- October 7, 2020
- Posted by: granitewordpress
- Category: News
It looks like good news could be on the way for insurers when it comes to the landscape of the award of damages in personal injuries actions. The Law Reform Commission in its recent report has identified two “constitutionally permissible” models for capping awards of general damages in personal injuries actions. Could there be a change on the horizon?
The report which has been welcomed by the Law Society, undertook a review of four potential models for capping personal injury awards. These models had been previously set out in an Issues Paper published by the Commission last year.
The review of damages was prompted by the considerable public debate in recent years concerning the cost of motor, employer, and public liability insurance. The discussion on these rising insurance premiums has centred on whether the levels of personal injury awards in the courts have affected these fluctuations, with big rewards made to Plaintiff’s cited as driving up the costs of premiums. The commission expressed no view on the causes of these fluctuations in insurance costs.
In Personal Injury Actions, general damages refer to compensation for pain and injury suffered while special damages are for any financial loss that arises as a result of being injured, such as loss of earnings. Traditionally upper limits or “caps” on general damages awarded have developed through case law, which currently stands at a maximum award of €500,000, for the most catastrophic type of injury. The Courts apply a proportionality principle when assessing general damages which was summarised by the Court of Appeal in 2016 as follows: “minor injuries attract appropriately modest damages, middling injuries moderate damages and more severe injuries damages of a level which are clearly distinguishable in terms of quantum from those that fall into lesser categories”¹. The purpose of an award of damages is to put the injured person in the same position, so far as money can do, as if the injury involved had not happened.
FOUR POSSIBLE MODELS OF CAPPING DAMAGES
The report reviewed four possible models of capping damages and ultimately found that “in principle legislation to cap awards of damages could be constitutionally permissible”.
Model 1
The first model is comparable to sentencing law, as it involves primary legislation which would classify types of injury into categories of severity, with each category having a range of damages that could be awarded. There would be accompanying guidelines to assist the Court in determining which category an injury would be classified under and the appropriate damages to award for that particular injury. Under this model the Court would be bound to apply a mandatory cap in every case, with no judicial discretion. This lack of judicial discretion was cited one of the reasons the Commission deemed this model as “less likely to survive constitutional scrutiny”.
Model 2
The second model has two key features. The first is similar to provisions in New South Wales, Australia, which provides for an absolute ceiling on general damages, which a Court should only award in the most extreme case. The severity of the injury or loss a plaintiff has suffered would be determined in proportion to the most extreme case and awarded as such. The second feature allows the Court, where it considers it to be in the interests of justice to do so, to disregard the level of the cap and to make a higher award in exceptional circumstances. The Commission highlight this judicial discretion would make Model 2 more likely to satisfy the constitutional issues.
Model 3
The third model centres on a capping legislation, such as the legislation proposed in the previous two models, the difference being that in this model the legislation would not be in the form of an Act enacted by the Oireachtas but the Act would delegate the details of the cap to a Minister or some other regulation-making body. This is the model outlined in the Civil Liability (Capping of General Damages) Bill 2019. The Commission found that this model would be more vulnerable to constitutional challenge than either Models 1 or 2 as it “it involved delegating the setting of caps to a Minister” and ultimately from a constitutional perspective, would not be a desirable form of capping legislation to enact.
Model 4
The fourth model is the approach closest to the current position. It proposes that the courts should continue to determine the level of awards for general damages through case law, taking into account the significant reforms arising from the establishment of the Personal Injuries Guidelines Committee (PIGC) under the Judicial Council Act 2019 (2019 Act) . The 2019 Act will replace the Book of Quantum with personal injuries guidelines produced by the PIGC. There is currently no obligation on the Courts to explain any departure from the Book of Quantum, this model would require the Courts to have regard to any personal injuries guidelines produced by PIGC in assessing damages.
CONCLUSION
The Commission concluded that overall, of the four models listed above, a number of consultees considered that Model 4 was the most appropriate from a constitutional criteria, and was also preferable. Even though Model 4 was the preferred option, Model 2 could, subject to variation, be regarded as constitutionally permissible but as a fall-back option only.
The Commission acknowledged that the report has been published within the current, fast moving, context of policy and legislative developments in this area. Attention will now inevitably move to the Personal Injury Guidelines Committee who will publish their findings on the award of damages to the Judicial Council on 28 October 2020. It seems that the landscape of the award of damages in personal injuries actions after much public debate, is beginning to change.
Click here to read the full report and its findings.