merrion street

I thank Deputy Penrose for raising this very important matter. I remind Deputies that the Programme for Government has a commitment to legislative reform in this area. The commitment is to empower courts to making provision for structured settlements in circumstances where lump sums are currently awarded as a consequence of individuals suffering catastrophic injury because of the negligence of another.

In our legal system, an award for damages - in other words monetary compensation - in personal-injury cases is restitutionary in purpose. It is the most common form of redress pursued in civil claims. The bedrock principle underlying the awarding of damages in our legal system is that the amount of compensation should restore the injured person, so far as money can do so, to the position he or she would have been in if he or she had not sustained the wrongful injury.

Damages awards are in general paid by way of a single lump sum. Damages are awarded under two headings: special damages and general damages. Special damages are damages specifically claimed and proved to have been sustained in the circumstances of the particular wrong to the plaintiff. They cover pecuniary losses like medical expenses or loss of earnings, including loss of future earnings. General damages cover non-pecuniary loss that the law presumes follow from the type of wrong complained of. This loss includes: pain and suffering, loss of amenities, and loss of the expectation of life.

A one-and-for-all lump-sum award has a number of advantages. It is final, simple and allows the plaintiff to be flexible in deciding for himself or herself the order of priority in relation to his or her different needs and wants. This straightforward approach, however, often results in over-compensation or under-compensation. The calculation in court by reference to average life expectancy may bear little relation to the real life expectancy of the individual plaintiff involved. A claimant may die long before his or her expected time. In that event, the defendant cannot take back the excess of damages paid, and the excess becomes a windfall for the plaintiff’s family.

The converse is that a plaintiff may live longer than expected. In that event, his or her damages may simply not be enough to meet his or her needs during the last phases of his or her life. This is likely to happen later in life when the effects of having insufficient resources will be particularly hard to handle. Indeed, a plaintiff may out of excessive prudence become so concerned about exhausting the lump sum that he or she does not spend the required amount of money on their needs.

There are other variables we must keep in mind. Investment returns will depend on the person’s investment strategy and the prevailing financial and economic climate. A plaintiff’s needs may change from those assessed at the time of trial or settlement. And the costs relating to care that were assessed at rates or values operative at the time of the trial date may increase substantially afterwards.

Of course, judges do their best to ensure that a catastrophically injured plaintiff is adequately provided or whatever the future holds for him or her. But the pressure on judges in many cases to turn to what is in effect guessing what the future holds for the plaintiff is unreasonable. In this area, accuracy and legal certainty are important value. It is desirable to have a system of compensation that is better able to meet future needs as and when they arise. To meet some of the difficulties of the present system and, in particular, to ensure that plaintiffs are safeguarded against the danger that, at some time in the future, their damages might be depleted, a new means of paying damages by way of Periodic Payments Orders needs to be developed. This would allow the courts to structure awards or settlements in a more realistic way. It would provide a guarantee for a plaintiff that he or she will continue to receive regular annual payments for the duration of his or her life so that his or her damages will never be exhausted.

In 2010 the President of the High Court established the Working Group on Medical Negligence and Periodic Payments, under the chairmanship of Justice John Quirke, to consider, amongst other issues, whether certain categories of damages for catastrophic injuries could or should be awarded by way of periodic payment orders and to make such recommendations as necessary.

On periodic payments, the Working Group recommended that legislation be enacted to empower the courts, as an alternative to lump sum awards, to make consensual and non-consensual periodic payments to compensate injured victims in cases of catastrophic injury where long term permanent care and treatment will be required. The Working Group also recommended that periodic payment orders should only be made where the court is satisfied that continuity of payment under the periodic payments order is reasonably secure.

The viability of a statutory scheme for periodic payments requires the establishment of a financial infrastructure to ensure that continuity of payment is secure. In this regard the Working Group recommended that the State, through the agency of the National Treasury Management Agency, be empowered to provide injured victims with the necessary security for periodic payments either by the provision of annuities to insurers and others or in such other manner as may be appropriate. Alternatively it was recommended that consideration be given to the introduction of a statutory scheme whereby payments made under periodic payment orders will be statutorily protected and guaranteed.

The NTMA has recently concluded an actuarial review on the feasibility and cost-effectiveness of the State acting as an annuity provider to insurers and indemnity providers in personal injury actions to enable compliance with the security-of-payment principle.

The NTMA report is being considered in consultation with the Department of Finance with a view to the development of legislative proposals by my Department. Subject to the outcome of these consultations, which I expect will conclude shortly, I intend to bring to Government for its approval in the coming weeks concrete proposals for the preparation of the Scheme of a Bill to amend the Civil Liability Act to give the courts the power to make periodic payment orders in appropriate cases.