Check against Delivery
President of the Law Reform Commission, Mrs. Justice McGuinness, Ladies and Gentlemen.
I am pleased this morning to launch the Annual Conference of the Law Reform Commission.
This year, as you know, the Conference is devoted to examination of the broad topic of "Reforming the Law on Personal Debt" and it follows very quickly on the publication on 16 September, 2009 of the Commission's Consultation Paper on "Personal Debt Management and Debt Enforcement".
The publication of that Paper was timely, its subject matter is of critical importance to the very many families and individuals now affected by the serious economic and financial downturn.
The Paper is a very large and comprehensive document containing 123 provisional recommendations for reform of the law and administrative practice in the area of personal debt.
Today's distinguished speakers will shortly put in sharp focus their own experience and expertise on the subject matters.
I want to underline the importance that the Government attaches to this examination of the law on personal debt.
Let me be clear - this system needs to become more humane, more efficient and more effective in this area.
The reforms we discuss today and the Commission's considered conclusions in this area will form the template for that new system.
If I have one message it is this - we need to have that system in place fast. I understand the legal complexities - they are profound.
I understand that legislation takes time.
I understand also that we cannot afford unintended consequences.
But people are suffering real difficulties in making various repayments and they need the system to hear them.
The system of collection and enforcement of debt requires us to acknowledge, where possible, the exceptional circumstances that exist at this time.
This important Consultation Paper arises from the current programme of work of the Law Reform Commission, as agreed with the Government, which contains a commitment to examine the law in this whole area not just as regards enforcement, but also as regards the system of management of debt at the critical point at which persons are in difficulties.
We all know that the necessary process of consultation, with which the Commission is now involved, is an important one so as to ascertain the views of all stakeholders, both debtors and creditors, and to determining what needs to be done to achieve real change for the benefit of all.
I ask, respectfully, that this process be concluded in as timely a fashion as is possible.
Where possible the Commission might consider the early release of finalised proposals as they are concluded - rather than awaiting the completion of the final report.
We want short, medium and long-term proposals as soon as possible. We all agree that the sooner real and effective changes can be made the better it will be for those who are affected.
In parrallel, I have already discussed with my Government colleagues how we might drive reform in this area, including the implementation of the commitments in the Revised Programme for Government, in regard to personal debt.
This clearly requires a "whole of Government" approach.
To do this, I believe we need the focus of a Cabinet Committee of the responsible Ministers to drive policy in this area and to ensure that there is concrete implementation of workable policies that deliver for those most in need.
You may be assured that the Government will promote and maintain policies that draw together the strengths of each of the responsible Departments and their agencies.
We will bring forward proposals in this respect in the short-term.
I note that among the comprehensive range of issues addressed in the Consultation Paper are
· preventative measures to address personal indebtedness at an early stage to resolve debt problems in an efficient way;
· the need to bring debt enforcement processes into line with international best standards;
· the utility of imprisonment as a means of enforcement; and
· the putting in the context of relevant changes to the financial services regulatory framework.
Of importance, as the Commission points out in its Paper, is that the conclusions they reach and, indeed the new policies that the Government develops, must be guided by a balance between the rights of both creditors and debtors.
What cannot be ignored is that rights can be asserted by both parties under the Constitution and the European Convention on Human Rights.
While it is my conviction that the sanction of imprisonment should be used for serious and wilful offenders, I also believe that imprisonment is not the answer in every case. It is my conviction that imprisonment simply does not make social or economic sense for very minor infringements.
This is particularly true when there is a lot of pressure on our prison system. For that reason I have taken measures to minimise the use of imprisonment for non payment of both fines and civil debts.
I want to dispel the impression sometimes given that our prisons have ever been clogged up with fine or debt defaulters. This is simply not the case.
Today, for example, there is no one in jail in regard to a civil debt matter.
In the last few years, the number of such persons held in custody for non-payment of fines or civil debts at any one time is a tiny fraction of the overall prisoner population. To illustrate this point, on 30 October, 2009 approximately 0.17 percent of the numbers in prison custody that day fell into this category
Earlier this year, I published a Fines Bill and one of its main objectives is to reduce the need to imprison fine defaulters.
No one will go to prison because he or she cannot afford to pay a fine.
Only those who can afford to pay but simply refuse to do so will have to fear the last resort of possible imprisonment.
We want to do so without resorting to the expensive option of imprisonment. That said there will be a limited number of cases where imprisonment may have to be used as a last resort.
The imprisonment of people who refuse to obey a court order to pay a civil debt is an issue that I have also addressed. The State provides the mechanism whereby private citizens can have their disputes resolved by the courts and the judgment of the court enforced.
If a person refuses to obey a court order to pay a civil debt owed to another person, some action has to be taken. One of the options for the enforcement of court orders is imprisonment. However, clearly imprisonment should only be used as a last resort - but only a last resort.
In response to a recent High Court decision I introduced the Enforcement of Court Orders (Amendment) Act 2009.
The Act ensures that a debtor cannot be imprisoned if the debtor is unable to pay the debt. The debtor must be present at proceedings, he or she is entitled to seek legal aid, the court must be satisfied that failure to pay is due to wilful refusal and that there are no goods that could be seized to satisfy the debt.
The court can request the debtor and creditor to seek resolution by mediation. Imprisonment is to be used as a final resort, only where the debtor can afford to pay the debt but refuses to obey a court order to do so and only where the alternative of seizing goods to meet the debt is not available.
The Law Reform Commission view is that imprisonment of debtors is unjustifiable but it also indicates that "the question nonetheless remains as to whether imprisonment should have any role in civil debt enforcement procedures even as a remedy of last resort". I await their final conclusions with interest.
It will be only in very exceptional cases that a person might end up in prison for failure to pay a civil debt with the operation of my new legislation,
As Minister for Social and Family Affairs, I promoted the development of the Money Advice and Budgeting Service (MABS) as an agency that I strongly believe has the capacity to provide effective support for persons with difficulties in managing debt.
The Government has demonstrated its support for MABS by the provision in 2009 of additional resources and the appointment of additional money advisors to 19 MABS offices, bringing to 271 the number of money advice staff working in 65 locations around the country.
I believe that our faith in MABS as an important State support must continue. It offers probably the best chance of intervention, short of voluntary settlement, at this time. It means also that the lending institutions must show goodwill to those who are prepared to better manage their debt. That goodwill has already been demonstrated by the lending institutions in relation to mortgage holders.
The legislative changes on enforcement of the kind envisaged by the Commission are complex and difficult. But that is not a reason to shirk in any way from the challenge at hand.
I readily agree with the Commission's view that litigation must always be regarded as a last resort and that the legal system must be framed in a way that supports alternative dispute resolution. In this regard, it is worth noting that the Commission is finalising its Report on Alternative Dispute Resolution or ADR. That Report will be keenly awaited by the Government.
Again, because of its potential to keep debt related issues out of the Courts I ask that this issue be treated as an absolute priority.
There is growing use of alternative dispute resolution both in this country and internationally as an option available to help resolve civil disputes. In many cases the agreement reached through ADR has offered a speedy resolution of a dispute and has kept the matter from the courts.
The Commission's provisional recommendations proposed a general statutory framework for mediation and conciliation. Among the key recommendations is that there should be a clear distinction that mediation and conciliation should be seen as very different from litigation, but should be considered as part of a fully integrated civil justice system that includes litigation. A key recommendation is that a court should be able to enforce an agreement reached through mediation or conciliation.
Mediation always has the potential to save on court time and legal costs and that is why rules of court, for example, continue to be developed to facilitate adjournment of proceedings in our courts to permit mediation.
In a Bill to deal with problems in relation to Multi Unit Developments I have incorporated provisions to allow for mediation by parties to reach settlement so as to avoid the need for court intervention. There are similar provisions in our laws on personal injuries.
It is my view that the future lies with a more structured approach to mediation than exists at present in our legal system.
The Enforcement of Court Orders (Amendment) Act 2009 provides partial reform of the law on enforcement of debt. The Act clarifies the law on those who wont pay.
The Commission envisages extensive updating of all the law on enforcement and this is to be welcomed. It also envisages the establishment of a central Debt Enforcement Office so as to take much of the recovery of debt out of the court system. The concept of such an office is undoubtedly attractive, but has the potential to be costly. The key will be to ensure that any such Office would be cost effective and will not be an unreasonable burden on the taxpayer and the Exchequer. The State should not be regarded as a collection agency for all personal debts.
The Commission proposal to supplement or replace our bankruptcy laws, as contained in the Bankruptcy Act 1988, will not be easily achieved if the experience of putting in place the 1988 Act is recalled. It took a Working Group many years to report and it took as long again to enact the legislation.
Government strategy on management and enforcement of personal debt will, of course, be strongly guided by the final recommendations of the Commission. To the extent that legislation will be involved and that it may be complex it will be a challenge to implement in a short time. On that basis, the Government Strategy will be to identify measures, administrative and legislative, that can be implemented in the short term so that early and effective results can be achieved. The momentum for change has already started and I can assure you, that it will be maintained by the Government.
Today, as we meet, many thousands of our friends, neighbours, family members are struggling with unemployment, hardship and debt. Our challenge is to make the system help them, not hinder their path to recovery.