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British payouts are 'mean' says Kearns
Pic: RollingNews.ie

19 Sep 2018 / personal injury Print

British payouts 'mean' compared to ours – Kearns

The second report of the Personal Injuries Commission (PIC) was published on 18 September and has tasked the nascent Judicial Council to draw up indicative guidelines for judges on the issue of damages awards.

Chaired by Mr Justice Nicholas Kearns, the PIC was established to examine the rates of damages for whiplash-type soft-tissue injuries.

The Judicial Council Bill is expected to be enacted by year-end. If the new Judicial Council accepts the task, it will draw up the non-binding guidelines for judges. It is believed that the new award levels will be benchmarked in line with international standards.

The PIC anticipates that the resources of the Personal Injuries Assessment Board (PIAB) will also be available to the judiciary in drawing up the guidelines.

Inconsistency in awards

The commission also conducted a detailed examination of inconsistency in awards for comparable injuries in Ireland.

"We are not saying the level of awards in the UK is necessarily the correct one," Mr Justice Kearns conceded at the launch.

He described how, when he started practising in personal injury work as a barrister in 1968, he was "shocked" at how mean the awards were in the UK.

The loss of an eye was valued at around £5,000 in Britain as opposed to £25,000 in Ireland, at the time. "I didn't think there was anything wrong with [the latter award]," said Mr Justice Kearns.

Unscrupulous claimants

On the issue of fraudulent or exaggerated claims, Mr Justice Kearns said that "solicitors, prior to commencing legal proceedings on behalf of a client, will know that the client has to swear an affidavit verifying the facts deposed to in the proceedings".

Solicitors are also aware of the penalties for issuing a false statement, which is a criminal offence, Mr Justice Kearns said.

"The overwhelming majority of solicitors are very careful to seek re-assurance as best they can, but they can be lied to as well, by unscrupulous claimants.

"Often a solicitor is mortified in court when some facts come out, or CCTV material is shown in court.

"From any discussions I've had with the Law Society, they attach a very high premium to the honesty of their members. They react very firmly in any situation where impropriety is brought to light.

"And, of course, a solicitor runs the risk of being struck off by the President of the High Court if facts are established which suggest fraud or dishonest dealing," Mr Justice Kearns pointed out.

He said that PIAB levels of recommended compensation track the averages of court awards, so the system is "self-perpetuating".

The insurance industry has pledged that consistency in damages awarded will lead to a reduction in the level of premiums.

In response, the Law Society has said that it welcomes any measures which improve consistency in personal injury awards but stresses the need to preserve appropriate compensation for accident victims.

“Improved clarity and consistency in personal injury damages is a positive prospect, and the Society agrees that judges are uniquely placed to develop strong guidelines for accident awards,” said Law Society Director General Ken Murphy. 

However, the Law Society expressed concern that reducing damages may solely benefit the insurance industry and could do harm to those who have suffered injury.

No evidence

Director General Ken Murphy explained that there is no evidence that reducing the level of compensation awarded to personal injury victims will result in premiums going down.

“We must avoid a situation where injury victims end up in a poorer position while insurance companies keep getting richer," he pointed out.

“Simply reducing damages takes money away from those who suffer injuries through no fault of their own and puts it in the pockets of the already very profitable insurance companies. It is critical that the judiciary maintains a balance between the rights of injury victims and appropriate compensation levels," he said.

Even in relation to claims costs, which comprise the various expenses associated with the processing and handling of insurance claims and of which legal fees are just one element, Mr Murphy highlighted a common fallacy.

"Reducing claims costs does not lead to a reduction in premiums. The cost of making a claim rose by around 2.7% per year between 2011 and 2016.

"The reality is that premiums are calculated based on several different factors, and claims costs are just one of those factors.

"Bad underwriting, under-reserving, a volatile stock market and new capital requirements under the EU Solvency II Directive were far more influential on the massive premium increases than claims costs could possibly have been," he said.

Factors

“Now that most of those factors have been removed or improved upon, insurance companies seem to be doing very well and posting strong profits,” Ken Murphy added.

The Law Society also cautioned against placing too much emphasis on comparisons between the UK and Ireland in personal injury cases.

Benchmarking

“The PIC’s benchmarking exercise against the UK highlights that Irish personal injury awards are a multiple of those in the UK.

"However, is there actually any good reason to align our personal injuries awards system with the UK?” Ken Murphy asked, echoing Mr Justice Kearns' remarks at the report launch.

Health and wellbeing

“If anything, the higher level of awards in Ireland may, in fact, serve as an indication that Irish society places a higher monetary value on the health and wellbeing of its citizens,” he said.

Mr Murphy also points out that “Recent decisions from the Court of Appeal show that judges are not afraid to reduce awards they consider to be too high, particularly in cases involving soft-tissue ‘whiplash’ injuries. This has already led to downward pressure on damages and settlements across the board.”

The PIC report points out that fraudulent or exaggerated claims have a low risk of detection, and an even lower risk of prosecution in this country.

Meanwhile, the Cost of Insurance Working Group, formed in July 2016, in its review of the level of damages in personal injury cases, has called on the Law Reform Commission (LRC) to undertake a detailed analysis of the matter.

The LRC has been asked to examine the possibility of developing constitutionally sound legislation to delimit or cap the amount of personal injury damages that a court may award.

Gazette Desk
Gazette.ie is the daily legal news site of the Law Society of Ireland