In February 2010 the President of the High Court, Mr Justice Nicholas Kearns, established a working group chaired by Mr Justice John Quirke to look into the desirability of recommending reforms to the law in relation to the manner by which damages in personal injury claims (in particular catastrophic injury claims and Cerebral Palsy birth injury claims) are awarded. The high powered expert working group have been looking at reforming the current system of payment of lump sum damages. The group is considering a more sophisticated system allowing for the payment of damages by way of an annual or periodic sum for life, suitably index linked.
Since the group was established an enormous amount of work has already been undertaken and it is hoped that the group will report by the end of the year and that thereafter its report might be accepted by the Minister for Justice and the appropriate legislative reform will take place urgently.
Pending the possible reform a number of catastrophic injury cases which came before the High Court in recent months have been dealt with in a manner which anticipates the introduction of a periodic payment regime to deal with items of future care and expense. A number of cases have been adjourned for a period of 18 months to 24 months to allow sufficient time for the working group to bring forth its proposals and the necessary legislative changes to take place. These cases have been dealt with by way of a relatively modest award of lump sum damages, to cover once off capital type expenditure and general damages, with the remainder of the issues i.e. future care, future aids and appliances, future loss of earnings etc being adjourned to enable the anticipated legislative change to take place.
A series of 4 cases to date have been dealt with on an interim basis in this way. Firstly, in April 2010 the High Court approved a settlement in an option taken by a 15 year old boy suffering from Cerebral Palsy as a consequence of the admitted negligence of the doctors and nurses caring for him at the time of his birth. After negotiation, the Defendants (the State) agreed to pay a sum of €1.6 million on an interim basis. The remaining items of future care, aids, appliances and equipment etc were being adjourned for a period of 18 months to enable the necessary legislation/reforms to be enacted. Mr Justice Quirke who approved the settlement expressed a strong preference for reform to the law to permit an annual index-linked payment to be made.
A second case was dealt with in a similar way in May 2010 with an interim payment of €2 million being made to an 8 year old girl paralysed during spinal surgery. In July 2010, a third case in which Augustus Cullen Law acted for the Plaintiff was dealt with in similar fashion (Charlotte Barry –v– N.M.H. – see separate article on this website for a detailed account). In that case the Plaintiff was a 5 year old girl who suffered brain damage and Cerebral Palsy at birth as a consequence of the ultimately admitted negligence of the Defendant. In July 2010, the High Court approved an interim payment of €1,650,000 plus costs and adjourned the action for a period of 2 years in anticipation of the necessary reform legislation being enacted so as to enable the cost of future care, aids, appliances and assistive technology to be dealt with by way of an annual, index linked, payment for life.
Finally, in the last week of July 2010 the High Court approved a structured settlement arrangement in a case involving CIE who have admitted fault for seriously injuring a man when a steel gate fell on him. The Defendant in that case reached an agreement of €250,000 in general damages together with €160,000 per year for life for care costs together with €1,200.00 per month for life for future loss of earnings to be index linked. The case was adjourned until October 2011 to finalise the settlement in anticipation of the necessary legislative reform occurring in the intervening period.
All of the above cases illustrate the growing momentum for change to take place to enable a more equitable system of compensation to be enacted and developed to deal with complex catastrophic injury cases. From the Plaintiff’s point of view, the current system, whereby a once off lump sum award of damages is made to cover the cost of future care for life, is a system which is fraught with risk from the Plaintiff’s point of view. It makes certain assumptions as to the likely anticipated future life expectancy of the Plaintiff. It also makes assumptions as to the likely rate of return on investments and the likely cost of future care. All of these assumptions are fraught with uncertainty. There is a serious risk that the lump sum will not be sufficient to cover and meet the catastrophically injured Plaintiff’s lifetime needs.
A much fairer system would be the introduction of an annual payment which was index-linked and would be increased by the future inflation in care costs. One would imagine that this would be quite an easy task to achieve but the UK experience has shown that the system can be quite complex with very complex calculations having to be made. Crucial to the successful operation of such a scheme and to ensure that it adequately compensates Plaintiffs would be a guarantee that future payments to be made by Defendants would be secured and that the Defendant and/or his insurers will be financially able to make the future payments for the lifetime of the injured Plaintiff. In cases where the Defendant is insured by persons other than the State, there would have to be sufficient safeguards to ensure that the stream of future payments was absolutely guaranteed and could not be affected by say, either the Defendants or the Defendant’s insurance company going out of business or going bankrupt.
Another absolutely crucial component of such a scheme would be an appropriate index, against which to measure the inflation in care costs. For example, the consumer price index would be an unsuitable inflation index to use as often the changes in the consumer price index do not match the changes in carers wages/salaries. Experience over the last 50 years or more has shown that wages generally, and care costs in particular, have risen by far greater a rate, than the rise in the general consumer price index. These are issues that will require very careful consideration and would need to be addressed in any proposed reforms.
In the UK, in recent years, these issues have been satisfactorily addressed by appropriate legislation and in the past 4 or 5 years settlements by way of periodic payments have gained widespread acceptance by Plaintiffs and indeed Defendants. There have been nearly 1,000 cases settled on this basis. The UK experience has been, since the Courts started to measure inflation in future care costs by reference to inflation in carers wages (ASHE 6115), that they have become popular with Plaintiffs. However, problems still are encountered as a result of the complex issues which arise for example in the Courts assessment of compensation for house purchase and alterations.
It is anticipated that the President of the High Court’s working group will complete its work by the end of the year and report to the Minister at that time. It will be especially interesting to see what proposals the Group come up with and whenever it is published we will update readers.
For further information please contact Joice Carthy.
27 August 2010