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ISME welcomes the Law Reform Commission report on capping damages

ISME welcomes the report this week by the Law Reform Commission (LRC) which found that a cap on damages in personal injury claims is permissible by Irish law. This decision has confirmed ISME’s long-standing position that there is no constitutional impediment to capping damages. However, ISME is concerned that the LRC’s preferred model will not solve the problem of unjustifiably high awards.

It is significant that the LRC has accepted the recommendations of both The Law Society and The Bar Council in opting for ‘Model 4 Presumptive cap set by the Judiciary.’ This differs from the views of most victims of the current insurance cost debacle that general damages should be capped by legislation (Model 1).

Neil McDonnell, CEO of ISME said: “The effect of this recommendation will be to hand sole responsibility to the Personal Injuries Guidance Committee (PIGC) of the Judicial Council for lowering general damages. It is problematic that it is the judiciary that set general damages for minor injuries so high in the first place. Leaving awards as they are (or to reduce them nominally) fails to address the problem. To lower damages substantially would be an admission that the judiciary has erred.

 There has been hysterical invocation of constitutional rights by the legal lobby in defence of inflated awards, but this ignores the fact that there is no individual right conferred by Bunreacht na hÉireann that is not balanced with the rights of others or social rights. Capital punishment was consistent with the Constitution until it was removed by referendum in 2002.”

Similarly, the suggestion that the Article 34 confers upon the Courts alone the right to fix general damages; or the suggestion that Article 40 confers the right to an irreducible sum of money for a sore neck are completely bogus and The Law Society and Bar Council have long been aware of this.

It is important to note that the Separation of Powers argument cuts both ways. The Oireachtas must not interfere in the judicial function, nor with the administration of justice. Similarly, the judiciary must not interfere with the exercise of executive functions or the setting of public policy, which are matters reserved exclusively to the Oireachtas.

Even allowing for a significant input by the judiciary in deciding the level of damages in individual cases, the LRC has accorded too much weight to the tests of constitutionality in its deliberations on the legislative capping of damages for minor injuries, which are: 1 – the right to bodily integrity; 2 – property rights; and 3 – the right to equality.

In layman’s terms, this boils down to a net position on whether the constitutional rights of the individual are breached if the Oireachtas reduced the Book of Quantum assessment of a sprained thumb from its current level of €21,200 (for example) to the level of €4,240 suggested in the ISME Fair Book of Quantum (Left; Neil pictured at the launch earlier in the year). In our view, constitutional rights are not breached by such a reduction..

There are several risks inherent in the suggestion by the Law Reform Commission that the State adopts the ‘Model 4 Presumptive cap set by the Judiciary’ approach to reducing awards. This approach allows the courts to set the award for catastrophic injuries, with the awards for lesser injuries being calculated as a proportion or percentage of the catastrophic award. These risks are:

  1. Amending the award level for catastrophic awards from time to time, as must happen, changes every award beneath that (in effect the entire Book of Quantum), irrespective of the merits of increasing damages for minor awards.
  2. Catastrophic injuries are an emotive issue, which can be subject to substantial change. In 2019, in a significant judgment against the HSE, it increased by 11% from €450,000 to €500,000. In ISME’s opinion, it does not follow that an 11% knock-on to all other awards would be justifiable on this basis.
  3. In recommending Model 4, the LRC uses the phrase “assuming that the Guidelines may broadly reflect the Book of Quantum” in suggesting that awards guidelines issued by the PIGC would be immune from constitutional challenge. If  the outcome of the PIGC awards recommendation process is a set of guidelines anywhere close to the current levels of awards for minor damages, the entire Judicial Council/PIGC process will have been a waste of time, and will not reduce insurance costs.
  4. There is also an inherent risk that as ‘Guidelines’ only, the output of the Judicial Council PIGC will be ignored by all or some of the judiciary, who will continue to set damages as they see fit. The judiciary are required to ‘have regard’ for the Book of Quantum guidelines that currently stand, yet they routinely ignore them.
  5. There is also the inherent risk that, if the Judicial Council’s PIGC were to substantially reduce minor injury awards below the going rate in the current Book of Quantum, those reduced rates would themselves become the subject of constitutional challenge. The judiciary would be put in the invidious position of correcting their own homework. This risk was alluded to last year by the Chief Justice in his letter to the then Justice Minister Charlie Flanagan.

Neil Mc Donnell added; “For all the reasons set out above, ISME opted for a straight legislative cap on general damages (‘Model 1’) which was not recommended by the LRC. We regret to say that in the long run, we consider our position to be the only sustainable solution to the problem of excessive damages for minor injuries.”