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LRC report

10 Nov 2020 / Law reform Print

Constitutional rights front and centre in LRC report

The appetite for a soundbite can never be underestimated, but Stuart Gilhooly hopes that the LRC’s report on personal injuries damages will be taken on board and that a sensible reaction will ensue.

Signs you are getting old, number 563 – constitutional law starts becoming interesting. I blame Ruadhán Mac Cormaic, really.

He started the downward spiral by having the temerity to write a readable, entertaining book about important decisions of the Supreme Court. It was only heading one way after that.

So it was with anticipation, rather than trepidation, than I embarked upon the 144-page report of the Law Reform Commission (LRC) on Capping Damages in Personal Injuries Actions (LRC 126-2020, published on 30 September 2020).

The LRC has provided many thought-provoking and often radical reports over the years, but rarely has one been so eagerly-awaited, particularly by politicians and the media.

The issue of damages has long been flagged by insurers as the main reason for the excessive increases in premiums in recent years.

The Law Society has set out, in various fora – including these pages – why this thesis is without evidence or most likely any foundation.

Nonetheless, it fits neatly into the narrative peddled by an insurance industry that will use any excuse to defend its egregious profiteering and has no compunction in laying the blame at the feet of innocent injury victims.

It would appear that, notwithstanding the Central Bank finding of dual pricing, the Competition and Consumer Protection Commission’s allegation of price signalling, and earning supernormal profits, it continues to, shamelessly and with a straight face, suggest that the victims of their policyholders’ wrongdoing are, in fact, to blame.

Strong constitution

In any event, the LRC was not tasked with determining whether or not capping damages would reduce insurance premiums, but rather to opine on the constitutionality of such a concept.

In doing so, it provided an issues paper last December that suggested four models that could be considered, and it invited submissions from interested parties as to which, if any, they believed would pass the constitutionality test.

The Law Society was one of 35 bodies or people who made submissions, and it is clear from the report that the views received were of a very diverse nature.

It is an issue that attracts partisan opinions and, when the issue of constitutionality arises, it is not unusual to see an argument made in line with the views of the subject. Which is not to say all such arguments are equal.

In order to obtain independent, expert, and objective advice on the issue, the Law Society sought the advice of counsel, which was reviewed by an expert subcommittee of the Society, and resulted in a comprehensive submission detailing the pros and cons of each model.

Before outlining the submissions, it would be useful to briefly set out the four models:

  • Model 1 – legislative capping (mandatory in nature and set by primary legislation) that divides types of injury into separate categories of severity, alongside guidelines that would determine the category or severity of an injury, with damages for each category. It was proposed that the respective caps for each category would be mandatory in nature, with no room for judicial discretion above that level.
  • Model 2 – this is quite complicated. Loosely described as a presumptive cap set by primary legislation, it proposes to set an upper limit for damages, and every other injury below the most serious would represent a percentage of that injury from 1% to 100%. It is not clear whether each distinctive type of injury would have a separate cap or whether every injury would simply be a percentage of the maximum, which would presumably be the current common-law cap of €500,000. This model, however, crucially allows for judicial uplift in cases with exceptional circumstances and in the interests of justice.
  • Model 3 – this is the most controversial and most problematic. It essentially suggests that the capping proposals, such as appear in Model 1 or even Model 2, could be set in secondary legislation by way of ministerial regulation. This would again involve mandatory capping, with no judicial discretion.
  • Model 4 – the easiest to achieve and simplest proposal. It envisages a common-law cap, such as that which is currently set at €500,000, and guidelines as drafted by the Judicial Council under its power conferred by the Judicial Council Act 2019. The LRC noted that these draft guidelines must be produced by 28 October 2020, after which the board of the Judicial Council will review, amend if necessary, and approve within 12 months. They noted that the amended section 22 of the Civil Liability and Courts Act 2004 has now significantly changed the emphasis on judicial discretion. While the original section merely required a judge to have regard to the Book of Quantum, now, as soon as these guidelines are produced, a judge must state a reason for departure from the guidelines.

The Law Society submission immediately rejected Models 1 and 3 as being unsafe constitutionally. It felt that Model 4 would be safest and least likely to be susceptible to challenge.

Final report

The final report of the LRC took a similar stance.

In determining the issue, it looked at the constitutional rights that may be affected and focused on three rights primarily: the right to bodily integrity, property rights (the right to litigate and to an effective remedy), and the right to equality before the law.

In assessing whether the restriction of any of these constitutional rights could be justified, it applied the two tests set down in Heaney v Ireland ([1994] 3 IR 593) and Tuohy v Courtney ([1994] 3 IR 1), which are described as the proportionality and rationality tests respectively.

In applying these tests to Model 1, it was likely to fail the proportionality test because of the mandatory nature of the cap.

Model 2 was considered the most likely of the new proposals to withstand challenge because of the discretionary nature of the judicial uplift provided.

Model 3 was rejected as the least likely to pass constitutional muster, both for reasons of its mandatory nature and its failure to pass ‘the principle and policies test’ set down in Cityview Press Ltd v An Chomhairle Oiliúna ([1980] IR 381) in respect of the proposal to delegate the power to set caps to the minister.

It was in relation to Model 4 that the LRC felt that most amount of comfort could be drawn. It was very conscious that, since the commission was asked to commence its work on this issue, the Oireachtas had passed the Judicial Council Act 2019 and the fruits of that legislation’s provisions had yet to be experienced.

Judicial guidelines

It felt that the creation of judicial guidelines with the power to go beyond them only for good reason was the best and fairest approach. It felt that these guidelines, and their effect, should be given an opportunity to work before serious consideration should be given to any other model.

However, it was clear that this was a matter for the Oireachtas and that, of the other models considered, Model 2 with appropriate safeguards would be the most desirable.

The political appetite for a soundbite can never be underestimated, but it is to be hoped that this report will be taken on board and a sensible reaction to the guidelines will ensue. In the meantime, the Court of Appeal jurisprudence continues to recalibrate damages in a fair and consistent manner. 

Stuart Gilhooly
Stuart Gilhooly
Stuart Gilhooly is a partner with Dublin law firm HJ Ward and Co