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14 December 2009 - Lost at Sea Scheme

Part Two - Investigation Report (Section 3. Preliminary Examination)

3.1  In all, during the preliminary examination process, I received four separate reports from the Department. The first was dated 5 January 2005, and on foot of supplementary queries, three further responses dated 4 February 2005, 4 May 2005 and 20 December 2005.

3.2   Department’s Report of 5 January 2005

In its first report, dated 5 January 2005, the Department stated, inter alia that during 1999-2000 representations were made to the Department on behalf of individuals seeking to have the capacity of lost vessels used for replacement capacity purposes. The normal requirement for a fishing boat to be licensed and entered on the Fishing Boat Register was that fishing boat capacity, expressed in Gross Tonnes and in kilowatts of engine power, equal in amount to the capacity of the fishing boat, must be removed from the Register. This was known as the ‘entry-exit’ regime or the ‘100% replacement capacity’ requirement. Such capacity was, in practice, a tradeable commodity separate from the value of the physical fishing boat and there were a number of individuals known as ‘tonnage brokers’ who arranged for the acquisition and disposal of fishing boat capacity on behalf of owners or proposed owners of fishing boats. According to the Department’s report, the cost of fishing boat capacity varies according to supply and demand. The Department played no role in the purchase and sale of capacity between individuals nor in relation to the prices charged. The Department indicated that it understood that in recent years the price per tonne of capacity varied between €2,000 and €4,000 but it would not have an accurate picture of this. The Department stated that clearly, however, fishing boat capacity is a valuable commodity in the fishing community.

The report explained that in 1989 steps were taken to introduce a new Fishing Boat Register, to replace the then existing Register. The introduction of the new Register took place in the light of European Community requirements on the management of Member State fishing fleets, which took into account the need for modernisation of the fleets while at the same time tackling the overcapacity situation of the fleets. In order for a boat registered on the old Fishing Boat Register to be entered in the new Register it was necessary for the owner to apply for registration before 31 January 1990. This requirement was set out in the Merchant Shipping (Registry, Lettering and Numbering of Fishing Boats) Regulations 1989 (S.I. no. 344 of 1989) under which the new Register was established. The capacity of all boats entered on the new Register was counted towards Ireland’s fishing fleet capacity which was controlled under EU rules. There was no provision for boats registered under the old system, but lost at sea before that time, to be accepted into the new Register.

The Department went on to say that it appeared from its records that towards the end of 2000, at the request of the then Minister (Mr Frank Fahey TD)  and despite reservations on the part of the Division, a scheme was drawn up to accept as replacement capacity the capacity of vessels lost at sea before the introduction of the fishing boat register in 1990, subject to specified criteria. According to the Department’s report, a major concern of the Division was the need to ensure that Ireland kept within the EU-determined capacity limits. The Division then knew of around 10 cases of such vessels lost at sea between 1980 and 1989. In January 2001 the Minister approved the scheme subject to the conditions laid down and “subject to PO’s agreement that there are no further cases in addition to those of which we are aware” . The industry was consulted on the provisions of the proposed scheme in February 2001. The response was mixed in that some of the representative organisations welcomed it but others had difficulties with the effective granting of free capacity to certain individuals but not to others.

The report went on to say that the Lost at Sea Scheme was launched in June 2001. The closing date for receipt of applications was 31 December 2001. Each of the representative organisations was written to as well as the potential applicants which were then known, with details of the Scheme. The list of known cases had grown to 16 at that stage. In addition, advertisements were placed in the Marine Times, the Skipper and the Fishing News. The Department indicated that the total number of applications received before the specified deadline was 67 and the number approved was six. All of the others were refused on the basis that they failed to satisfy one or more of the Scheme’s criteria (see Appendix 1).

The report went on to say that the application from the complainant’s family was received in January 2003 under cover of a letter from Minister Mary Coughlan, TD, the then Minister for Social, Community and Family Affairs and the Minister was informed the same month that the application could not be considered because it was not received by the closing date for the Scheme. The report indicated that the complainant’s family made a number of points in support of their application. For a summary of these points see paragraph 1.2 above).

In relation to the specific questions raised by my Office, the Department responded as follows:

The Department said it made reasonable attempts as outlined above to ensure that the existence of the Scheme was publicised widely and that every case known was made aware of it. The period of six months given for applications also enabled ample opportunity for existence of the scheme to be disseminated by word of mouth. The fact that the number of applications grew to 67 from a figure of 16 shows that the publicity given to the Scheme had an impact.

The Department stated that before the launch of the Scheme the Fishing Boat Licensing and Registration Division investigated whether there were relevant records within the Department but ascertained that no such records were “readily to hand” . It would have required searches of individual files within the Maritime Safety Division of marine incidents, only a minority of which would have related to fishing vessels. In addition, it was considered possible that not all incidents would have been reported to the Department. There was no record within the Sea Fisheries Division of the Skifjord case nor of any request for replacement capacity in respect of the vessel before the Lost at Sea application was received. It was not considered necessary to have such searches carried out for the purpose of launching the Scheme. 

The Department said that if the relevant application had been received before the closing date it would have been refused on the grounds of failure to meet one of the criteria. Paragraph (c) states that ‘the boat in question is shown, by reference to the logsheet returns or other appropriate records, to have been in active and continuous use for a considerable period of years by the person concerned for sea fishing of a category covered by the replacement capacity rules, until its loss at sea’. The Department, in assessing applications, interpreted ‘ a considerable period of years ’ as a minimum of 2 years. The Skifjord was lost in the same year as it was purchased. While the Byrne family pointed out that the Skifjord was a replacement vessel for a previous vessel which had been fished by the Byrne family for a number of years, the terms of the Scheme were quite specific and did not allow a previous vessel to be counted towards the track record required for qualification purposes. If the Department was to relax that criterion in this case, all other applications would have to be reconsidered in the same way. It indicated that there were three other cases where the only reason for refusal was failure to comply with this criterion. At least one of those made reference to a previous boat.

While paragraph (a) of the Scheme criteria (see Appendix 1) provides for the applicant to be the owner and skipper of the lost vessel, the Department would not have disallowed an application from immediate family members in relation to that criterion in a case such as this. This was consistent with the provision of the Scheme which allowed for capacity granted under the Scheme to be availed of by the applicant or by an immediate relation of the applicant.

The Department stated that the grant of the complainant’s application would involve two amendments to the Scheme criteria and would thereby set precedents in that other applications or potential applications would have to be treated in the same way. These issues were:

• By accepting the application for consideration, this effectively would extend the closing date by over one year. Apart from this case the Department had two other requests for inclusion in the Scheme after the closing date. In addition, the staff of the Division received a number of telephone queries from potential applicants after the closing date but these cases were not recorded. It was estimated by the Department that there were at least five such calls. Those concerned were told that the Scheme was closed and any applications from them would not be considered. It was not known how many other cases there would have been had the closing date been extended.
• In relation to an amendment of Paragraph (c)(of the Scheme) relating to track record - the Department’s position is set out above.

The Department said that it fully appreciated that the loss of five lives along with the sinking of the vessel was a tragic event and no doubt caused hardship to the families involved. The Department presumed that  a number of other applicants could also claim that the events which gave rise to the loss of the vessels concerned were tragic. However, the Department said it was bound, in the interests of fairness, to operate the Scheme in accordance with the criteria laid down in respect of all applications.

Where a vessel on the Fishing Boat Register is lost at sea, the capacity would be available to the owner in the same way as capacity is available to owners who sell and de-register their vessels. Under the current Register Regulations the Registrar General may remove a vessel from the Register which is constructively lost, broken up, unseaworthy or no longer engaged in fishing. Under current fishing boat licensing policy, fishing boat capacity which is ‘off-register’ must be re-introduced onto the Register (i.e. be used to introduce a fishing boat onto the Register) within two years of its deregistration, otherwise the capacity entitlement will be lost to its owner. As the Skifjord was lost before the introduction of the current Register the capacity involved was not available for re-use.

The Department’s report concluded by saying that the Scheme was a finite, limited Scheme which effectively involved the provision of a limited entitlement to qualifying applicants, as an exemption from normal rules. The terms of the Scheme were quite limited and restrictive. The Scheme was now closed and there was no provision under fishing boat licensing policy for the Licensing Authority to re-open the Scheme or to vary application of any of its conditions.

The Department said the only basis on which the application from the Byrne family could be considered and accepted would be on the basis of a policy directive from the Minister extending the closing date of the Scheme and amending paragraph (c) of the criteria to allow a track record of previous vessels to be taken into account.  The Department indicated that such changes would have implications beyond the case of the Byrne family as, in the interests of fairness, others who applied after the closing date or who would have applied had they been given the opportunity to do so, would also have to be given the opportunity to apply. In addition, a change to paragraph (c) would also bring at least one other vessel into the reckoning for approval. The cumulative effect of these changes would add to Ireland’s fleet capacity situation and add to the Department’s concern to ensure compliance with their limits. If the limits are likely to be breached it would be necessary, by means of a policy directive from the Minister, to amend the terms of the one-for-one entry-exit regime to require greater capacity to be withdrawn than is to be brought in to the fleet. This would mean that other fishermen would be paying the price for the concession granted to those benefiting from such a re-opening of the Lost at Sea Scheme.

3.3 Having considered the Department’s response, I found it necessary to seek further information and clarifications from the Department and, in addition, I asked it to provide my Office with particular files relating to the case.

3.4   Department’s Report of 4 February 2005

In this second report, the Department pointed out that at the time the Lost at Sea Scheme was drawn up, the Sea Fisheries Administration Division, which was responsible for sea-fishing boat licensing and registration, was not aware of the case of the MFV Skifjord . Accordingly, it had no knowledge as to whether or not any investigation was carried out into the loss of the vessel nor of any reports thereon. It stated that the information contained in its report in relation to the vessel was based solely on information supplied by the Byrne family. The Department said that enquiries were made with the Marine Survey Office and the Maritime Safety Directorate of the Department to ascertain whether they had any records in relation to the loss of the Skifjord . Following a search of their records, the Maritime Safety Directorate had now retrieved from deep storage a file on the sinking of the Skifjord . 

The Department said that it appeared from that file that there was an investigation on the sinking of the vessel by an officer of the Marine Survey Office. A report of that investigation was contained in the file and it included a number of recommendations. The Department said that it was important in this context to note that at the time of the launch of the Lost at Sea Scheme in 2001 those responsible for the Scheme within the Department had no knowledge of the Skifjord case. They had carried out some enquiries with the Maritime Safety Division prior to the launch of the Scheme in relation to lost fishing vessels but were informed that information on losses of fishing vessels were not readily to hand.

3.5     Department’s Report of 4 May 2005

Further correspondence issued to the Department on 10 February 2005 in which, inter alia , the following issues were raised:

• There appeared to be a lack of detailed records on the Department’s files as to how the conditions for the Lost at Sea Scheme were devised and they did not appear to contain any notes on discussions regarding those conditions before the final draft Scheme was sent forward for approval to the Minister;
• It was noted that among the cases which the Sea Fisheries Administrative Divisions had detailed knowledge of were the MFV Joan Patricia, MFV Spes Nova and MFV Kreis an Avel . These three cases were among the six applications which were ultimately successful following the implementation of the Scheme. It was unclear from the records on file the extent to which the details of those cases informed decisions on the formulation of the Scheme at drafting stage;
• It was suggested that it would have been administratively prudent to research the details of other cases which were stored by the Marine Safety Division as part of the Scheme formulation process and it was not clear why this action was not taken. An exploration of those files could also have yielded contact details for further potential applicants who could have been informed directly about the Scheme following its launch;
• It was noted that condition (c) of the Scheme (see Appendix 1) did not make provision for an applicant to qualify under the Scheme in a situation where he/she was a skipper and owner who had fished continuously for a considerable period of years, but in two boats, one of which was traded in, to acquire the boat which was lost;
• Some concerns were raised about the limited scope of the advertisement of the Scheme following its launch, particularly in view of the fact that in relation to the limited number cases of which the Sea Fisheries Administration Division had detailed knowledge, those persons were notified directly by the Department about the launch of the Scheme so as to enable them to apply;
• It was suggested that the Department should consider carrying out more detailed research of all available relevant files in order to determine if there were further cases which might legitimately be considered for qualification under the Scheme.

3.6   The Department furnished a further report to my Office dated 4 May 2005 in which it reiterated that the Fishing Vessel Lost at Sea Scheme was introduced in 2001 and applications were required to be submitted to the Department by 31 December 2001. It went on to state, inter alia , that the Scheme was introduced in the context of the EU policy framework in place at that time.

According to the relevant EU Regulation (2371/2002), which was directly applicable to all Member States, the granting of fishing boat licences and the registration of Fishing Boats on the Fishing Boat Register of the Community must be implemented in such a manner so as to provide that when a fishing boat is introduced into the fleet, full replacement capacity must be withdrawn from the fleet. The new Licensing Policy for fishing boats introduced by the Minister in November 2003 sets down, inter alia, that:

The 1:1 replacement capacity requirement in terms of GT and KW will remain in place other than in the limited cases hereunder. This policy will also apply to the specific segment of the fleet.

The Department stated that it should be noted that the limited cases covered in the policy related to situations where greater than 1:1 replacement requirements are required and accordingly are fully permissible under the provisions of Council Regulation 2371/2002. The allocation of capacity to the cases approved under the Lost at Sea Scheme 2001 was taken into account in the determination of the amount of capacity to be removed under section H of Policy Directive 2/2003 by certain vessel owners and, accordingly, was in compliance with the requirements of the EU Regulation. According to the Department, the allocation of further capacity, on the basis of a review of the Lost at Sea Scheme suggested by my Office, to individuals who would thereby be permitted to introduce fishing boats into the fleet without removing equivalent capacity, would, in the Department’s view, be in breach of the terms of the EU legislation in so far as vessels would be licensed and entered on the Fishing Boat Register, without the removal of equivalent capacity from the Fishing Boat Register.

The Department went on to say that in relation to the State purchasing capacity to allocate to applicants under a Lost at Sea Scheme, EU rules precluded such an initiative. It indicated that EU Regulation 2371/2002 does not permit the State to remove capacity from the Fishing Boat Register with public aid and re-introduce it onto the Fishing Boat Register in any circumstances. The Department indicated that this policy is regarded by the EU Commission as a cornerstone of the new Common Fisheries Policy, in so far as it ensured that the capacity of fishing boats did not increase beyond the level in place on 1 January 2003.

3.7     Department’s Report of 20 December 2005

On 11 May 2005 my Office again wrote to the Department asking it to consider the issue of possible redress in this case. At the same time a detailed update was furnished to the complainant. The view was expressed to the Department and the complainant that the Lost at Sea Scheme may have been flawed and deficient in those respects outlined in my Office’s letter of 10 February 2005 (see paragraph 3.5 above) to the Department.  The Department indicated that it would be seeking legal advice on the matter.

The Ombudsman Act, 1980 makes a distinction between a preliminary examination and a formal investigation of a complaint. It is only following a formal investigation that I can make formal findings and recommendations for redress to a public body. At this stage the case was still at preliminary examination stage and as such the views expressed as regards the adequacy of the Department’s Scheme were preliminary and tentative and were open to rebuttal by the Department.

3.8  The Department responded to my Office on 20 December 2005. It rejected the suggestion that the Scheme was in any way flawed. It indicated that my Office appeared to link the issue of the extent to which the Department researched its files prior to the publication of the Scheme to a suggested lack of equity in the scheme design. The Department said that it did not accept that the level of research of previous cases is a determining factor in relation to equity of scheme design. It indicated that the Department was entitled to design the Scheme on the basis of current policy considerations relating to the management of the Irish fishing fleet. The Department considered that arising out of those policy considerations the Department was entitled to impose restrictive conditions and a firm deadline for receipt of applications. The Department also said that it was not necessary to have identified all potential cases in advance of launching the Scheme. It indicated that, as in the case of any call for tenders or expressions of interest, the Department could have no definitive way of knowing in advance the numbers of vessels that might be covered by the Scheme. The announcement of the Scheme in the trade press as well as the reasonably lengthy period for receipt of applications would, in the Department’s view, allow for knowledge of the Scheme to be disseminated. The Department went on to say that the fact that the number of applications grew to 67 by the closing date from a figure of 16, indicated that the publicity given to the Scheme had a very positive impact. The Department said that the purpose of the Scheme was clearly for sustaining or maintaining a family tradition of sea-fishing. Any replacement capacity granted would have to be used by the family of the applicant only and could not be sold. Accordingly, it was, in the Department’s view, reasonable that the Minister, in introducing the Scheme, would do so in a way that reasonably targeted persons involved in the fishing industry and this was consistent with the purpose of the Scheme being introduced. The Department said the fact that persons who were no longer involved in the fishing industry were not specifically targeted was not inconsistent with the purpose of the concession that was being introduced. It claimed that all applications were fairly assessed and that this seemed to be accepted. It indicated that it did not propose to review or re-open the Scheme.

3.9  The Investigation

Following a thorough review of all the evidence gathered up to that point I decided to initiate a formal investigation of the complaint. In this regard, I felt that notwithstanding that my Office had been arguing the merits of the case over a prolonged period, the Department had refused to review its decision and had resisted any suggestion that this was a case that may have involved maladministration leading to adverse affect on the complainant. I also felt that this was a case which might, potentially, involve wider systemic issues of public administration. This decision to investigate was notified to the Secretary General of the Department in July 2006, together with a Statement of Complaint which recited the facts established in the preliminary examination of the complaint.

3.10   Department’s Response to the Statement of Complaint

The Statement of Complaint alleged, inter alia, that

• the special circumstances of his family’s case were not properly considered by the Department in drafting the Lost at Sea Scheme;
• the Sea Fisheries Division proceeded to draft the scheme based on the detailed information it had on 16 cases available within that Division;
• the manner in which the Department went about devising and publishing the Scheme, appears to have militated against the desired intention of the Scheme -i.e. to  sustain or maintain a family tradition of sea fishing - being achieved in the Byrnes’ case;
• while there were detailed reasons contained in a file memo outlining why such a Scheme should not be introduced, there were no records available as to why exactly it was decided that a Scheme should go ahead or the precise grounds on which the seven qualifying criteria in the Scheme were drawn up.

The then Secretary General, Mr Brendan Tuohy, responded to the Statement of Complaint on 31 July 2006 (attached as Appendix 2) and in relation to the foregoing points he indicated that these statements appeared to be based on the concept that the level of knowledge of individual cases had a significant impact of the scope of the Scheme as it was eventually drawn up. He stated that this was incorrect. He indicated that the purpose of the request to the Maritime Safety Division in, September 2000, for information regarding lost fishing vessels (see paragraph 5.3 below) was to ascertain an estimate of the number of lost fishing vessels there might have been rather than to analyse the cases concerned for the purposes of devising a replacement capacity scheme. He stated that at that stage, the Sea Fisheries Division were not drawing up a proposed scheme. The response went on to say that the nature of the Scheme was simple in concept and did not require such analysis. It was simply to accept as replacement capacity proven cases of active fishing vessels lost at sea within the specified period where owners were unable, for bona fide reasons, to acquire a replacement vessel before or after the introduction of the new Register in 1990. The detailed conditions of the Scheme were put in place to reflect this objective. In order to avoid difficulties with Ireland’s MGP (Multi-Annual Guidance Programme) fleet objectives, the Department was concerned to ensure that the Scheme did not result in other types of cases qualifying for replacement capacity. The Department indicated that the purpose of the Scheme was not open-ended, and it only applied to those who met qualifying criteria. Restrictions relating to the use of any capacity awarded were imposed for the purpose of achieving that purpose. The Department expressed the view that it did not consider that specific knowledge of the Byrne family case or other cases at that time would have affected the scope of the Scheme as eventually drawn up. It did not accept my Office’s suggestion that there was a lack of equity in the design of the Scheme or that the design of the Scheme militated against the Byrne family.

In relation to the way the Scheme was advertised, the Department referred to its letter of 20 December 2005 (see paragraph 3.7 above). It indicated that it did not accept my Office’s suggestion that the manner in which the Department went about publishing the Scheme militated against the desired intention of the Scheme being achieved in the Byrne’s case.

In conclusion, the Department commented on the reference in the Statement of Complaint to the lack of records relating to the reasons why it was decided that a Scheme should go ahead or the precise grounds on which the seven qualifying criteria in the Scheme were drawn up. In this regard, the Department said that it had provided all the documents available and the Department considered that they were quite clear in relation to these matters.

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