BURTON CALLS FOR HEARINGS INTO REDRESS AGREEMENT
Labour Spokesperson on Education, Joan Burton TD, has today written to the Chair of the Joint Committee on Education and Skills, Fiona O’Loughlin, calling for hearings to be held into the circumstances, considerations and motives surrounding the agreement between the State and certain religious congregations of June 2002.
11th April, 2017
Re: Residential institutions redress – indemnity and contribution agreement with religious congregations
I am writing to request that you put on the committee’s agenda a proposal that we hold hearings to inquire into the circumstances, considerations and motives surrounding the agreement between the State and certain religious congregations of June 2002.
I think it is clear that my reason for seeking such an inquiry is not one of prurience or idle curiosity. That agreement has had – and continues to have – enormous impact, not least financial impact. I believe we need, finally, to get to the bottom of it.
On the 11th May 1999, the then Taoiseach offered an apology on behalf of the State to victims of abuse in residential institutions. The report of the Child Abuse Commission has more than proven the need for that apology.
I accept that the State is liable to the victims of residential child abuse. It was the State, after all, that sent children to those institutions and the State was charged with the supervision, regulation and inspection of those institutions.
Clearly, there was a massive and chronic failure on the part of the State in its duty to its most vulnerable citizens – and the State should be involved in compensating them, so far as money can do, for the injuries they have suffered.
But of course that should not be the end of the matter. The question is not whether the State was liable but whether it alone was liable.
From the point of view of Irish society and the Irish taxpayer, the division of liability between the State and the religious congregations that ran these institutions has been disastrous.
The Residential Institutions Redress Act became law on the 10th April, 2002. According to that Act –
- the Redress Board would make awards to applicants in respect of claims that they had suffered injuries consistent with abuse while resident in institutions specified in the Act’s Schedule;
- the congregations that ran residential institutions could make contributions to the fund from which awards were to be paid by the State; and,
- if the applicant for redress accepted an award made by the Board, then the applicant would have to waive any right to sue the State, any publicly funded body and any congregation that contributed to the redress scheme.
What the Oireachtas did not debate was an entirely separate non-statutory scheme entered into between the State and 18 religious congregations. According to that scheme, the State was now underwriting any possible future liability of the contributing congregations arising from court claims, regardless as to whether those claims had been notified to the Redress Board and an award offered and accepted.
That deal was apparently agreed in principle in April and finalised in June, 2002. But its terms are nowhere reflected in the Act that was passing through the Oireachtas at exactly the same time.
There are a number of issues arising. First, the size of the contributions made by the congregations: relative to the total cost of the redress scheme, their contributions fall far short of the anticipated 50% of the final cost. And in fact the total of cash payments from the congregations, which were paid into the special account from which redress awards were made, was far less than the €127 million so often referred to. The deal involves:
- transfers of land already made, valued at €40.32 million;
- transfers of land to be made, valued at €36.54 million; and
- counselling and other support services, for former residents and their families, already provided or to be provided, valued at €10 million.
None of these can be translated into cash for statutory purposes. These additional transfers of land and the provision of counselling or other services, that were added on to bring the total up to €127 million, are not within the framework of the Redress Act. They are not payments into an account of monies with the Paymaster General, audited by the Comptroller and Auditor General, and so on.
What’s more, it is a pretty basic principle of law that “past consideration is no consideration”: a contract cannot be based upon consideration that was provided before the promise was made. In other words, I cannot become contractually bound to you to perform a service in return for money or property which you have given me before the contract was made. So, in normal contractual terms, the land already transferred can be discounted when valuing this aspect of the deal, as can counselling services already provided.
Second, there was the fact that the contributions were made under a non-statutory deed of indemnity which greatly extended the benefits conferred on the congregations and exceeded the terms of the Act. As well as being indemnified against having to compensate twice an individual who sought redress under the Act and then sought compensation in court, the congregations were now indemnified by the State against the costs and awards of any claim by an individual who might now or in future take an action against them, regardless as to whether that individual made a claim to the Redress Board – and regardless even as to whether the State was or could be liable as a co-defendant in any such legal action.
Third, where did the Minister for Education derive his legal capacity to bind the State in this way – a way that went outside the terms of the legislation going through the Oireachtas and which accepted sole responsibility for unknown future contingent liabilities, over years?
Our party argued at the time that there was no statutory basis for the additional guarantee to the congregations. The deed clearly did not arise from the legislation, since it set out an indemnity that the legislation neither authorised not even envisaged.
The Taoiseach replied that the Government and each of its Ministers did not need specific statutory authority. They had a “general power to settle” litigation and were entitled to enter into agreements for that purpose.
Of course it is true that Government Ministers have the power to settle any cases brought against them relating to the performance of official functions.
But the State did not just settle actions against itself by entering this agreement. It was cases against the congregations that were settled. The State increased rather than reduced its potential liability. As a very early example of the consequences of this deal, there was the High Court action brought by Mr Patrick Morgan against the sister in charge of Nazareth House in Co Sligo. Under the terms of the indemnity, the State was obliged to take over the case at less than one week’s notice and the action was settled on its second day of hearing. The State became liable to pay the negotiated settlement amount, plus the costs of both sides, in an action to which it was never a party.
The Taoiseach’s position in the correspondence with us was that the negotiation and conclusion of the indemnity deal did not need statutory authority because it was an exercise of the “inherent” powers of the executive branch of government, in relation to the management and control of State litigation.
This amounts to an effective concession that the Residential Institutions Redress Act does not and never did provide a statutory basis for the agreement with the congregations – our central assertion but one that was consistently resisted both at ministerial and official level.
I think the committee might arrive at its own view as to whether the power to settle litigation includes a power to assume the liabilities of a third party in cases to which neither the State nor a Minister is a party in the first place.
Fourth, at its meeting of the 5th June – Minister Woods’ last day in office – the Government noted “that the Minister for Education and Science had reached agreement with representatives of the religious orders on the contribution to be made by them to the compensation fund in respect of victims of abuse in institutions”. On the same day, a public statement was made that the Government had agreed in principle to the proposals that the religious congregations contribute €128 million to the scheme.
What we do not know, however, is whether the Government either knew of or approved any side deal with the congregations, conferring an additional indemnity.
Fifth, Article 11 of the Constitution provides that the revenues of the State “shall be appropriated for the purposes and in the manner and subject to the charges and liabilities determined and imposed by law”. Yet the result of this deal is that public moneys were appropriated for a purpose for which there was no statutory authority.
Sixth, the signed deed of the 5th June 2002 concluded between the Minister for Education Michael Woods TD and the 18 religious congregations was drafted by the solicitors for the congregations and not in the Attorney General’s Office and its terms were never debated in the Dáil.
A subsequent report from the Comptroller and Auditor General, which correctly forecast that the total liability arising from the scheme could exceed €1 billion, revealed that –
- the Minister was unaccompanied by Government law officers at critical negotiations;
- the Department of Finance had recommended a 50:50 apportionment of liability between Church and State but this recommendation was ignored;
- the Attorney General told the Minister that he was unilaterally withdrawing his services, on the grounds that the Minister was not providing him with the information he needed to do his job.
Seventh, I believe that the indemnity exposed the Exchequer to a substantial contingent liability in a manner that flouted the rules of good financial housekeeping set out by the Department of Finance in “Public Financial Procedures”. According to the then current version of that document, at C1.4 – “Authority for Expenditure” –
“Some schemes have been introduced and continue to exist wholly on the basis of the Appropriation Act. In such cases it will be generally be found that –
- no appropriate body of permanent legislation exists
- the expenditure is small and is covered by the ambit of the Vote concerned
- the scheme is uncontroversial
- the scheme is seen, at least in its origin, as being of a temporary in nature (e.g. subsidies) and therefore more suited to annual rather than to permanent legislation.”
It could not be argued that expenditure arising on foot of the indemnity was small, covered by the ambit of the Vote concerned or uncontroversial.
Eighth, there are further peculiar aspects to the written agreement of the 5th June 2002. It is – or purports to be – a formal deed, rather than an unsealed, ordinary contract.
A deed is an instrument in writing, signed and sealed. Companies have seals they can use for their purposes. Government Ministers are corporations sole and have seals and have legal capacity to enter into deeds.
Natural persons do not usually have seals or use them as part of our everyday business, but we are entitled to use seals for conveyancing.
But the religious congregations, on the other hand, are private, voluntary, unincorporated associations of individuals. They have much the same status in civil law as residents’ associations or GAA clubs.
They do not have ‘natural’ legal status because they are not individuals. And they do not have corporate status because they have never chosen to seek incorporation in Irish law.
It may of course be that the congregations have some form of corporate status under Roman Catholic canon law and it may be that they use seals for canonical purposes. But that has nothing to do with their status under the law of the State.
And it also may be that there are companies associated with some of these congregations and there may well also be associated trusts. But the deed of the 5th June 2002 was not signed by any of the leaders of the congregations in their capacities as company directors or as trustees. It is simply signed by them and purportedly sealed by them, for example: “Signed, sealed and delivered by Br. Michael Reynolds and Br John Burke for and on behalf of the Congregation of Christian Brothers”.
I have been advised that this raises a question as to whether this was ever a valid deed in Irish law. Because the congregations are not corporate bodies in civil law, have no seals and so have no capacity to enter into deeds.
And because it would seem that the 18 individuals, heads of religious congregations, who signed this document did so not in their personal capacities but in their capacities as heads, “for and on behalf” of the various congregations. They were acting as agents. But an individual entering into a deed using his personal seal in an ostensibly representative capacity on behalf of an unincorporated association cannot bind that association to the deed.
So, why choose the formula of making a deed for this agreement, the one legal instrument the congregations had no capacity to make?
Was it perhaps because a deed as opposed to an ordinary contract is binding and enforceable even if there is no valid consideration between the parties?
Under this agreement, the congregations received a guarantee that they would be indemnified against cases brought against them by third parties, regardless as to whether the State was or even could be made a co-defendant in those cases. Arguably, this was a unilateral promise on the part of the State, without consideration.
There was also the fact that much of the consideration coming from the congregations under the agreement consisted of property that had been already transferred to State agencies. In other words, much of it was “past consideration” and so not valid consideration. But a deed does not need valid consideration to become binding.
Hence the question: would this have been a valid contract if it was not made under seal? And, if its validity can only be defended on the basis that it was a deed rather than an ordinary unsealed contract, was it a valid deed?
Finally, it seems that we may not have the full information about dealings between the Government and the congregations. Is there another agreement? For example, the legislation nowhere says how additional institutions can become covered by the redress scheme. It seems to be assumed by everyone that the scheme would only be extended to cover institutions whose congregations had contributed to the redress fund. But is that understanding reduced to writing anywhere? Again, the €128 million figure is not referenced in either the Act or the deed. Is it written down somewhere else?
In summary, it seems to me that the committee should examine why –
- the Minister for Education without any or any adequate legal advice concluded a deal with the congregations, putting a cap of €128 million on the contribution to be made by the congregations to the redress fund
- separate and apart from the legislation before the Oireachtas, the Minister sanctioned terms in an agreement that went way beyond the terms of the Act whereby the taxpayer became liable for all awards of damages and all court costs, regardless as to whether the State was sued in the case or whether the victim had applied to the Redress Board at all,
- the deal itself was concluded by way of a legal instrument which neither the congregations nor their heads seem to have had capacity to make.
I am of course aware that a lot of this is history. But I do believe that there remains an unanswerable case for re-opening the indemnity deal with the religious congregations.
The whole sorry saga raises the question what was the point of the Dáil and Seanad deliberating and voting on proposed legislation, setting out in quite elaborate terms a future course of action if, behind the scenes, secret negotiations entered into by Government members without legal advice exposed the State to a different scenario entirely?
Joan Burton TD
Labour Party Spokeswoman on Education