Daniel Kuczak v Treacy Tyres [Portumna] Ltd (No. 2)

• Jurisdiction: Ireland
• Judge: Mr. Justice Twomey
• Judgment Date: 09 November 2022
• Neutral Citation: [2022] IEHC 619
• Court: High Court
• Docket Number: [2018/8428P]

Between

Daniel Kuczak

Plaintiff

and

Treacy Tyres [Portumna] Limited (No. 2)

Defendant

[2022] IEHC 619

[2018/8428P]

THE HIGH COURT

Personal injuries – Settlement – Apportionment of liability – Parties seeking to insert a term in a Social Welfare Consolidation Act 2005 s. 343R(2) consent order stating that the defendant’s insurance company was only 50% liable for the plaintiff’s injuries – Whether the Minister for Social Protection agreed to such a consent term being inserted in the s. 343R(2) consent order

Facts: The principal judgment ([2022] IEHC 181) dealt with an application to court, with the consent of the plaintiff, Mr Kuczak, the defendant, Treacy Tyres (Portumna) Ltd, and the defendant’s insurance company, to insert a term in a Social Welfare Consolidation Act 2005 s. 343R(2) consent order stating that the insurance company was only 50% liable for the plaintiff’s injuries. The High Court concluded that insurance companies and personal injury plaintiffs should not be able to get the taxpayer to subsidise the settlements which are paid to personal injury plaintiffs by insurance companies. The Court concluded that it is not possible for an insurance company to be relieved of its obligation to reimburse the taxpayer the amount of social welfare benefits that had been paid by the State to the plaintiff. The Court held that an insurance company could not claim to have an ‘order of a court’ simply because it had got a court to insert a term (that was agreed between the parties to the personal injuries’ claim) in a consent order issued by a court on the settlement of a personal injury case. The Court refused to insert a consent term in the s. 343R(2) consent order striking out the proceedings. Both a report by the Law Reform Commission and an article by Keane J in the Irish Judicial Studies Journal were relied upon by the Court in the principal judgment. Before the Court finalised the order striking out the proceedings, the insurance company requested that the Court delay the perfection of the court order until the insurance company had sought the agreement of the Minister for Social Protection to such a consent term being inserted in the s. 343R(2) consent order. In making the application, the insurance company relied on the fact that one of the reasons that the Court gave in the principal judgment for refusing to insert ‘consent terms’ in s. 343R(2) consent orders was because the party that was financially prejudiced by the insertion of that term, the taxpayer/the Minister, was not represented. The Court acceded to the application to stay the perfection of the order until the Minister had been consulted. The Court gave the Minister liberty to apply to court.

Held by Twomey J that the Minister confirmed to the Court that she agreed with the interpretation of the Court that a ‘consent settlement order’ is not an ‘order of a court’ for the purposes of s. 343R(2). He noted that her counsel stated that she did not accept that an insurance company is relieved from its obligation to reimburse the taxpayer by using a consent settlement order. He noted that she confirmed that she was not consenting to the insertion of the 50:50 apportionment of liability in the consent order to be issued by the Court.

Twomey J held that the outstanding matter, for the Court to deal with, was to lift the stay and perfect the order striking out the proceedings, but without inserting the apportionment of liability, which the plaintiff and the defendant/insurance company had asked the Court to insert.

Application refused.

JUDGMENT OF Mr. Justice Twomey delivered on the 9 ^th of November, 2022

INTRODUCTION

1 . This case may herald the end to the practice whereby the taxpayer has been subsidising personal injury settlements to a significant degree. As regards the amount of money at issue, reference is made to €20 million shortfall to the taxpayer in an article in the Irish Law Times (referenced below), but it is not clear for which period of time this relates.

2 . The reason this practice appears to have come to an end is because the Minister for Social Protection (the “Minister”) has confirmed to this Court that she agrees with the interpretation of this Court that a ‘consent settlement order’ is not an ‘order of a court’ for the purposes of s. 343R(2) of the Social Welfare Consolidation Act, 2005 (the “2005 Act”)

3 . The background to this issue is that the Law Reform Commission has said in very stark terms that it was ‘wrong’ that in personal injury cases the taxpayer was made to ‘ foot the bill for what might be regarded as a business expense of the insurance companies’. Yet this is what happens when a consent settlement order, made by a court on the settlement of a personal injuries case, is used by an insurance company to claim that it is not legally obliged to repay sums due to the taxpayer.

4 . In a similar vein, Keane J., writing in the Irish Judicial Studies Journal, highlighted that this use of consent settlement orders amounted to a ‘ subvention from the State (or taxpayer)’ to insurance companies.

5 . Both the Law Reform Commission Report and Keane J.'s article were relied upon by this Court in the principal judgment ( Kuczak v. Treacy Tyres [2022] IEHC 181, (the “Principal Judgment”)). In it, this Court concluded that insurance companies and personal injury plaintiffs should not be able to get the taxpayer to subsidise the settlements which are paid to personal injury plaintiffs by insurance companies. In particular, this Court concluded that it is not possible for an insurance company to be relieved of its obligation to reimburse the taxpayer the amount of social welfare benefits that had been paid by the State to the plaintiff. This was because this Court held that an insurance company could not claim to have an ‘order of a court’ simply because it had got a court to insert a term (that was agreed between the parties to the personal injuries' claim) in a consent order issued by a court on the settlement of a personal injury case (a ‘consent settlement order’, in the words of counsel for the Minister).

6 . In this supplementary judgment, it is noted that the Minister has now confirmed that she agrees with the interpretation adopted by this Court. Her counsel stated that she does not accept that an insurance company is relieved from its obligation to reimburse the taxpayer by using a consent settlement order. On this basis it seems likely that this costly practice for the taxpayer of insurance companies and personal injury plaintiffs using consent settlement orders to have the taxpayer finance personal injury settlements will come to an end.

7 . This case therefore illustrates the important role of the Law Reform Commission and the Irish Judicial Studies Journal in bringing matters of significant public interest to the attention of the judiciary and the public at large.

Shortfall of €20 million due to the taxpayer

8 . The practical financial benefit to the taxpayer of the resulting clarification which has been provided by the Minister appears to be very significant. See for example the reference to a shortfall of €20 million in the recovery by the taxpayer of these benefits from insurance companies in Peters, Recovery of Benefits and Assistance Scheme: Aim and Implementation (2020) Irish Law Times, Vol 38(19) at p. 289.

9 . It is not surprising that there might be such a large sum of taxpayers' money involved when one considers the huge number of personal injury cases each year (15,071 in 2021 per the Courts Service Annual Report 2021 at p. 46), combined with the fact that 97% of personal injury cases settle (see the Statement of the President of the High Court, 10 ^th July, 2020 in relation to High Court cases).

10 . This means that courts are dealing on a daily basis with a huge number of consent settlement orders. It is clear therefore that this is a matter of considerable financial importance for the taxpayer.

11 . Before, considering the various confirmations that have been provided by the Minister, it is helpful to clarify how it has been possible for insurance companies to get the taxpayer to ‘foot the bill’ for their ‘ business expenses’, in the words of the Law Reform Commission. This is necessary because a cursory reading of the the relevant legislation, s. 343R(2) of the 2005 Act, would not lead one to conclude that this is intent or effect of that section. It reads:

“(2) 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.”

12 . It seems to this Court that it would not be possible for a lay person, and indeed many lawyers, to discern from this section that it could be used by insurance companies and personal injury plaintiffs to have the taxpayer fund their settlements.

13 . For this reason, it is important to give an example which will illustrate how this section has been used by plaintiffs and defendants in personal injuries' claims to have the taxpayer fund their settlement payments.

How have insurance companies got the taxpayer to foot their bill for business expenses?

14 . In a typical personal injuries' case, a plaintiff claims that his injuries were 100% caused by the negligence of a defendant, who is insured. The plaintiff may receive disability or other payments from the State as a result of being out of work due to those injuries. In Mr. Kuczak's case, these payments amount to approximately €90,000.

15 . Since the State is not responsible for the injuries, it is entitled, as a matter of logic and as a matter of law (under s.343R(1) of the 2005 Act), to be reimbursed this €90,000 by the party that...