About this case:

• Citation:
  [2022] IEHC 619
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice Michael Twomey

Delivering judgment in the case, Mr Justice Michael Twomey stated that the practice of insurance companies (representing defendants) of seeking apportionment of liability in settled cases had to end. The court commented that the recovery of monies by insurance companies were getting the taxpayer to “foot their bill” for liability in personal injury cases.

Background

The plaintiff and defendant in a personal injuries action settled their case outside of court. The plaintiff had received some benefits from the State prior to the settlement of the action and accordingly, the defendant (funded by an insurance company) was liable to repay these monies. As part of the settlement, the parties agreed that the plaintiff would be recorded in the court order as being 50 percent liable for the injuries.

Under section 343R(2) of the Social Welfare Consolidation Act 2005, where “the recoverable benefits specified in the statement of recoverable benefits exceed the amount of the relevant compensation payment and that relevant compensation payment was the subject of an order of a court or assessment by the Board in accordance with the Act of 2003, the compensator is liable only to the extent of that amount so ordered or assessed.” [Emphasis added].

As a result of this section, the practice developed in personal injuries cases whereby parties in settled actions would record a percentage split in liability. For example, where it was agreed that a plaintiff would be 50 per cent liable in a settlement, this would be recorded in the court order by the parties. The insurance company would then repay 50 per cent of the benefits received by the plaintiff from the State, instead of 100 per cent.

In this case, the plaintiff received €90,000 in benefits from the State prior to the settlement. The apportionment of 50 per cent liability to the plaintiff meant that the defendant/insurer stood to repay only €45,000 to the State on foot of the settlement.

Mr Justice Michael Twomey had previously outlined his disapproval of the practice of reducing liability for the RBA Scheme in settled actions. The court initially refused to include the apportionment of liability in the order striking out the proceedings, but agreed to delay perfecting the order until the insurance company had sought the consent of the Minister for Social Protection.

In submissions to the court, the Minister drew a distinction between an order made on consent of the parties and an order made by a court following a hearing. A “consent settlement order” did not meet the required standard of “an order of the court” for the purpose of section 343R(2), it was said. Simply put, the Minister claimed that section 343R(2) did not apply to settlements and it only applied after a full hearing by a court or as assessment by PIAB.

High Court

Mr Justice Twomey began by referring to the views of Mr Justice Keane who wrote an extra-judicial paper for the Irish Judicial Studies Journal, as well as the views of the Law Reform Commission. The court also referred to the principal judgment in the case, where it was said that insurers were getting “the taxpayer to subsidise the settlements” in personal injury proceedings (see Kuczak v. Treacy Tyres [2022] IEHC 181).

The court also referred to an article in the Irish Law Times which claimed that there was a €20 million shortfall to the taxpayer as a result of the Scheme.

It was stated that, by settling cases instead of fighting them, insurance companies were assuming liability for an accident. The court said it was a matter of logic that the insurer should not be repaid by the State on this basis.

The court held that the apportionment of liability in a consent court order was in the financial interest of both parties to the action but was not in the interest of the taxpayer. It was also stated that an “order of a court” would ordinarily be understood to mean a decision of a court after hearing evidence.

Mr Justice Twomey outlined that, where cases were being struck out by a court on the basis of settlement, a judge was “merely rubber-stamping” a consent term on liability agreed between the parties and this was not appropriate.

The court noted that another High Court judge had held that a consent order for liability was an order of the court for the purposes of the Scheme. It was said that this inconsistency of approach could affect public confidence in the system.

Further, the court accepted the Minister’s submission that, even if she were to consent to the liability terms in a consent order, it would not cure the inherent defect that the consent term was not an “order of a court” because no decision had been made by the trial judge.

Mr Justice Twomey also rejected the proposition that an agreement on liability could be “noted” on a court order as this also would not fulfil the requirement of the term being an order of the court.

Conclusion

In light of the Minister’s refusal of consent, the court confirmed its decision in the principal judgment and refused to insert the term on the apportionment of liability in the final order.

The court noted that no appeal had been brought against the previous decisions to refuse such orders and an appellate court could take a different view. However, in the absence of an appeal, the Minister’s position may see the end of such orders being made in personal injuries cases, the court commented.

Kuczak v. Treacy Tyres (Portumna) Limited [2022] IEHC 619