well as the consumer benefits. It is not unreasonable in the context of this legislation to request its extension to the business or professional sector.

In the case of a small businessman or woman running a public house and encountering a defective product, why should the producer or manufacturer of that product not be responsible in liability [882] terms for the defect? The step from private consumer use to use in a small workshop or family busines is a small one. On the professional side, almost everything is done now on a professional basis. Members of the teaching profession use pens, books or other teaching aids in the classroom and any of these may be defective. This is not a case of personal or private use but it is akin to private use. Use of a product by a professional in this case could easily be covered by the intention of this Bill and the context in which this directive was produced.

There is no reason to restrict this legislation or the definitions in it to purely personal or private injury. It is unfortunate that we tend to implement EC Directives as well as international protocols, as we discussed in the Sea Pollution Bill two weeks ago, in a minimal way. We should be more generous.

This legislation was produced only when we were told to do so, we had exceeded the allotted time span for its introduction and it is coming, I suggest, under the shadow of a gun and being proposed in its most minimal terms. I ask the Minister to be more generous and not to say, as he said on the last amendment, that he has do discretion. Of course he has discretion. He can extend the legislation to a greater definition of damage if he wishes.

Mr. Howard: I support Senators Kennedy and Costello on this amendment. In extending the definition of damage to include business, occupation or profession the provisions of the Bill are being rightfully extended into the commercial sector. The legislation provides safeguards for the private individual's use; the intention of this amendment is to extend those safeguards to certain commercial or professional operations. Earlier on I suggested a half-way house between those two states to the Minister which he said he would reply to at this stage. My suggestion related to the loaning of a product and damage caused to the person to whom it was on loan; the Bill did not extend the definition of [883] damage to that kind of situation. I am anxious, therefore, that the point I raised with the Minister be clarified now and I fully support the argument put forward by Senators Costello and Kennedy for extension of the definition of damage to business, occupations and professions.

Mr. Kirk: Once again I draw the attention of the Members of the House to the provisions of Article 9 of the directive. When referring to property damage, this Article specifies that the definition applies only to property of a type ordinarily intended for private use or consumption. This proviso is also stated clearly in the preamble to the directive, page 8, lines seven and eight.

The directive is a consumer protection measure; that is its intent and purpose. The rationale for this is that business is or should be able to adequately look after its own interests. The law of tort and the various remedies available under it cater for the interests of business. It is evident, therefore, that the directive is not intended to apply to property damage in the commercial sphere. There can be no other interpretation and I am not, therefore, in a position to accept this amendment.

Mr. Costello: The Minister's reply is just as unsatisfactory as it was in the case of the other two amendments when he says that anything not included in the definition is adequately dealt with by the law of tort under existing legislation. The problem is that the purpose of this legislation and of the EC directive was to ensure strict liability where the consumer was at risk. Now a consumer can be at risk in a private or a public capacity. Drawing a line between private and commercial use is too rigid a solution; a large grey area exists where people operate in a private and a semi-private capacity. I gave two good examples in relation to a small business operation and a professional operation, where considerable personal damage can be caused by a defective product. We are leaving huge swards of areas unprovided for here [884] despite the intention of the legislation. We should be more generous in our definition and in our interpretation and extend the application of strict liability on behalf of the consumer to a greater rather than a lesser degree.

Mr. Howard: The main difficulty has been exposed as a result of the Minister's reply. The proposed application of this legislation is very restrictive. The Minister who introduced this Bill here last week dressed it up, saying it was the most significant consumer legislation to come before the House but at this point it emerges that severe restrictions are contained in it. The definition of damage and the provision in this Bill will apply to me as a private individual only. We experienced reservations from the introduction of this Bill and we attempted to establish clearly the limitations of this legislation with regard to the consumer. It has now emerged that it has an extremely restrictive application.

Mr. Kirk: I wish to make some points. Senator Howard mentioned earlier that goodwill in rural Ireland meant that items were lent among farmers and that this was not covered by the Bill or the directive. The loan of a product in such circumstances normally implies no liability on the part of the lender. If the situation were otherwise, producers would be placed in an impossible situation. The opening sentences of my original response to points raised by the three Opposition speakers graphically set out the position in relation to this directive and the facilitating legislation. The Confederation of Irish Industry which represents the interests of small businesses has not asked to have their activities covered by this Bill or this directive. That is a recognition of the restricted application of this legislation. I respectfully ask the Senators to reconsider their position in relation to this amendment.

Amendment put and declared lost.

Mr. Kennedy: I move amendment No. 4:

[885] In page 2, subsection (1), between lines 27 and 28, to insert the following:

“(c) consequential loss or damage sustained by the injured person, such loss to be assessed in like manner as losses are calculated by law in cases of tort;”.

The purpose of this amendment is to clarify conclusively that consequential or economic losses or damages sustained by an injured person come within the scope of this Bill. We have heard the Minister of State say that the advice he got from the previous Attorney General in respect of pain and suffering was that it was not included in this legislation. Today we were told the new Attorney General advises that consideration of pain and suffering is provided for in this legislation. Two different Attorneys General advising the Minister of State took differing views.

The arguments I made in support of the first amendment today are relevant in respect of this amendment also. I do not intend to repeat them but I remind the Minister of State of the conclusion reached by the English and Scottish Law Commissions and by the Pearson Commission in this regard. Those three well established commissions examined this question over a period of years. The definition of damages given in this Bill is excessively specific and restrictive and makes no reference to the definition of damage contained in the Civil Liability Act, 1961. It means that a court may not use the well defined meaning of the word “damage” or “damages” that has been used over centuries. This Bill defines damage in terms of two heads, (a) and (b); therefore that is all that a court will say when applying the normal rules of court. I urge the Minister to seriously consider this amendment above all others. It would clarify the legislation.

There is great confusion at present, as to whether consequential losses are covered by this Bill. I have checked with various colleagues in the law library and have found that much confusion and uncertainty have arisen from things said in the other House. On the one hand, we [886] are told by Alex Schuster, a distinguished lawyer from Trinity College, Dublin, director of ICEL that consequential and economic loss is not covered by this Bill; that was categorically stated at the conference held in the Incorporated Law Society on this topic. Deputy Michael Smith, the former Minister of State speaking elsewhere, stated that consequential damage is covered and included as a legitimate claim within the provisions of this Bill — I refer to volume 411, No. 7, column 2095 of the Official Report.

This amendment, therefore, would help enormously to remove some of the uncertainty and confusion that now exists and we would be happy if a shorter version of this amendment was agreed to by the Minister. He might look at that on Report Stage. I suggest that the amendment be abridged to “(c) consequential loss or damage sustained by the injured person.” That would cover it. The rest of that amendment could be regarded as superfluous in view of judicial interpretation and decisions in the courts.

I hope that the Minister of State will be responsible in this matter and permit three heads of damage rather than the two heads contained in this definition. Damage would mean (a) death or personal injury, (b) loss of, damage to, or destruction of any item of property other than the defective product itself and (c) consequential loss or damage sustained by the injured person. This is a most reasonable amendment and I urge the Minister of State to give it consideration. Legal practitioners at the moment are questioning the application of this legislation.

We need a united approach to this matter. There is no point in having three compartments, contract, tort and civil liability. Various learned treatises on the subject in America point up the desirability of a unified approach which is currently being implemented there. Having studied the approach to this matter in the other House where it was teased out in great detail and having read the debate on this matter in the House of Lords and the House of Commons at [887] all Stages, I think the Minister would be acting in the interests of the consumer and of legal clarity if he would accept this amendment.

Mr. Costello: I strongly propose that the Minister accept this amendment. Of the five Committee Stage amendments this is the most important. It would be very valuable if we could extend the definition of damage to the three areas suggested here: (a) death or personal injury, (b) loss or damage to an item of private property by a defective product and (c) consequential damage or loss sustained by the injured person. That provision is extremely important because nowhere else in the Bill is there reference to financial or economic loss, pain or suffering sustained as a consequence of a defective product. It is not covered under the terms of strict liability defined in the directive.

Without this amendment, consequential loss would be left to the law of tort and of contract, but if we want to introduce radical change to protect the consumer, let us specify consequential loss or damage in the definition of “damage”.

This is an important amendment and if accepted by the Minister will expand the definition to a reasonably satisfactory degree. We would have liked to see it expanded further, but this amendment gives a necessary degree of protection against consequential loss and covers many related matters we have discussed over the years.

Defective plasma means that haemophiliacs may be infected with the AIDS virus. Neither consequential loss whether economic, pecuniary or financial, nor pain and suffering as a consequence of that defective product had been admitted for strict liability with the result that we spent years haggling over whether compensation would be given in respect of that defective product. The matter brought about the fall of a Government before the last election and caused enormous human suffering in a very sensitive area. Why can we not [888] extend the definition of damage to cover consequential loss in that context?

One could quote other examples. A factory could be reduced to rubble by a defective light bulb. What about consequential loss there? How is it covered except by tort, by negligence or by contract? Why not by strict liability? We are going to end up with a mish mash of protection measures. We are trying to implement EC Directives to ensure strict liability to protect the consumer. Let us be generous where a desirable extension could be applied.

Mr. Kirk: The purpose of amendment No. 4 appears to be the same as amendment No. 1 so far as consequential loss or damage is concerned. The arguments advanced by my colleague, Deputy Leyden when he rejected amendment No. 1 apply with equal force to this amendment. I am satisfied that this subsection as it stands in combination with section 2 (1) provide for consequential loss and on that basis I cannot accept the amendment.

Mr. Costello: The Minister is satisfied that the section provides for consequential loss. I wonder if he would tease that out further? We are certainly not satisfied because from our reading of the Bill it is far from clear. There are two items covered — “damage” means death or personal injury and “damage” means loss of, damage to or destruction of any item of property, provided that the item of property is such and such for private use. Where is there a reference to consequential loss? I have no doubt that it is covered within the broad provisions of the Bill in terms of tort, but where is it covered in terms of strict liability? That is what I would like to know and that is the whole tenor of the amendment.

Mr. Kirk: I think that when Minister of State, Deputy Leyden, set out the arguments in his response to amendment No. 1 — Members will be familiar with the argument he advanced at that stage — it clearly set out the position that, [889] having had consultation with the Attorney General at the time, there was inadequacy of cover in the particular provisions. On that basis I think Members might consider their stance and perhaps accept the validity of the arguments that were advanced in opposition to amendment No. 1.

Mr. Kennedy: It is disappointing that we have a different Minister of State at this stage and that the Minister of State with the main responsibility of this area could not be here, because this is a most important amendment. We have to put it on the record that it is also disappointing to read that in the other House one Attorney General gave one view in regard to payments and another Attorney General now apparently giving another view to this House. In regard to consequential loss, economic loss and so on, it is intolerable that we have this lack of clarity. You have the Director of the Irish Centre for European Law, a distinguished lawyer in this area, telling us that consequential and economic loss is not covered by this legislation. That is a categorical statement. You have the former Minister of State, Deputy Smith, as I indicated, clearly saying categorically that it is covered. Then you have the Minister of State, Deputy Leyden, coming in today telling us that this is a matter for the courts and the judges.

Of course, it is a matter for the judges, but I would like to suggest to this House that our job as legislators is to keep these unnecessary controversies from reaching the High Court and the Supreme Court. We see, for example, the fiasco that has been made in regard to various matters including the recent situation on extradition.

Here we are trying to create three heads under that definition of “damage” in order to bring clarity into the law. We want to have it spelled out that death, personal injury, property damage and consequential economic loss come within the ambit of this legislation. If the Minister is not responsive, then I think it is a poor day indeed for legislators. I think we have done our job. The feeling at the [890] moment among practitioners of law is that consequential loss is not covered. The very fact that there is a question mark over it means that some of this legislation will have to be tested. I would prefer if we did not have to have a case stated for a High Court judge to rule on this matter. We should do our jobs as legislators as far as we can and we should bring clarity into the law.

I sympathise with the Minister having to handle this matter at short notice, but his reply is not sufficient for us. Therefore reluctantly we must press this amendment.

Mr. Costello: Very briefly, we have emphasised that this is the most serious and most important amendment we are proposing. We think it would fit the bill if the Minister was to take this amendment and look at it between now and Report Stage. We are not necessarily talking about the specific wording of this amendment but that the sentiments it expresses would be taken into consideration. Clearly, there is an element of confusion whether consequential loss is covered by the definition of damage and if paragraph (c) was inserted to clarify the situation, then the matter would be resolved. I ask the Minister to take it back and come back to us on Report Stage with suggestions.

Mr. Kirk: It appears there is some confusion about what different people are supposed to have said. The realities are, I am advised, that the Attorney General's advice was sought on the matter of consequential loss and he is satisfied on that point. I am also advised that my colleague, Deputy Leyden, did not suggest what is being imputed to have said earlier today. It is not a question of there being alternative varying advice from the two different Attorneys General. That is not the case. As I said, the Attorney General's advice has been sought on the matter and he is satisfied in regard to it. I would ask the Members on the other side to respect his opinion on the matter.

[891] Mr. Costello: We respectfully ask the Minister to take it back and look at it for Report Stage.

Mr. Kennedy: The Minister was not present and obviously he is now relying on hearsay. The fact is that the Minister of State, Deputy Leyden, said here that he sought further clarification on the matter and that he is now satisfied that pain and suffering come within the ambit of the Bill. I have already given Senators the reference to the Dáil debates on the matter when the Minister of State said that pain and suffering did not come within the ambit of the Bill.

However, he told us today in this [892] House that he sought further advice on the matter and he is now satisfied that it comes within the ambit of the Bill. If you want, I can read the extract from the Dáil and go through it all; but the Minister said he sought further clarification from the new Attorney General.

The Minister mentioned the new Attorney General, I did not; and I do not think any Member here mentioned it. He was the first person to say that the new Attorney General had further clarified the matter and I think it is disappointing the Minister does not agree to give clarity to the Bill.

Amendment put.

The Committee divided: Tá, 16; Níl, 25.

Cosgrave, Liam.

Costello, Joe.

Doyle, Avril.

Harte, John.

Howard, Michael.

Jackman, Mary.

Kennedy, Patrick.

Neville, Daniel.

Norris, David.

Ó Foighil, Pól.

O'Reilly, Joe.

Raftery, Tom.

Ross, Shane P.N.

Ryan, Brendan.

Staunton, Myles.

Upton, Pat.

Níl

Bohan, Eddie.

Byrne, Hugh.

Cassidy, Donie.

Conroy, Richard.

Cullen, Martin.

Dardis, John.

Finneran, Michael.

Fitzgerald, Tom.

Foley, Denis.

Haughey, Seán F.

Honan, Tras.

Keogh, Helen.

Kiely, Dan.

Kiely, Rory.

Lydon, Don.

McGowan, Paddy.

McKenna, Tony.

Mooney, Paschal.

Mullooly, Brian.

Ó Cuív, Éamon.

O'Donovan, Denis A.

O'Keeffe, Batt.

Ormonde, Donal.

Ryan, Eoin David.

Wright, G.V.

Tellers: Tá, Senators Howard and Costello; Níl, Senators Wright and Fitzgerald.

Amendment declared lost.

Mr. Kennedy: I move amendment No. 5:

In page 3, lines 17 and 18, to delete “where damage is caused as a result of a failure in the process of generation of electricity”.

Section 1 (1) of the Bill provides that electricity is a product for the purposes of this new legislation. Unlike the position in the directive itself, liability is restricted to those instances “where damage is caused as a result of a failure in the process of generation of electricity”. That is section 1 (1) (b).

Finbar O'Mahony, Secretary of the [893] Electricity Supply Board, in a recent article entitled “Customer Policy, the new EC Trading Environment: the ESB's Position” state that “electricity is mentioned in this directive because under many laws electricity is deemed to be energy rather than goods”. However, section 1 (1) (b) provides that 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 generation of electricity and not to the defects which are due to external agents interfering after the electricity has been put into the network or to damage resulting from a failure to supply.

Section 1 (1) (b) is another example, in my view, of an important variation which the Minister has made in the wording of the directive. The directive itself simply states that “product includes electricity”. The Minister of State on several occasions today has referred to the need to carry over the exact wording of the directive but here the Minister has varied and extensively altered the definition. Therefore, in any fair interpretation of “electricity” as defined in the directive itself, it must include electricity in all its forms and facets so far as generation, supply or any other aspect of electricity is concerned. The Minister has changed that. He has cut back, varied and altered the clear meaning of the word “electricity” as contained in the directive and this could lead to serious loss to those consumers who may be affected by this change in definition. The large scope of electricity deals with several areas other than generation. Therefore, in view of the special position of the ESB, and indeed the position of private suppliers of electricity also, this change in the directive should be looked at.

It must also be emphasised that in the recent UK case of Foster v. British Gas in 1990 it was held in that case that an EC directive can indeed have direct effect as far as nationalised companies and industries are concerned. Thus, even if domestic legislation does not implement a directive or only partly implements an EC directive, an individual can rely on the particular directive in a claim for [894] damages against the body responsible for providing a service which is under the control of the State. I am suggesting because of the supremacy of European law over domestic law in certain situations and because that it is directly applicable and that EC directives are directly applicable, if not introduced or only partly introduced here, that on the basis of the Foster and British Gas decision an individual would have a straight case against a nationalised or semi-State industry in this regard. Such bodies, as has been pointed out by the Secretary of the ESB, must comply with EC directives even though the State has not implemented them or only partly implemented them.

The Minister of State in endeavouring to defend his position in the other House — and he will probably do so again in this House — pointed to the alleged intention of the directive as far as electricity is concerned as contained in a statement on the subject entered in the minutes of the Council of the European Communities on the occasion of the adoption of this directive. It is extraordinary that a Minister would come into either House and reply on the minutes of a meeting of a Council of the EC. It would be extraordinary if an Irish court or any court were to rely on such extrastatutory or extra-parliamentary material. In fact, it is not done in the courts. The courts do not look at Dáil reports and Seanad debates and all the extra parliamentary material to decide what is the intention of the directive. Is it now to be suggested, as the Minister of State said in the other House, that in order to find out the intention of the directive we must look at the minutes of the Council of the EC, or indeed the minutes of the European Commission?

We have this directive in black and white before us. It is annexed to this Bill, and I already have commended the Minister and the Government for so doing. We cannot and should not go beyond the clear words of the directive and start talking about minutes and other extra-parliamentary material. Section 1 (1) (b) is an extraordinary departure from [895] the clear wording of the directive dealing with strict liability in the area of electricity. Therefore, I urge the Minister, in his own words, to adhere to the exact wording of the directive on this occasion.

Mr. Howard: I wish to support Senator Kennedy in putting forward this amendment. I do not want to repeat at length the points made by Senator Kennedy except to endorse one point he made, which is that the directive simply said that “product includes electricity”. Therefore, it was a conscious decision by the Minister or Government, whoever is responsible, to move from a straightforward situation where the directive said that “product includes electricity” to what we have in the Bill which states: “electricity where damage is caused as a result of a failure in the process of generation of electricity”.

Will the Minister say what damage we are talking about here? Will he please give an example of the kind of damage this line in the Bill is supposed to cover? His reply may show that my reason for what I am going to say might not be well founded but when you find the Minister for the Government move from what is a very simple proposition to one that is not quite so simple, you have to seek reasons, you have to try to anticipate what was the thinking that brought about that change. I believe that change was brought about as a result of representations made to the Government by certain interests or certain people involved in that area, including the ESB. I am suggesting that it is very likely that representations were made to the Government by either the ESB or/and others who have an interest in providing electricity. There has been considerable interest in and talk about the privatisation of electricity generation. I am not against that proposition.

Another reason to change the wording is to ensure that this protection is built in and that the possible privatisation will be an attractive proposition to the private sector. I am advancing these few points to the Minister and I look forward with [896] interest to his response. I fully support the other points made by Senator Kennedy.

Mr. Kirk: The definition of electricity in the Bill is that suggested to us as being the optimum by the EC Commission. They felt it achieved the purpose of the directive. I am satisfied that Article 2 is intended solely to cover defects due to a failure in the process of production of electricity and not defects due to external agents intervening after the electricity has been put into the network. The rationale behind this principle is that when a power cut occurs electricity is no longer in the network and cannot, therefore, be considered as a product within the meaning of the Bill. A surge in current, however, occurs during the time when the electricity is still in the system and as such is considered to be a defect in the product, the product in this case being the electricity itself. I am also satisfied from our contacts with the EC Commission that the directive is intended to cover surges in power but not power cuts. As far as I am aware, this interpretation has been the one followed by other member states when transposing directives into their national law. Unfortunately, I am not in a position to accept this amendment.

On the point raised by Deputy Howard, neither the Minister for Industry and Commerce nor his Department received representations from any interests relating to the definition of electricity. Thus, the issue of privatisation is not in question.

Mr. Kennedy: The Minister has just said that he has been informed that a similar approach has been adopted by other Legislatures. In fact, the Consumer Protection Act, 1987, in the UK, in Part I, section 1 (1) states:

A “product” means any goods or electricity.

Electricity is not defined. It is taken in all its facets and aspects. There is no reference to the generation of electricity or anything else. There you have a very [897] comprehensive Bill that was introduced in 1987 in the UK and they have not departed from the strict wording of the directive. I do not know of any other country that has departed from the wording of the directive as the definition in our Bill has. If the Minister is looking for [898] support of his arguments to reject the amendment, I do not think he can rely on the British legislation.

Question put: “That the words proposed to be deleted stand”.

The Committee divided: Tá, 24; Níl, 15.

Bohan, Eddie.

Byrne, Hugh.

Cassidy, Donie.

Cullen, Martin.

Dardis, John.

Finneran, Michael.

Fitzgerald, Tom.

Foley, Denis.

Haughey, Seán F.

Honan, Tras.

Keogh, Helen.

Kiely, Dan.

Kiely, Rory.

Lydon, Don.

McGowan, Paddy.

McKenna, Tony.

Mooney, Paschal.

Mullooly Brian.

Ó Cuív, Éamon.

O'Donovan, Denis A.

O'Keeffe, Batt.

Ormonde, Donal.

Ryan, Eoin David.

Wright, G. V.

Níl

Cosgrave, Liam.

Doyle, Avril.

Harte, John.

Howard, Michael.

Jackman, Mary.

Kennedy, Patrick.

Neville, Daniel.

Norris, David.

Ó Foighil, Pól.

O'Reilly, Joe.

Raftery, Tom.

Ross, Shane P.N.

Ryan, Brendan.

Ryan, John.

Upton, Pat.

Tellers: Tá, Senators Wright and Fitzgerald; Níl, Senators Howard and Kennedy.

Question declared carried.

Amendment declared lost.

Question proposed: “That section 1 stand part of the Bill.”

Mr. Howard: I want to raise what I regard is a very crucial matter on section 1. It is crucial that we get clarification of what we are talking about here. I support the exclusion of primary agricultural produce. I do not think that a defective product in the majority of cases has ever occurred inside the farming gate.

The liability for a defective agricultural product occurs at what is described as the initial processing stage. What does “initial processing” mean? My concern is shared by a number of organisations. I want to give one example. I received a letter from the consultative committees of accountancy bodies in Ireland. They said they consider that clarification is required as to what precisely constitutes “initial processing”, for example would packaging of vegetables, grain drying or the initial cleansing of fish prior to being placed in cold storage, constitute such processing? They consider that the definition of initial processing contained in section 1 (1) of the Bill should be significantly expanded to avoid that doubt. I have doubt about this.

I want the Minister's response to the following example. Currently we are all concerned about certain developments in the meat industry. A perfect product is produced on the land, a perfect product initially processed. Some years later it is removed from the chill room, the cold store or wherever it is, it is thawed out, [899] it is reprocessed and a defect occurs. My reading of the legislation is that no responsibility or no damage attaches to the reprocessing, which is the point at which the damage occurred but comes back to the initial processor. I would like the Minister's comments on the reservation expressed by the accountancy bodies as to what precisely is meant by “initial processing.” Here again we have introduced a change to the wording in the directive.

Under section 1 “primary agricultural products” means the products of the soil, of stock-farming and of fisheries and game, excluding such products and game which have undergone initial processing. Are the packaging of vegetables, the drying of grain and the initial cleansing of fish considered to be the initial processing? I would like the Minister to comment on the longer term scenario I also referred to.

Mr. Kirk: One aspect of the Bill's definition of “product” is that it exempts primary agricultural products which have not undergone initial processing. Such products were also exempted by the directive but the directive allowed member states, in 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 Senators on Second Stage 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 based on a number of grounds. First, of the nine member states which to date have implemented the directive, only Luxembourg has included primary agricultural products. Agriculture does not boom 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 the total Community production whereas for Ireland this figure is 2.0 per cent. [900] Second, in the other eight markets — the UK, Germany, Italy, Belgium, Denmark, Holland, Greece and Portugal — primary agricultural products are excluded from the implementing legislation. Third, 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, for example, 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 where damage caused by negligence can be proven. Under contract law goods are required to be of 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, for example, 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; and the Animal Remedies Act, 1956, which regulates the import, manufacture, sale and advertisement of animal remedies; 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. 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 [901] 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 “any processing of an industrial nature which could cause a defect” drawn from 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 Conferation of Irish Industry and the Industrial Costs Monitoring Group, concur with our thinking in respect of the exclusion of primary agricultural products. The main opposition to this exclusion is represented by the Consumers Association of Ireland, who feel there is no real relevance to the argument that primary agricultural products are subject to environmental factors beyond the control of the producer. Because of the extent to which fresh vegetables are, for instance, sprayed with chemicals and the land in which they are produced is artifically fertilised no valid distinction can be made between natural and processed products.

In view of the fact that the vast majority of the 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 of their production costs and, as a result, have a negative effect on competitiveness in respect of further EC members. Product, as defined in the Bill, will be very wide in coverage and any question of whether [902] a particular product is covered by the legislation will ultimately be determined by the courts.

Section 1 of the Bill defines “initial processing” in relation to primary agricultural products as any processing of an industrial nature of those products which could cause a defect therein. In most situations where a defect has been caused in such products by the processing operation, it will be obvious that the process used was “of an industrial nature,” for example canning, bottling, freezing and packaging, etc.

However, in some cases where the raw product has been subjected to some minor process only such as, for instance, trimming and washing and packaging, it will not be such a clean-cut case of industrial processing. It is considered, therefore, that the question of whether or not a product has been subjected to such processing will be a matter for interpretation by the courts. This was the advice of the Commission when we sought their advice on what does or does not constitute initial processing. The definition in the Bill is that contained in the preamble to the directive.

Progress reported; Committee to sit again.

Sitting suspended at 6 p.m. and resumed at 6.30 p.m.