Check Against Delivery

Statement by Charlie Flanagan TD, Minister for Justice and Equality on the Civil Liability (Capping of General Damages) Bill 2019

Seanad Second Stage

28th March 2019

 

 

I would like to thank Senator Lawlor for his introduction of the Civil Liability (Capping of General Damages) Bill 2019, which he and his co-sponsors brought to the Seanad as a Private Member’s Bill (PMB) on 6th March 2019 as is now before us for Second Stage.

As the Senator has set out, the eight-section Bill is intended to provide for the imposition of a cap on the level of awards which may be made in respect of a claim for general damages arising from personal injury. This is to be done by Ministerial regulations to be approved by a resolution of each House and subject to review under the aegis of the Personal Injuries Commission. There is also to be a periodic stakeholders’ review of the operation of the Bill when enacted.

At the outset I would like to state that the Government has decided not to oppose this Bill on the understanding that substantial amendments to the Bill may, subject to the advice of the Attorney General be required and proposed by the Government at Committee Stage. At the same time the Government has noted that the Bill addresses a specific matter under ongoing consideration by the Cost of Insurance Working Group. Also, that the Law Reform Commission is now, at the request of the Working Group, carrying out a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap damages in relation to personal injuries awards. We now have an ideal opportunity, therefore, to debate this matter with the benefit of expert analysis of the issues concerned to determine what our optimal legislative and policy responses should be.

As reflected in the establishment of the Cost of Insurance Working Group, the Government recognises that we have very real challenges with both premium inflation and awards inflation in the insurance sector in this jurisdiction with the ensuing claims inflation coming between them. At the same time we have a highly profitable insurance sector with the annual profits of our top ten insurance companies running between €6.1 million and €201 million at the end of 2017 with the total assets of insurance corporations reported by the Central Bank to be €305 billion at the end of last year.

The Personal Injuries Commission has found that soft tissue injury claim costs in this jurisdiction are approximately 4.4 times the comparator costs in the UK taking account of the relevant capping level that applies. Based on claims paid between 2015 and 2017, the average soft tissue claims cost in Ireland is €17,338 when considered within a €50,000 claim threshold. I want to assure the House therefore, that the adverse impact of such prohibitive costs on small business, Play Centres, and on a range of leisure and other activities at local community level, is key to the Government’s ongoing consideration of reform in this area. As Members will recognise, this is also an area of the law replete with complex constitutional and legal issues, including the rights of bona fide litigants. 

Not surprisingly therefore, the capping of damages issue covered by today’s Bill is among those being considered by the Cost of Insurance Working Group established by the Minister for Finance in July 2016 and chaired by Minister of State, Michael D'Arcy TD. The objective of the Working Group is to identify and examine the drivers of the cost of insurance, and recommend short, medium and longer term measures to address the issue of increasing insurance costs, taking account of the requirement for the need to ensure a financially stable insurance sector. The Group published its Report on the Cost of Motor Insurance (Motor Report) in January 2017 and its Report on the Cost of Employer and Public Liability Insurance in January 2018.

 

Moreover, in response to recommendation 5 of the Working Group’s January 2018 Report, the Law Reform Commission (LRC) in now conducting a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap the amounts of damages which a court may award in respect of some or all categories of personal injuries. This now forms part of the Commission’s Fifth Programme of Law Reform approved by the Government on 20 March 2019.  It is my understanding that the Law Reform Commission is giving this project immediate attention with the aim of publishing an issues paper before the end of the year.

It should also be noted that in its Final Report of July 2018, the Personal Injuries Commission, or the PIC as it is more familiarly known, chaired by the former President of the High Court, Mr. Nicholas Kearns, noted this development and expressed the belief that the LRC is the appropriate body best equipped and resourced to undertake this study. While it is proposed that the PIC have a review function under today’s Bill, it is important to note that it was not a State Body and no longer functions having completed its work. As such the PIC would have to be reconstituted and resourced to function effectively as today’s Bill would propose.

 

I want to emphasise that the decision by the Cost of Insurance Working Group to refer the capping of awards issue to the Law Reform Commission was not taken lightly. Indeed, as reflected in the Group’s published reports, this was an issue raised by several stakeholders who contributed to its work. This included by reference to the comparative level of awards being considerably higher in this country than in the UK to which I referred earlier.

 

The Working Group recognised that a fundamental consideration in any analysis of this issue is whether a legislative cap on damages, or a similar measure, is necessary for the common good. For instance, an argument can be made that broader economic and societal needs may be impacted upon by lack of access to insurance as a result of the cost. A further consideration was the danger of incentivising the small minority of people who may choose to take fraudulent advantage of the high level of awards, and to negate the perception that insurance fraud is a victimless crime with no consequences.

 

At the same time, these aspects have to be balanced by the rights of genuine plaintiffs to an appropriate level of compensation. In short, the Working Group recognised that the State must be cognisant of the constitutional rights of all parties and must balance those rights to ensure any encroachment on them is justified, proportionate and in the common good.

 

To progress this issue, representatives of the Departments of Justice and Equality; Business, Enterprise and Innovation and of Finance who were members of the Working Group’s legal sub-group, engaged with the Office of the Attorney General. Arising from this engagement, the three Departments discussed the issue further with the main Working Group and concluded that

 

  1. introducing such a measure would constitute a significant development in the law, because any legislation which restricts the rights of citizens must be carefully considered and justified to ensure it would withstand constitutional challenge,

 

  1. that the main question for a court, if such a measure was challenged, would be whether an appropriate balance was struck having regard to the exigencies of the common good, and

 

  1. that the appropriate balance can only be struck once all appropriate factors have been taken into account by the Houses of the Oireachtas in considering the legislation.

Taking account, therefore, of these matters, the Working Group concluded that it was not in a position to undertake the in-depth analysis required to demonstrate to the satisfaction of a court that the correct balance of constitutional rights and principles could be struck to the common good. Consequently, the Working Group saw the necessity of further expert research and that the Law Reform Commission would be the appropriate body to carry it out. I would also like to confirm that that these fundamental legal and constitutional concerns clearly arose in the Government’s consideration of today’s Bill in conjunction with the Office of the Attorney General.

 

It will also be recalled that, for its part, the PIC recommended that the future Judicial Council be assigned the function under its statute of compiling guidelines for appropriate general damages for various types of personal injury, and that pending introduction of such legislation, the judiciary participate with representatives of the Personal Injuries Assessment Board and my Department in the formulation of guidelines as to quantum in the case of claims for damages for soft tissue/whiplash injuries. These are matters on which I am in ongoing consultation with the Chief Justice while also working in cooperation with the Houses of the Oireachtas with a view to commencing Seanad Committee Stage of the Judicial Council Bill before Easter.

 

The Government is, therefore, taking a whole range of policy and legislative actions across Departments and agencies, including the Personal Injuries Assessment Board and the State Claims Agency, as part of its strategic response to insurance costs. Most importantly from the perspective of today’s Bill, this includes the analysis of the capping of awards from a constitutional perspective which is being supported by the expertise of the Law Reform Commission as I have described. This will inform any further steps including in terms of what possible, and above all legally robust, legislative or other measures may be taken. Hence the Government’s position not to oppose this Bill at  Second Stage in the understanding that substantial amendments to the Bill may, subject to the advice of the Attorney General, be required and proposed by the Government when the Bill comes to Committee Stage.

 

Ends