THIRD REPORT
Report on the Product Liability (Amendment) Bill
(NIA Bill 13/00)
COMMITTEE FOR ENTERPRISE, TRADE AND INVESTMENT
TOGETHER WITH THE MINUTES OF PROCEEDINGS OF THE COMMITTEE RELATING TO THE REPORT AND THE MINUTES OF EVIDENCE
Ordered by The Committee for Enterprise, Trade and Investment to be printed 16 May 2001
Report: 3/00 R (Committee for Enterprise, Trade and Investment)
COMMITTEE FOR ENTERPRISE, TRADE AND INVESTMENT:
MEMBERSHIP AND POWERS
The Committee for Enterprise, Trade and Investment is a Statutory Departmental Committee established in accordance with paragraphs 8 and 9 of Strand One of the Belfast Agreement and under Assembly Standing Order No 46. The Committee has a scrutiny, policy development and consultation role with respect to the Department of Enterprise, Trade and Investment and has a role in the initiation of legislation. The Committee has 11 members including a Chairperson and Deputy Chairperson and a quorum of 5.
The Committee has power:
- to consider and advise on Departmental budgets and Annual Plans in the context of the overall budget allocation;
- to approve relevant secondary legislation and take the Committee Stage of relevant primary legislation;
- to call for person and papers;
- to initiate enquiries and make reports;
- to consider and advise on matters brought to the Committee by the Minister of Enterprise, Trade and Investment.
The membership of the Committee since its establishment on 29 November 1999 has been as follows:
Mr Pat Doherty (Chairperson)
Mr Sean Neeson (Deputy Chairperson)
Mr Alex Attwood
Dr Alasdair McDonnell
Mr Wilson Clyde
Ms Jane Morrice
Mrs Annie Courtney*
Dr Dara O'Hagan
Mr Duncan Shipley Dalton
Mr Jim Wells*
Mr David McClarty
*Mr Campbell was replaced by Mr Jim Wells on 3 October 2000.
*Ms Lewsley was replaced by Mrs Annie Courtney on 29 January 2001.
TABLE OF CONTENTS
Third Report
Report on Product Liability (Amendment) Bill
Minutes of Proceedings of the Committee relating to the Report
1. Written submission from the Committee for Agriculture and Rural Development
2. Written submission from the Committee for Finance and Personnel
REPORT 3/00
(COMMITTEE FOR ENTERPRISE, TRADE AND INVESTMENT)
Report on the Product Liability (Amendment) Bill
(NIA Bill 13/00)
General
1. The Product Liability (Amendment) Bill was referred to the Committee for consideration in accordance with Standing Order 31(1) of the Northern Ireland Assembly after completing its Second Stage on 8 May 2001.
2. The Minister of Finance and Personnel made the following statement under section 9 of the Northern Ireland Act 1998:
"In my view the Product Liability (Amendment) Bill would be within the legislative competence of the Northern Ireland Assembly".
3. The prime purpose of the Bill is to implement European Directive 1999/34. This Directive amends Council Directive 85/374/EEC of 25 July 1985 on liability for defective products, which is implemented in Northern Ireland by the Consumer Protection (Northern Ireland) Order 1987. Directive 1999/34 extends product liability to primary agricultural products and game.
4. The amending Directive (1999/34) means that strict liability will apply to "primary agricultural products" and game as it already does to other products (including processed agricultural products).
5. In accordance with Standing Order 48 (2) of the Northern Ireland Assembly the Committee sought the views of the Committee for Agriculture and Rural Development and the Committee for Finance and Personnel (see Appendices 1 and 2).
Consideration of Bill
6. The Committee met on 16 May 2001 to consider the Bill. The Committee had before it the Product Liability (Amendment) Bill and the Explanatory and Financial Memorandum to the Bill (NIA Bill 13/00-EFM).
7. Officials from the Office of Law Reform appeared before the Committee on 16 May 2001 to answer questions about the provisions contained in the Bill (a transcript of the evidence is included in this Report).
8. On that date the Committee carried out a detailed clause by clause scrutiny of the Bill. A Legal Adviser from the Northern Ireland Assembly provided advice to the Committee.
9. The Committee agrees with the recommendation made by the Committee for Agriculture and Rural Development in which they strongly urge that full information and advice is provided to farmers and others affected on the effects of the Bill and the advisability of insuring against the possibility of damage claims as a result of the removal of the existing exemption (see appendix 1). The Committee considers that the provisions of the Bill, as introduced, are necessary to implement the Directive.
10. The Committee considers that no amendments are necessary to the Product Liability (Amendment) Bill.
PAT DOHERTY MLA
Chairperson
MINUTES OF PROCEEDINGS OF THE COMMITTEE RELATING TO THE REPORT
WEDNESDAY 16 MAY 2001
COMMITTEE ROOM 144 PARLIAMENT BUILDINGS
Present: Mr P Doherty (Chairperson)
Mr S Neeson (Deputy Chairperson)
Mrs A Courtney
Mr D McClarty
Dr A McDonnell
Ms J Morrice
Dr D O'Hagan
Mr J Wells
Apologies: Mr A Attwood
In attendance: Mrs C White (Committee Clerk)
Miss J Presho (Executive Support)
Mr D Donaldson (Administrative Support)
Mr P Johnston (Assembly Legal Adviser)
In attendance for the public session at 12.10pm: Office of Law Reform, Department of Finance and Personnel - Mr M Foster, Mr N Lambe
Product Liability (Amendment) Bill (NIA 13/00)
1. Public evidence session at 12.10pm - Office of Law Reform, Department of Finance and Personnel
1.1. Officials from the Office of Law Reform gave evidence, in public, to the Committee on the Product Liability (Amendment) Bill. The officials outlined the reasons for the introduction of the Bill and answered a number of questions put by the Committee on the implications of the Bill in Northern Ireland.
Ms Morrice left the meeting at 12.30pm
1.2. The Committee carried out a detailed clause by clause scrutiny of the Product Liability (Amendment) Bill. The clauses were read along with the related commentary in the Explanatory and Financial Memorandum.
Clause 1 was considered.
Agreed - that the Committee is content with the clause 1 as drafted.
Clause 2 was considered.
Agreed - that the Committee is content with the clause 2 as drafted.
Clause 3 was considered.
Agreed - that the Committee is content with the clause 3 as drafted.
1.3. The Committee considered the responses from the Committee for Agriculture and Rural Development and the Committee for Finance and Personnel and agreed with the recommendation made by the Committee for Agriculture and Rural Development. However, the Committee considered that the provisions of the Bill are necessary to implement the Directive.
1.4. The Committee considered the draft report.
Agreed - that the Committee ordered the draft report to be printed.
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MINUTES OF EVIDENCE
16 May 2001
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mrs Courtney
Mr McClarty
Dr McDonnell
Ms Morrice
Dr O'Hagan
Mr Wells
Witnesses:
Mr M Foster ) Office of
Mr N Lambe ) Law Reform
1.
The Chairperson: Good morning. You are very welcome.
2.
Mr Foster: Members have a copy of the Product Liability (Amendment) Bill and the Explanatory and Financial Memorandum. The Bill arises from an obligation to implement EU Directive 1999/34, and it is very short. It will extend the current system of strict product liability to include primary agricultural products and game - food in its raw state. Processed food is already included under part II of the Consumer Protection (Northern Ireland) Order 1987.
3.
The Bill means that consumers affected by food sold in its unprocessed state will be able to sue a producer for damages without having to prove the producer's negligence. However, the injured person must be able to prove that the product was defective and that the defect caused the injury.
4.
The original Product Liability Directive was promulgated in 1985 and was implemented in the 1987 Order, allowing member states to include food sold in its raw state. At the time, there were concerns that food in its raw state might have hidden defects beyond the control of the producer. However, it has been acknowledged at European level that those difficulties could happen to other products already covered by the original Directive. In addition, the four countries that have implemented the Directive have not reported any problems. Concerns that it might lead to an increase in insurance costs were also proven to be unfounded in those four countries. A United Kingdom-wide regulatory impact consultation process revealed that the majority of producers already have adequate insurance cover and that any increases would be minimal. The additional costs, compared to the benefit for consumers, would be small.
5.
Members will note that clause 2 refers to a change in the constitutional position and to the procedure for any future amendments to the Directive. There were difficulties in bringing forward the implementation. Under normal circumstances, as envisaged under the 1987 Order, the Directive's implementation would have been a matter for secondary legislation. However, the power to amend the 1987 Order, and therefore the 1985 Directive, was reserved to the Secretary of State for Northern Ireland.
6.
Given the area's overall emphasis - it is a transferred matter - it would have been constitutionally impossible to exercise that power, or for the Secretary of State to bring forward a matter within the competence of the Northern Ireland Assembly. Therefore, clause 2 rectifies that by transferring a power from the Secretary of State, with his agreement, to the appropriate devolved Department.
7.
The Executive have agreed that, in future, any changes made to the original Product Liability Directive can be given force by secondary legislation by the Department of Enterprise, Trade and Investment.
8.
The Bill is seen to represent a small, but important step in improving the framework of consumer protection. The amendment will remove any confusion over which food products are covered by strict liability, since all food will now be covered.
9.
There has been no policy choice whatsoever on the part of the Executive in relation to the Bill. Implementation is mandatory. The European Commission insists that the Directive must be implemented into national law. That concludes my short presentation on the Bill.
10.
Mr Wells: Is it reasonable to say, at a time when farming is going through a crisis, it needs this Bill like a hole in the head?
11.
Mr Foster: Absolutely. That has been one of the concerns that have been raised from the outset. However, as I have said, we have no choice but to implement this. Otherwise, the UK Government will be in breach of the Directive, and the European Commission will begin infraction proceedings. The result will be fairly heavy fines for the UK Government in the first instance, which will then be recouped from the Northern Ireland Executive.
12.
Mr Wells: If a farmer produces beef under our traceability scheme, and someone eats that beef, gets CJD, and dies, can the relatives of that person sue the farmer concerned under this Bill?
13.
Mr Foster: That is theoretically correct. However, the Directive has a 10-year bar - if somebody died, it would have to be within 10 years of the beef product coming from the farm.
14.
Mr Wells: CJD has a maximum incubation period of eight years, so it is possible that within the 10-year period someone would die. Any claim would be very serious; you are talking about hundreds of thousands of pounds. If a farmer inadvertently found that he was not insured, or that his insurance policy did not cover this, would he be risking ruination?
15.
Mr Foster: Yes.
16.
Mr Wells: You say that you can get insurance, and some policies already cover it, but we have been quoted a figure of £200 to £300 to take out specific insurance for this.
17.
Mr Foster: Are you referring to the figure in the Explanatory and Financial Memorandum?
18.
Mr Wells: Yes.
19.
Mr Foster: That figure relates to farmers who do not already carry product liability cover. The UK-wide regulatory impact consultation exercise revealed that 99% of farmers already carry that cover, so we are talking about a small proportion.
20.
Mr Wells: That is part of their overall liability insurance?
21.
Mr Foster: Yes.
22.
Mr Wells: How much extra do they pay to include that?
23.
Mr Foster: Nothing, because they are already covered for Product Liability Directives. They are already covered, for example, in a situation where they may be negligent. They are also covered where the original product is processed in some way. The figures we have received on that regulatory impact assessment lend support to the view that the impact on the farming community, which you are interested in, will be minimal.
24.
Mr Wells: Many folk in South Down who gather up potatoes and carrots, and sell them in the square at Rathfriland or the market in Ballynahinch, are not farmers, but they handle primary agricultural products. They do not have insurance for that type of thing. If they spread disease by handling those goods how would they be affected?
25.
Mr Foster: The experience of other countries that have it in force has shown that there have been no cases brought because of the Directive.
26.
If somebody were injured because of a product defect they would first have to show that that defect originated from a particular source. If they could do that, they could sue any, or all, of the people down the line. In practice, they would sue the person most likely to meet the claim - a person with insurance.
27.
Mr Wells: Did you consult with the Ulster Farmers' Union and the Northern Ireland Agricultural Producers' Association (NIAPA)? What was their response?
28.
Mr Foster: They did not give any response. People accept that it is mandatory. It is a harmonisation measure to level the playing field throughout the European Community. We carried out a secondary consultation process, because we felt that certain groups, and their views, may have been omitted from the UK-wide regulatory impact assessment.
29.
We went specifically to the Department of Agriculture and Rural Development and to the Department of Enterprise, Trade and Investment to get another list of all people who may be affected. We asked for their comments on the regulatory and business side of things.
30.
We received only one response, which was positive and in support of the Directive. The reply also noted that the measure will help in the longer term to restore public confidence in food safety, because the effects on business will be of a limited nature. As such, it is useful.
31.
Mr Wells: We consulted the Agriculture and Rural Development Committee. It wants all farmers and producers to be informed of the new Bill and be advised on having adequate cover. What do you intend to do once it becomes law?
32.
Mr Foster: We intend to issue a press release clearly stating the updated position. We will also be writing to the unions and those with farming interests to inform them that the Directive is now law, and that they should take the necessary steps, if they have not already done so, to ensure that their product liability cover is up to date.
33.
Mr Wells: As a farmer's son, I know that the vast bulk of farmers' insurance is done through NFU Mutual. It would be very wise if they wrote to all of their existing policy holders to advise them to ensure that they are covered for the new Directive.
34.
Mr Foster: That presents us with no difficulty. We can alert the NFU Mutual to do that.
35.
Ms Morrice: I am the last person to say that we should not adopt European Directives. What are the four countries already applying the Directive?
36.
Mr Foster: Finland, Sweden, Luxembourg and Greece.
37.
Ms Morrice: I wondered if they were northern or southern European countries. What is the Republic of Ireland's position?
38.
Mr Foster: The Republic has recently implemented the Directive, and it is now in force.
39.
Ms Morrice: Has there been any reaction from the farming community there? How long has it been in force?
40.
Mr Foster: In a report in 'The Irish Times' within the last six weeks, the Irish Farmers' Association (IFA) said that farmers accept their responsibilities in that area, and that the rigorous safety procedures made it extremely unlikely that an animal carrying BSE would enter the food chain. The question of a legal action was theoretical. The IFA would not know how that would work until something happened.
41.
Ms Morrice: The argument about restoring public confidence in food safety is valid. One important message that must come out is the need to inform the farmers. It will be a field day for the legal profession.
42.
Mr Foster: Evidence from other countries suggests not. The absolute bar for a claim is 10 years, but there is also a three-year time limit within that, which is the normal limitation of action period. The chances of someone bringing a successful claim under the Directive appear to be relatively slim.
43.
Mr Wells: How long until companies like Claims Direct pick up on that?
44.
Ms Morrice: Will people soon be able to make a claim against a farmer because they got food poisoning in a restaurant?
45.
Mr Foster: Claims Direct do not operate in Northern Ireland, and there would need to be a fairly radical change to the framework of the legal profession for people to bring such a claim. However, I accept your point.
46.
Dr McDonnell: Mr Wells has stolen most of my thunder. When you speak about livestock, you are talking about poultry, pigs, sheep and cattle. Those animals would normally go through a few farms during the production process - there is a meat factory and there is a wholesaler. How do you define the producer? Do you consider each farm or factory in the process to be the producer?
47.
Mr Foster: An injured person will take action through a civil case against the producer, the importer or the "own-brander". The producer is defined as the manufacturer or, in the case of raw materials, the person who mined or otherwise obtained the product. Importers are defined as those who bring goods into the community - not just into the UK. When goods are imported into another European country and then sold on to the UK, the liability lies with the first importer - not the UK importer. "Own-branders" put their name on a product to give the impression that they are the producer. Other suppliers such as wholesalers and retailers are not liable unless they fail to identify the producer, importer or "own-brander" when asked to do so by the person who has suffered the damage.
48.
Dr McDonnell: I am not an expert in legal niceties, but how do you prove that a product is flawed? If someone gets food poisoning in a restaurant, was the product flawed?
49.
Mr Foster: Yes. A product is defective if the safety of the product is not such as people are generally entitled to expect.
50.
Dr McDonnell: Most of the flaws that I see in food are inflicted during the handling or processing. I eat in restaurants, at work and at home. I buy the food that I eat at home from Sainsbury's, Tesco and many smaller shops. God forbid that I contract CJD, but if I did, how could I prove that a particular piece of meat, that was bought from a certain shop and that came from a certain farm, gave me the disease?
51.
Mr Foster: That question takes us back to Mr Wells's point about traceability.
52.
Dr McDonnell: There is a lack of traceability. I know that if I buy meat from a butcher's shop it might be possible to trace where the butcher bought the beef from on a particular day. However, I do not know where the Assembly restaurant buys its meat from.
53.
Mr Wells: If you were vegetarian you would not be at risk from that disease.
54.
Mr Foster: Legislation concerning processed foods has been in place for the last 14 years.
55.
Dr McDonnell: I welcome the Bill from the point of view of the consumer. However, I do not want to see a farmer with a small business punished. I do not understand how you can make the legislation work. You are getting no-claim cases because the system is unworkable.
56.
Mr Foster: My original, underlying point is that that is not a policy choice on the part of anybody in the Northern Ireland Executive. The policy was agreed at European level and we have to implement it.
57.
The Chairperson: Thank you very much.
MINUTES OF EVIDENCE
Wednesday 16 May 2001
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mrs Courtney
Mr McClarty
Dr McDonnell
Dr O'Hagan
Mr Wells
Also in attendance:
Mr P Johnston, Assembly legal adviser
58.
Mr Wells: Many people are starting little diversification schemes. My father is a farmer, and he has a policy that covers him if his tractor hits someone, or if one of animals escapes. That is fine; no extra cost is incurred. However, the small farmer will have to take out a policy specifically for that. Farmers need the Bill like a hole in the head. We can do nothing about the situation, and, unfortunately, people will be caught. People will happily go about their business oblivious to the legislation until one of them is caught because they are uninsured. People potentially face ruination if that happens. The fine is not the issue - the other person probably has legal aid and will go through the courts and ruin the person he is against. You say that there have not been any such cases, which I accept. However, it is a certainty that more litigious cases will be brought in Northern Ireland in five years than there currently are. That is the trend - everyone is now suing for everything. That is a blow for people starting out. It involves more paperwork and hassle, which is the last thing that people need. We can do nothing about that - we are stuck with it and we have to rubber-stamp it.
59.
Mr Neeson: We must take on board the Agriculture and Rural Development Committee's comments. It said that the industry must be informed of the changes that are coming about. We realise that we are implementing something that we will have to implement anyway.
60.
The Chairperson: We have had the informal discussion, and we will now formally proceed through the Bill. The Assembly legal adviser, Mr Percy Johnston, is present in case we are stuck on any point or need any queries answered.
61.
This is the first session of the Committee's meeting on the Product Liability (Amendment) Bill. We have already heard evidence from the officials of the Office of Law Reform, Department of Finance and Personnel. Several questions were put on concerns that members had about the Bill's effects.
62.
The purpose of the meeting is to carry out a clause-by-clause scrutiny of the Bill, and members will have the opportunity to raise any concerns, suggestions or amendments. Members should read the relevant clauses and paragraphs in the Bill along with the related commentary in the Explanatory and Financial Memorandum. The Bill has three clauses. Each clause and any subsection will need to be considered in turn. The Committee will have two options: to agree that the Committee is content with the clause as drafted, or to agree that the Committee recommend to the Assembly that a clause be amended. The primary purpose of the Bill is to implement European Directive 1999/34, which extends product liability to primary agricultural products and game.
Clause 1 (Product liability: repeal of exclusion for game and agricultural produce)
63.
The Chairperson: Clause 1 is explained on page 3 of the Explanatory and Financial Memorandum.
64.
Question put, That the Committee is content with clause 1 as drafted.
65.
Question agreed to.
Clause 2 (Power to modify enactments in consequence of modification of product liability Directive)
66.
The Chairperson: Clause 2 will permit any future changes to the original Directive to be affected by the more straightforward process of secondary legislation. That is also explained on page 3 of the Explanatory and Financial Memorandum.
67.
Question put, That the Committee is content with clause 2 as drafted.
68.
Question agreed to.
Clause 3 (Short title)
69.
Question put, That the Committee is content with clause 3 as drafted.
70.
Question agreed to.
71.
The Chairperson: The Committee should read the responses from the Committee for Agriculture and Rural Development and the Committee for Finance and Personnel.
72.
Does the Committee agree to include the Committee for Agriculture and Rural Development's recommendation in the report?
Members indicated assent.
73.
The Chairperson: The report must be given a Second Reading.
74.
Does the Committee also agree that the oral evidence from the Office of Law Reform and the written submission for the Committee of Agriculture and Rural Development and the Committee for Finance and Personnel be included in the overall report?
Members indicated assent
75.
Report given its Second Reading and ordered to be printed.
76.
Question put and agreed to.
77.
Resolved: That the Report be the Third Report of the Committee for Enterprise, Trade and Investment.
TopCOMMITTEE FOR ENTERPRISE, TRADE AND INVESTMENT
PRODUCT LIABILITY (AMENDMENT) BILL (NIA BILL 13/00)
WRITTEN SUBMISSION BY:
COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT
16 May 2001
Thank you for your minute dated 10 May, in which you sought this Committee's comments on the Product Liability (Amendment) Bill.
As you know, the Committee discussed the matter at its meeting on 11 May and members were most concerned at the potential for additional costs to farmers and the possible ramifications of a successful claim against a farmer under the Bill's provisions.
Following receipt of further information from the Department, the Committee Chairperson has authorised this response on behalf of the Committee.
The Committee was most disappointed that there appears to have been no local consultation on the Bill. It therefore recommends that the ETI Committee, in its report, strongly urges that full information and advice is provided to farmers, and others affected, on the effects of the Bill and the advisability of insuring against the possibility of damage claims as a result of the removal of the existing exemption. In a response to a request for information on the Bill, DARD officials informed the Committee Clerk that those involved in agricultural production and the fishing industry would be made aware of possible repercussions and additional costs.
The Committee Chairperson was also of the opinion that, if it was indeed essential for the Bill to receive Royal Assent before the summer recess, it should have been introduced much earlier than it actually was. This would have enabled full and proper consideration to be given to the Bill by the most appropriate Statutory Committee, in full consultation with other relevant Committees.
You will wish to bring this minute to the attention of the ETI Committee who will, I assume, wish to include it in their report.
PAUL MOORE
Committee Clerk
APPENDIX 2
COMMITTEE FOR ENTERPRISE, TRADE AND INVESTMENT
PRODUCT LIABILITY (AMENDMENT) BILL (NIA BILL 13/00)
WRITTEN SUBMISSION BY:
COMMITTEE FOR FINANCE AND PERSONNEL
11 May 2001
Thank you for your letter of 10 May in which you offer the Committee for Finance and Personnel the opportunity to comment on the product Liability (Amendment) Bill.
The Committee considered the Bill during its meeting on 24 April when officials from the Office of Law Reform gave a helpful explanation of the background to the proposed Bill. However, the Committee concluded that this Bill lay outside the policy interest of the Finance Committee and that the Bill was more appropriate to the ETI Committee. The Committee responded to the Minister of Finance and Personnel advising him that had no views on the policy intent of the Bill.
MARTIN WILSON
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