Why is the cost of public liability insurance escalating?

The reasons behind the escalating cost of public liability insurance are complex. But one of the explanations the Government has focused on is that courts are being too generous to the people who slip and fall and otherwise suffer injuries that are the result of the negligence of others.

This generosity is, in turn, feeding into the size of the payments being agreed in cases that are settled outside the courts system.

The judges’ decisions also influence the famous Book of Quantum, which is prepared by Personal Injuries Assessment Board (PIAB) using data from the various settlement routes that exist – party-to-party negotiations, negotiations with insurance companies and the State Claims Agency, dealings involving PIAB, and court awards.

A substantially recovered, minor injury of the hand is priced at up to €21,700

The Book of Quantum then acts as a guide to the judges, in the hope that this will provide some kind of consistency between different judges’ decisions in relation to similar injuries.

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The book has chapters dealing with the various parts of the body; each is broken down into the different injuries that can occur to those parts, with each injury then being sub-divided into categories such as minor, moderate, moderate severe, and so on.

Each type of injury is then given a price guide for compensation for associated pain and suffering (as against compensation for the cost of care and loss of income).

So a substantially recovered, minor injury of the hand is priced at up to €21,700, while the most catastrophic type of spinal injury, where a person is to suffer pain and distress for the rest of their lives, is priced at up to €450,000.

Pushing downwards

In November 2015, Ms Justice Mary Irvine, in the Court of Appeal, made the first of a series of rulings that are credited with pushing downwards personal injury awards that were being made at High Court level.

In a case involving a woman, Margaret Payne, who had suffered injuries to her neck, back and shoulder in a car crash, Irvine reduced the High Court award of €67,985, to €37,985, observing that Payne's neck and shoulder injuries had healed within a year, and all treatment had ended within two years of the car crash.

“Modest injuries should attract moderate damages,” the judge observed.

This ruling, and a few more that Irvine and her colleagues delivered in the months afterwards, have had the effect of recalibrating downwards the awards being made in the High Court, which is obliged to follow the rulings of the higher, appellate courts. This has affected what happens in settlement negotiations.

Judges are obliged to apply a reasonable amount of scepticism to the claims made in personal injury cases

However the effect of the rulings does not trickle down as far as the Circuit Court, which deals with awards below the threshold of €60,000, or so it appears the Government believes.

Because of this the Government has decided it should tweak the Judicial Council Bill, currently before the Oireachtas, to ensure the new council, once established, will be able to set new guidelines for judges in the lower courts.

These courts, we are told, are currently awarding damages for whiplash and other injuries that are up to five times what is being awarded in England and Wales.

Strangely enough, all of this would appear to be questioned by a long and interesting judgment delivered in June of last year by Mr Justice Michael Twomey in the High Court.

The judge was dealing with a claim under the Garda Compensation Scheme, where Garda Niall Kampff was seeking €21,700 for bruising to the hand suffered while trying to arrest a suspect. The amount sought was what the Book of Quantum suggests is the maximum award for such minor injuries. The judge decided €5,000 was more appropriate.

Book of Quantum

Twomey made some very interesting general observations in the course of his ruling. Judges are obliged to have regard to the Book of Quantum, he noted. However “this court (and indeed the District Court and Circuit Court) is obliged to follow the binding principles for the assessment of damages for personal injuries enunciated by the Court of Appeal and the Supreme Court”.

It was because of the rulings made by Irvine and others that Twomey decided that Kampff should get less than a quarter of what he was seeking.

As well as applying the principle that moderate awards should be given for minor injuries, Twomey also said courts were obliged to take into account the fact that, according to the Central Statistics Office, it takes the average person a year to earn €45,611, or a month to earn €3,800.

This issue was also cited in Irvine’s rulings. The Supreme Court, as far back as 1984, has said that damages awards should have regard “to the ordinary living standards in the country”.

Twomey decided that, despite what the Book of Quantum said, awarding “anywhere close” to what is the equivalent to half a year’s salary for an average person, for the bruising of a hand, would breach the principles set out by the Court of Appeal and the Supreme Court.

He noted that €5,000 is equal to more than a month’s salary for the average person, and 1.1 per cent of the general damages that would be awarded to someone who suffered a catastrophic spinal injury.

Such an award (€5,000) was fair not just to the garda, the judge decided, but also to the public, who would have to foot the bill by way of the exchequer.

The judge said his decision was not a reflection on the honesty of the garda but that he was obliged, as per a ruling by Mr Justice Donal O’Donnell last year in a Supreme Court case called Rosbeg Partners V LK Shields, to apply “common sense and a degree of scepticism” to personal injuries claims, where it was only human nature for claimants to “wish to be as successful as possible”.

Twomey also made the interesting point that the latest Book of Quantum was published in 2016 and, therefore, the figures in it did not reflect the principles contained in the rulings made by Irvine, principles to which he, Twomey, also said all courts, down to District Court level, are obliged to have regard.

The Book of Quantum was of “significantly less importance” than these principles.

In other words, all judges are already obliged by law only to award general damages to injured parties that are proportionate to the injuries complained of, and that reflect the reality of average incomes.

Furthermore, judges are obliged to apply a reasonable amount of scepticism to the claims made in personal injury cases.

On the face of it, it would seem that judges should be applying a substantial discount to many of the figures contained in the Book of Quantum.

If that is the case, then why do we need the proposed Judicial Council to intervene? Perhaps it is so that it can be explained more clearly to all judges what the responsibilities are, given what has already been decided by the highest courts in the system.