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Annual Report of the Ombudsman 1995

Chapter Three - General Issues Arising from Specific Complaints

Principles of Good Administration

Last year, in the introduction to my report, I highlighted the importance of accountability for both elected and non-elected public servants. Accountability can take different forms - political, financial and administrative. The latter is the area in which my Office and indeed, the courts, operate. My role is to ensure that the exercise of decision making powers is carried out not only in a proper legal manner but in a manner consistent with fairness and good administrative practice. To guide me, I have regard to the principles of good administration. Most of these principles were set out as far back as the 1980s in a series of recommendations from the Committee of Ministers of the Council of Europe which were endorsed by the individual member states.

There is little doubt that greater knowledge and awareness of these principles within the public service will lead to improved standards of public administration. For this reason, I have decided to highlight particular cases which illustrate how individual citizens suffered as a result of failures to observe these principles.

Unfair Discrimination

The Ombudsman Act, 1980 does not define maladministration but it refers to actions by public bodies which, among other things, are "improperly discriminatory". Good administration requires, as I reported last year, that "unfair discrimination must be avoided - like cases must be treated in like manner". I feel strongly that public bodies must ensure that the highest standards of equity and fairness are observed in all their dealings with the public. Indeed, these standards should form the cornerstone of all customer service initiatives in the public service. The following two cases which, coincidentally, both involve the Department of Education, illustrate how two individuals suffered because like cases were not treated in like manner.

The first case concerns unfair discrimination by the Department of Education in refusing to award a grant under the Vocational Education Committee (VEC) Scholarship Scheme. The initial evidence showed that the complainant was not entitled to the grant because he did not fulfil the criteria for eligibility. The requirements specified that the candidate must have obtained either two honours in the 1992 Leaving Certificate examination or an equivalent standard following a second-level programme of education outside the State. The applicant did not have either qualification. He had, however, completed a third-level course in the United Kingdom, obtaining a Higher National Diploma which enabled him to enter a third-level course here. The Department did not accept the Diploma as 'equivalent' to two Leaving Certificate honours and pointed out that the course which he had followed was not at second-level. The Department also informed me that it was not possible for an exception to be made in his particular case.

When I obtained the Department's file on the matter, I discovered that the Department had found it possible in a number of cases to make exceptions to the rules of the VEC Scheme in question. In fact, it had done so as recently as January 1995 (I first contacted it about this case in May 1995). The academic attainments of some candidates to whom grant aid was allowed were practically the same as those of my complainant.

My concern was that the Department did not exercise the same degree of discretion in my complainant's case, and, in fact, had not acted fairly in this case in that it had not treated like cases in like manner. When I put my opinion on the matter to the Department, it agreed to pay the grant and full arrears to the complainant.

The second case of unfair discrimination concerned the Department of Education and the Trí Ghaeilge Scholarship Scheme. This scheme provides for up to twenty third-level scholarships each year for specific courses which must be pursued through Irish at certain colleges. It applies only to students who have completed their second-level education through Irish.

A student who met all of the qualifications of the scheme in 1993, was refused a scholarship because the quota had been filled. Some of the twenty scholarships available had been awarded, however, to students pursuing a course (Medicine at University College, Galway), which was not included on the list of approved courses in the published scheme.

My examination of the case showed that scholarships had been awarded to students following the non-approved course since 1989 even though the course was not included in the scheme or mentioned in any of the explanatory material relating to the scheme until 1994. After lengthy contact with the Department, it agreed to award the student the sum of �3,239 - the value of the scholarship in the academic year 1993/1994.

I informed the Department that I was very concerned at the unacceptable way the scheme had been operated before it was regularised in 1994. I pointed out that, if a concession is to be given, then, as a fundamental principle, that concession must become the rule and apply to everyone. I sought and received the Department's assurance that it would review any similar cases in the light of the principle established by this case.

As a general rule, Government schemes and programmes are given effect through primary legislation or through regulations made by the appropriate Minister. For example, the vast majority of payments to social welfare recipients are provided for in the Social Welfare Acts and in regulations made under those Acts. However, among Departments generally, the Department of Education is exceptional in that many of its schemes have no statutory basis. For instance, the Higher Education Grants Scheme, the School Transport Scheme and the scholarship schemes which I have already mentioned, are administrative in nature. In practice, I treat complaints coming within these schemes in the same way as those coming within the ambit of statutory schemes. My approach is that only those who meet the terms and conditions of the schemes are entitled to benefit although my Office will, from time to time, suggest amendments to the schemes as a whole to correct anomalies or injustice. The evidence from the vast majority of complaints which I receive, suggests that the Department adopts a similar approach to mine. However, I consider that instances of unfair discrimination, such as I have described above, might be less likely to occur if the Department's schemes were placed on a statutory footing. I have recently made suggestions along these lines to the Department.

Proportionality

This principle places an obligation on public bodies, in the exercise of a discretionary power, to maintain a proper balance between the adverse effect of their decisions on citizens and the purpose being pursued by those bodies. The familiar phrase "let the punishment fit the crime" is often used to illustrate this principle. The principle of proportionality is an established feature of administrative law in other member states of the European Union and of the Union itself. It is becoming a feature of Irish constitutional and administrative law and, in the past few years, the concept has been employed by the courts, principally as a means of judging whether the restrictions imposed by legislation on the exercise of any given legal right are excessive in the circumstances.

My interest in the principle of proportionality also centres on this key word "excessive". Specifically, where a citizen fails to meet the qualifying conditions set by a public body for payment of a grant or benefit, and is thereby disqualified from payment, I will ask whether this failure merited such a penalty. Public bodies still tend to administer their schemes and programmes in a rigid manner; even minor breaches of a scheme or minor failures to meet qualifying conditions tend to attract the same penalties as major ones. In short, the principle of proportionality has not yet been given sufficient recognition.

A good example of a case where my predecessor took issue with a public body on the principle of proportionality concerned the administration of a milk subsidy scheme by the Department of Agriculture. It was a condition of the scheme that, in order to qualify for a subsidy, good quality milk be supplied and proper records be kept of those supplies. While it was also a requirement that claims for payment be submitted within a reasonable period, the Department accepted, for many years and without question, the late submission of claims. The complainant, who had a history of late submission of claims, was eventually denied payment of over �5,000. This was at a time when the Department, in an effort to deal with the administrative problems arising from the late submission of claims, decided to refuse his and all other claims solely on the grounds that they were late. My Office took the view that the penalty in this case was not proportionate to the infringement of the scheme, bearing in mind that a similar penalty would apply for supplying substandard milk or failing to keep proper records, either of which would have represented a serious infringement of the scheme. The Department accepted my Office's view and agreed to pay the subsidy in this case.

The principle of proportionality also features in certain complaints against the Department of Social Welfare. Every year, my Office receives complaints from people who belatedly discover that they have been entitled to a contributory social welfare payment for some time but who, when they apply, are not paid arrears from the date on which they would have been first eligible. These complainants feel that, because their entitlement is based on social insurance contributions, they should be fully entitled to whatever arrears arise.

I received 12 such complaints in 1995. In many of these cases, very substantial arrears - up to eight years and �40,000 in one case - are at issue. These complainants did not apply for the pension at the prescribed time either because they were simply unaware of their entitlement or because they say that they were given wrong information regarding entitlements. The Department says that arrears can only be paid for a maximum of six months prior to the actual date of claim and that their position is governed by the regulations relating to late claims.

On a number of occasions in the past, my predecessor expressed his concern about the restriction on arrears. In his 1993 Annual Report, he expressed the view that this provision is essentially unfair and that it is not in line with the principle of proportionality i.e. that the penalty (loss of arrears) should be in proportion to the "fault" (failure to apply in time). The Department says that it is currently reviewing its position. However, I remain concerned that pension entitlements, based on social insurance contributions, can be lost simply because there was a failure to apply in time without due regard to the reason for the failure to apply. In my view, the penalty imposed by the regulations is, in many cases, too severe. Some of these complainants say that they were unaware of their entitlements. It seems to me that the social welfare system has now become so complex that it may no longer be sufficient for the Department to put the onus on ordinary citizens to be aware of their rights and entitlements. For these reasons I have started a formal investigation of three of these complaints.

The Provision of Information

The principles of good administration require that public bodies should have available general administrative guidelines about their schemes and programmes to which the public at large may refer. There is no doubt that information is fundamental to transparency and accountability in the way Government and public bodies operate. Increasing the availability of official information enables the public to become more involved in the making and administration of laws and policies of central government and in the actions and decisions of local government and other state bodies. All bodies have a duty to respond to enquiries from the public in a prompt and, as far as possible, open manner. However, the growing complexity of the administrative and legislative system is placing the public at a serious disadvantage in terms not only of seeking information, but actually knowing what information to look for. This, in turn, places an increasing responsibility on public services to be as generous as possible in their dissemination of information.

I receive many complaints where citizens, while not given the wrong advice, were not given adequate advice. An example is the Domiciliary Care Allowance (DCA) Scheme which provides for the payment of an allowance to the parents of handicapped children to help alleviate the burden when substantial additional care and attention is required. I take the view that, where a health board has a professional involvement in the management of handicapped children, it places a certain responsibility on the personnel who have contact with the family to provide information on specific allowances for the handicapped. A recurring problem in the complaints which I receive is the failure of health boards to provide information regarding this allowance resulting in parents losing out on payments for a number of years.

In almost all cases, the applicant is paid DCA from the date of application. However, should the parents request that arrears of the allowance be paid from the child's second birthday, the date the child could first be considered, this will normally be refused on the grounds that payment is made from the date of application. The case usually presented by the parents is that they had been unaware of the existence of the allowance and often only discovered it from a third party.

The following cases illustrate the problem.

In the first case, which concerned the Eastern Health Board, I established from its file that the Board had been professionally involved with the family nine years prior to the date of payment of the allowance. I was satisfied that the Board would have had a reasonable opportunity to advise the parents regarding DCA within that time. When I put this to the Board, it reviewed the case and paid arrears of DCA, amounting to �7,546, from the date of its first professional contact with the child.

In a case concerning the Southern Health Board, it was accepted that there had been a high level of contact between its staff and the family. When requested to review the case, it agreed to pay DCA arrears of �9,672. The Board also sought legal advice on its obligations in such matters and subsequently advised me that it intended to review other similar cases which it had on hands.

These cases illustrate the need for health boards to be aware of their obligations regarding the provision of information. The Eastern Health Board has taken an initiative in this area with the provision of a Customer Services Shop at Dr. Steevens' Hospital, Dublin 8, which provides up-to-date, accurate information and advice to callers on all aspects of health and social services. I emphasised, at a recent meeting which I had with the Chief Executive Officers of the health boards, that complaints of this nature continue to recur and the need to take concerted action. I also raised the question of the payment of Disabled Persons Maintenance Allowance (DPMA) to persons aged 16 - 18 years in full-time education (see page XXX). The CEOs have agreed to review their procedures in the light of a memorandum which I am preparing setting out all the relevant factors on these issues.

Discretionary Powers

Public bodies must ensure that discretionary powers are exercised in a reasonable manner having regard to the principles of good administration, all the circumstances of the particular case and without undue fettering of their actual discretion by exclusion of classes of persons from eligibility or otherwise.

Some public bodies do not fully appreciate my role in relation to their exercise of discretionary powers. Some take the view that, where they have the power to exercise discretion, they are free from scrutiny by the Ombudsman. This is not so. I must be satisfied that discretion is exercised in a reasonable manner. This is why I always insist that public bodies supply comprehensive reports on complaints which I refer to them so that I have before me all the relevant facts and evidence to allow me to test the reasonableness of their decisions. As the following cases demonstrate, it is important that, in exercising their discretion, public bodies take into account all the circumstances of a case before making a decision.

The Eastern Health Board refused to provide financial assistance to a woman towards the cost of clothing under the Supplementary Welfare Allowance (SWA) Scheme. The application was refused on the grounds that the applicant was considered to have additional income which she had not disclosed. The basis for this conclusion was that she was alleged to be cohabiting with a man. The complainant rejected the allegation.

My concern centred on the fact that the decision to disallow the application was based on what was described as "local knowledge" of the complainant's relationship. There was no corroborating evidence to support this contention and the complainant was not therefore in a position to challenge the basis for the allegation.

My Office discussed the matter further with the complainant and she was able to provide me with information to support her case which I then put to the Board. As a result the decision was revised, and she received the financial assistance under the SWA Scheme.

The case illustrates that public bodies must have adequate procedures in place to ensure that their discretionary decisions are soundly based. In case of complaint, they must also be able to show me that they have exercised their discretion in a reasonable way. The reliance on hearsay, in the absence of any other corroborative evidence, is not, in my view, a reasonable basis on which to make a discretionary decision.

Another case which I received concerned a complaint from a man who had left the family home following the breakdown of his marriage. Shortly after he had moved out, his wife applied to a County Borough Corporationl to have the tenancy changed to her name. The Council accepted the granting of a Lone Parent's Allowance to the wife as proof that her spouse had left and transferred the tenancy to her, without consulting the complainant. However, in order to exercise his right of access to his children, he had an arrangement whereby he moved into the house every second weekend while his wife moved out. He feared that his right of access to his children might be affected by the removal of his name from the tenancy agreement.

I acknowledge that cases of this type can cause difficulty for local authorities. I can also understand the Council's decision to rely on the payment of a Lone Parent's Allowance as the basis for its actions. Nevertheless, I was concerned that the Council had transferred the tenancy without any reference to the complainant or any views he might have had on the matter. I have put my views to the Council and I have asked it to review its procedures for dealing with such cases.

Openness and Transparency

I have already outlined some cases which illustrate instances of unfair discrimination. A related principle of good administration states that public bodies must apply their powers with objectivity and impartiality - factors not relevant to the particular case must be disregarded. At the heart of this principle are the concepts of openness and transparency. Citizens are entitled to be given reasons for decisions made by public bodies. However, I find that some public bodies adopt a very minimalist approach when it comes to giving reasons for their decisions. The result is that, instead of satisfying the citizen, they only serve to undermine his or her confidence in the decision making process generally.

The following case concerning Westmeath County Council illustrates this point, where, year after year, it has failed to complete a footpath and has failed to explain adequately to a residents' association the reasons why it has not been completed. The question of my jurisdiction also arose in this complaint. Under the Ombudsman Act, 1980 I am authorised to investigate complaints against local authorities. This power extends to the administrative actions of such bodies only. Complaints relating to the functions reserved to the elected members of local authorities are outside my remit.

A representative of a residents' association complained to me about the failure of the Council to complete approximately 80 metres of a footpath on one side of a busy roadway in Athlone. He complained that the unpaved area was being used for the parking of vehicles which was a danger particularly to elderly pedestrians and mothers with prams.

Following a meeting of the residents' association in 1991 they approached the Council asking that the footpath be completed. They were advised that the cost involved would be �2,500 but that no provision had been made in the Council's estimate for 1992 for this work. In October 1992, they were advised that the cost of the work had risen to �3,600 and that the question of providing this amount would be considered in the estimates for 1993. In April 1993, the Council indicated that, while it was aware of the need to extend the footpath, funds would not be allocated in 1993. At this stage a complaint was made to my Office.

From the information available to me, it appeared that the selection of road projects for construction or improvement was an executive function of the Council. However, in this instance, it seemed that it was the elected Councillors rather than the officials who were selecting the works to be undertaken by prioritising particular projects, nominated by the Council's District Engineer.

As a general principle, I would agree that Council officials should have regard to the views of the Councillors in deciding on the priority of works to be undertaken. However, I was concerned about the complainant's contention that the wishes of the majority of residents were not reflected in the decision year after year not to include the footpath on the priority list. Neither was it clear from the Council's correspondence with the complainant that adequate reasons were given for the decision. The Council's view was that, while the arrangement did not have a statutory basis, and was based on custom and practice, the local Councillors provided valuable feedback as to what the interests of the residents were in respect of particular projects. It maintained that, in making decisions to prioritise projects, the Councillors were exercising a reserved function.

I decided to seek legal advice on the Council's procedure. The advice I received was that the decision to approve or not approve the construction of the footpath was an executive function. The advice also indicated, however, that this was a function about which the elected members had a right to be informed, consulted and, where they decided to prioritise specific works, to have their decisions implemented. The advice concluded that elected members were in a position to choose between projects by utilising their powers under the City and County Management (Amendment) Act, 1955. In this instance, however, as no resolution had been passed by the elected members under the Act directing that the works should not be proceeded with, it remained essentially a matter for decision by Council officials and therefore within my jurisdiction.

On the basis of my legal advice in regard to the division of powers between the officials and the elected Council and also that the decision, year after year, not to proceed with the footpath did not seem to be based on a system of priorities involving objective criteria, I advised the Council that I had decided to commence an investigation of the complaint.

The Council, in reply, said that the question of prioritising the works had again been considered at a meeting of the area Council members and that it had agreed to defer provision of the footpath for further consideration in conjunction with the following year's roads programme. The Council added that this decision had been both confirmed and endorsed by the full membership of Westmeath County Council at a subsequent meeting.

Having been given the endorsement of the elected Councillors, this latest decision constituted an action of the Council taken in the exercise of its reserved functions. As such, it was not subject to examination by me. I was, therefore, satisfied that the procedures followed in deciding not to complete the footpath were consistent with the requirements of the City and County Management (Amendment) Act, 1955. In the circumstances, I was precluded from continuing my investigation of the complaint.

Bearing in mind my earlier remarks about the need for transparency in decision making, it is important to set out my concerns in relation to the issues raised by this complaint. I have a duty to ensure that public bodies within my remit exercise their powers fairly and reasonably and within the limits prescribed by law. It is not my function to make representations on behalf of complainants. In this case I had doubts about the legal basis for the Council's procedures which were confirmed when I started my investigation.

The question of whether it was fair and reasonable not to grant the footpath a high priority is now outside my jurisdiction. However, while not wishing to interfere with the role of the elected Council, I have some comments to make which reflect the concerns of all citizens on the question of determining priorities. There are many areas of public administration where, as a result of scarcity of resources, demands for public services cannot all be met and some order of priority is necessary. It is very important that priorities should be established objectivly so that individual applicants may have a better chance of knowing whether they are being treated fairly and in a non-discriminatory manner vis-à-vis other applicants.

In this case, there seemed to be little transparency in the way in which individual projects were prioritised. It may well be that, had I been able to pursue the matter, I would have been convinced that, for good reasons, the provision of a footpath was not a high priority compared to other projects. As a result of the final decision of the Council, the matter was effectively placed outside my remit and I was unable to say whether or not the complainants had been treated fairly.

At the request of the elected Council I met a delegation and we had a full exchange of views on the general issues underlying the complaint.

Other Issues

Access to Information on the Environment

The Access to Information on the Environment Regulations, 1993 were made by the Minister for the Environment under Sections 6 and 110 of the Environmental Protection Agency Act, 1992 and came into effect on 20 May 1993. They give effect to the provisions of Directive 90/313/EEC on freedom of access to information on the environment. In my 1994 Annual Report, I gave a detailed analysis of these Regulations and the approach I adopt in my examination of complaints on this subject.

The regulations provide that information must be made available within two months of the request being made. I continued to receive complaints in relation to this matter in 1995 and I outline hereunder details of two such cases.

In the first case, Kildare County Council, not only exceeded the time limits in the regulations but also did not respond, for a considerable length of time, to my Office's request for a report on the complaint.

The Editor of a newspaper complained to my Office, following three unsuccessful requests to Kildare County Council for information on effluent discharges. On 8 May 1995, my Office requested the County Secretary to provide a report on the complaint as submitted by the Editor. It was necessary to issue three written reminders and seven reminders by telephone before a response was eventually received on 20 July 1995. The Council released the information on effluent discharges to the requester on 1 August 1995.

Given the inordinate delay in releasing the information, the County Secretary was asked to explain the reasons why the Council had failed to reply to the complainant's request within the two month limit and also to detail the reasons for the delay in reporting to my Office on the complaint. In its reply, the Council said that the initial contacts from the newspaper were made in an informal way to various members of the Council's staff and it was not made clear what information was required. It said that some of the information was not readily available and that, when this matter was properly clarified, a reply was sent. The Council also said that, due to staff shortages in its environmental department and the heavy workload falling on staff, regrettably, there would be delays in responding to requests for information.

It is a matter of concern to me that any public body would fail to meet its statutory responsibilities under the regulations. In this case, it took the Council seven months to provide the information requested. Delays in meeting requests for environmental information are particularly serious because the information sought can, over time, lose some or all of its value to the requester.

In the second case, I was approached by a representative of an environmental organisation who complained about Mayo County Council's failure to comply with a request for information made under the regulations. The request related to data on effluent discharges from an industrial plant. The Council had refused to release the data, which it was responsible for collating, as it considered that to do so would seriously conflict with the confidentiality associated with the industrial, technological and commercial know-how of the company. When the request was turned down by the Council, the complainant came to my Office.

Under the regulations, information relating to the environment, which is held by a public authority, must be made available on request to any person, subject to certain exceptions. When approached by my complainant, Mayo County Council had sought the views of the company involved. The response it received was that the release of the information would seriously conflict with the confidentiality associated with the company's industrial, technological and commercial know-how. In the light of this response, the Council decided that it would not be correct to release the information. The guidance notes issued by the Department of the Environment in connection with the regulations envisage that there can be circumstances where the release of information may be detrimental to the commercial interests of an individual or company and that these must be respected. However, the guidelines also envisage that a public authority must be satisfied that real and substantial commercial or industrial interests are threatened before refusing a request. Accordingly, I put these points to the Council and asked it to indicate the basis for its decision to refuse the information.

Despite protracted correspondence and direct contacts between my investigative staff and Council officials on the matter, the Council did not address this issue in any of its responses. I then asked the Council to let me have sight of the specific information requested. The data I received indicated the level of chemical substances present in the seawater and in the effluent from the industrial plant. The levels of effluent material were generally low and within the maximum allowable concentrations provided for in the company's effluent discharge licence. There was no evidence to suggest to me that the grounds for refusing to make this information available were justified.

Given the Council's failure to review the matter or to address my specific questions and the apparent lack of any valid grounds for refusing to release the information, I decided to initiate an investigation of the complaint. In response, the Council indicated that, following a review, it had decided to release the information. However, in view of the nature of the complaint, the inordinate delay which had occurred in reaching the decision to release the information and the need to clarify the specific circumstances of the Council's decision, I decided to proceed with the investigation.

The Council said that it had refused to release the information mainly because of the views expressed by the company. They added that, until it could be shown otherwise, these views should be respected by the Council. The company's activities were subject to rigorous environmental controls and it was adhering to these controls. The Council was satisfied that the regulations enabled it to refuse the request. It also was concerned about the use to which the requester might put the information. However, while it regarded the claims being put forward by the company as valid, it had, nonetheless, decided to review its position and, as a result, had decided to release the information.

In examining complaints relating to the regulations, I have to be satisfied that a public authority, in deciding not to release information, is acting reasonably and in accordance with the requirements of the regulations. A public authority has discretion to refuse to make available information where it affects commercial or industrial confidentiality. However, I expect that where such a discretion is exercised, a public authority would first assess all available evidence. In this instance, there was no indication that such an assessment had been made although the Council later claimed that it was not possible to get any independent body to carry out such an assessment.

I acknowledged that the Council's decision was based on what it perceived to be the best interests of all concerned. While I noted its claim that the case was fully considered before a decision was made, I did not consider that it was sufficient for the Council merely to quote the company's reasons for objecting to the release of the information as the basis for its decision. There is an obligation on a Council to supply my Office, in such instances, with supporting information to enable me to assess the reasonableness of such decisions.

From my examination of the data, it was not clear to me how it could, if released, affect commercial or industrial confidentiality. The Council's papers indicated that a local newspaper had reported on the matter and had referred to materials used in the company's industrial process. Accordingly, it seemed that information on specific materials used in that process was already in the public domain. While the Council had concerns about the requester, the regulations do not allow a public authority to pick and choose between requesters.

As a result of my investigation, I found that there was insufficient evidence to support the Council's decision to refuse to make the data available on the grounds that it affected commercial or industrial confidentiality. I concluded that the Council was remiss in failing to assess adequately the merits of the company's claim that the release of the data would be detrimental to its commercial interests.

I also found that the delay which my staff experienced in their dealings with the Council and its failure to reply to specific queries were not consonant with the degree of co-operation I should receive bearing in mind the provisions of the Ombudsman Act, 1980. The information was released almost 16 months after the date of the original request and 13 months after I first contacted the Council.

As it was not necessary to recommend the release of the information, my recommendation addressed the Council's procedures for dealing with complaints arising under the regulations. In regard to information requested by my Office in the future, I stressed the need for the Council to supply it in full and within the specified time limits. Where the Council refused to release information to a requester, I emphasised the need to provide my Office with supporting information to enable me to assess whether the Council was acting reasonably. I recommended that the County Manager ensure that Council staff were fully informed of these requirements and that the Council's systems and procedures were adequate to meet them.

The Council accepted my recommendations.

European Union Legislation

There is now a vast amount of secondary legislation arising directly at national level or as a result of European Union membership. Most of this legislation is not subject to any scrutiny by the Oireachtas. The following case shows how an EU Directive, and the arrangements within the Department of Agriculture for implementing it, adversely affected a small business.

A chicken hatchery owner complained about the manner in which he had been treated by the Department of Agriculture, Food and Forestry. He said that, during a routine enquiry to the Department in April 1992, he was advised that Directive 90/539/EEC on animal health conditions governing trade in poultry and hatching eggs was due to come into effect from 1 May 1992 for exports to Northern Ireland. The Directive prescribed new and higher standards which had to be met by hatcheries engaged in export trade as and from 1 May 1992.

The complainant said he had been told that he would not be allowed to renew his licence or to continue to trade after 1 May 1992 because his premises did not comply with the terms of the Directive. He added that on hearing this, his principal customer cancelled an export contract and his business collapsed. He said that he subsequently learned that the Department had visited other hatcheries prior to the date on which the Directive was due to come into effect and had given advice on what was required to comply with the terms of the Directive.

The Department's view was that the onus was on the complainant to keep himself informed of the legal environment in which he operated and that the difficulty in which he found himself was not attributable to them. When it failed to review its position, my Office commenced an investigation of the complaint.

In this case the Directive was implemented by regulation. It was dated 30 November 1992 and provided that the Regulation and Directive would come into operation on 1 January 1993. Notice of the new Regulations appeared in Iris Oifigiúil and four national newspapers in December 1992. The Regulation provided for introduction of the Directive from a date later than that originally envisaged in the Directive i.e., 1 May 1992. The publication of the Regulation occurred after the crucial contact between the complainant and the Department and was of no benefit in informing him of the existence of the Directive and its implications.

As a result of the investigation, I found that there were inadequate arrangements within the Department for co-ordinating and monitoring the implementation of the Directive. Interviews with Departmental staff and an examination of its files indicated that the Department had not taken reasonable steps to inform all hatcheries of Directive 90/539/EEC. In this regard, it was evident that the Department's treatment of the bigger hatcheries in relation to the Directive, vis-à-vis the treatment given to the complainant, resulted in improper discrimination against him. Furthermore, he was not informed of the Directive in sufficient time to give him an opportunity to comply with its requirements. This caused him to lose his principal customer which in turn rendered his business unviable.

Having made these findings, I considered the question of how the adverse effect in this instance might be mitigated. My objective was to calculate a sum which would reasonably compensate him for the loss of his business. I consulted my legal adviser on the general question of the measurement of damages in law which would apply when a negligent act causes a business to close down. In addition, I took professional advice on the computation of the complainant's capital and income losses. My advisers, a firm of chartered accountants, examined the complainant's accounts and met with him, his accountant and main export customer.

Arising from these consultations, I recommended that the Department pay to the complainant, in respect of the income loss suffered by him when his business was rendered unviable, a sum of �7,800. Given the nature of the business and the annual turnover, the loss was computed as three times the annual net profit reduced by the social welfare benefit received by him over the period of the loss. The amount was further reduced to reflect the possibility that he may not have been able, in the longer term, to meet the terms of the Directive. In addition, I recommended payment of �1,000 in respect of the stress and inconvenience caused to him and his family by the Department's actions.

The Department accepted my recommendation.

Social Welfare Insurance Anomaly affecting the Self-Employed

During the year I came across an anomaly in the social welfare system affecting people who had become self-employed following a substantial period of paid employment with full-rate Pay Related Social Insurance (PRSI).

Since April 1988, self-employed persons are compulsorily covered for social insurance known as the Class S rate which provides cover for Survivor's Contributory Pension, Old Age Contributory Pension and Orphan's Contributory Allowance. It does not provide cover against the risks of unemployment, illness or disability. The problem is that, in certain circumstances, people with substantial records of full-rate social insurance can lose entitlement to unemployment and illness/disability payments solely by virtue of having transferred to Class S social insurance.

A complaint, where Invalidity Pension was refused by the Department of Social Welfare, illustrates this problem. The person concerned was 55 years old and had worked for 26 years until redundancy in 1984. He claimed Unemployment Benefit for the maximum period and then went into self-employment until forced to stop at the end of 1992 when he developed serious health problems. His health problems worsened in 1993.

He considered that he was entitled to a Social Welfare disability payment on the strength of the full-rate PRSI (1,486 contributions) he had paid for over 26 years. However, to bring this contribution record into effect for Disability Benefit purposes, he would have had to resume work and pay at least 13 full-rate PRSI contributions. In addition, he would also have needed a further 26 weeks of credits. For Invalidity Pension he would have needed at least 48 credits which can only follow paid contributions. Had this man remained unemployed rather than taking up self-employment, in all probability, he would have qualified for Invalidity Pension on the basis of social insurance credits.

I cite this case to demonstrate the unfortunate implications for people who become self-employed following a substantial period of paid employment carrying full PRSI and who subsequently become ill. The likelihood of persons in this category belonging to the older age group is also high.

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