Friends with Collateral Benefits?: consent recitals on loss of earnings in orders striking out settled personal injuries actions and the recovery of state benefits from tort damages

AuthorDavid Keane
PositionJudge of the High Court of Ireland
[2020] Irish Judicial Studies Journal Vol 4(2)
Abstract: This paper examines the law’s treatment of collateral benefits – and, more specifically, social welfare
benefits in the assessment of damages for personal injury. In particular, it looks at the operation of s
343R(2) of the Social Welfare (Consolidation) Act 2005, as amended, and the widespread practice that has
emerged of the defendant in a settled personal injuries action applying on consent or unopposed for the inclusion
in the order striking out the proceedings of a recital addressing the nature or extent of plaintiff’s loss of earnings.
This is done for the purpose of limiting or eliminating the entitlement of the Minister for Employment Affairs
and Social Protection to reimbursement from the defendant of the social welfare benefits paid to the plaintiff
in connection with that injury.
Author: Mr Justice David Keane, Judge of the High Court of Ireland
In Ireland, as in the United Kingdom,
there are broadly three systems of accident
compensation. The first, provided through the commercial marketplace, is personal (or ‘first-
party’) insurance, although such insurance against personal injury is unusual. The second,
provided through the courts, is the personal injuries action. Though widely criticised,
based tort liability is both deeply embedded in our law and ever more closely entwined if
not, by now, inextricably bound up with the ‘third-party’ insurance market. The third,
provided by the State, is social protection (or social security). By any measure, it is the most
equitable of the three and the one most widely relied upon, although it is not, of course, the
most comprehensive in its potential scope.
The complex interrelationship between these different systems raises difficult issues. It
informs the argument that the tort liability system lacks any coherent theoretical justification
in modern society.
For Professor Atiyah,
it contributes to the need for ‘a good hard look’
at the whole system of compensation for personal injuries.
Such fundamental debates,
though plainly of great importance, are beyond the scope of this article.
Eoin Hennessy made an early contribution to the research for this article.
Peter Cane and James Goudkamp, Atiy ah’s Accidents, Compensation and the Law (9th edn, Cambridge University
Press 2018), 10-11.
ibid, ch 18.
Professor Steve Hedley, The Unacknowledged Revolution in Liability for Negligence in Sarah Worthington,
Andrew Robertson and Graham Virgo (eds), Revolution and Evolution in Private Law (Hart Publishing 2018) 99.
Who, sadly, died on 30 March 2018.
Patrick Selim Atiyah, The Damages Lottery (Hart Publishing 1997) 173. Although, in the first edition of Accidents,
Compensation and the Law (Weidenfeld and Nicolson 1970), P rofessor Atiyah had argued that the tort system
should be abolished and replaced by the social welfare system, by 1997 he had changed his mind and, while still
advocating the abolition of the tort system, suggested its replacement with a no-fault insurance scheme for road
accidents, run by the private insurance industry, leaving compensation for all other accidents to the ‘first-party’
[2020] Irish Judicial Studies Journal Vol 4(2)
The discussion that follows is directed to the practical question of how the law treats the
receipt of collateral benefits by a person seeking damages from a tortfeasor for personal
injuries and, more specifically, how it treats certain social welfare payments made to an
injured person in determining the damages that the tortfeasor must pay to th at person and
the social welfare payments that the tortfeasor must refund to the State. In particular, it
looks at the operation of s 343R(2) of the Social Welfare (Consolidation) Act 2005, as
amended. Under that provision, if an injured person’s loss of earnings or profits is the
subject of an order of the court or an assessment by the Personal Injuries Assessment Board
and the amount so ordered or assessed is less than that of the relevant social welfare
payments received by the injured person, then the compensator (almost always an insurer)
need only repay to the State the lesser amount.
Although they receive very little attention, such issues are not unimportant. As Professor
Lewis has commented on the lack of academic interest in the equivalent UK legislation, the
Social Security (Recovery of Benefits) Act 1997:
[A] wider point can be made here about the partiality of tort scholarship: it
concentrates excessively upon issues of liability as opposed to damages. This
bias is a remarkable one as far as practitioners are concerned. They are
bemused by the preoccupation of academics with rules on fault and cause. This
is because they are aware that, in practice, defendants and their insurers rarely
challenge liability. The issue is raised in less than 20 per cent of personal
injuries cases. By contrast, the amount of compensation is almost always open
to some negotiation.
Collateral Benefits and Tort Damages
When a person is injured in an accident, he or she may receive benefits and assistance from
a variety of sources, such as an employer, an insurer, a family member, a benefactor, a charity
or, most obviously, the State. Any benefit or assistance obtained from one or more of these
sources exists quite apart from or collateral to any damages obtained from a responsible
tortfeasor. As Professor Lewis notes,
this gives rise to two basic policy questions in the tort
system. First, to what extent should the damages payable by a tortfeasor be reduced to take
account of benefits or assistance received from other sources? And second, to what extent,
if any, should a person who provides some benefit or assistance to an injured person be
reimbursed by the tortfeasor? There are three possible solutions to those two questions.
The first solution is cumulation. Cumulation is the accepted term for the policy that there
should be no reduction in damages to take account of benefits or assistance received from
other sources. It might be said to represent the traditional position and has been embraced
most notably in the United States of America, where it is referred to as ‘the collateral source
rule’, formulated in the US Restatement of Torts as: ‘Payments made to or benefits conferred
on the injured party from other sources are not credited against the tortfeasor’s liability,
insurance marketplace, rendered affordable for all by the r emoval of ‘all the wasteful legal and administrative
costs associated with claims for damages and third party liability’, 185 193.
Professor Richard Lewis, ‘Recovery of State Benefits from Tort Damages’ in TT Arvind and Jenny Steele
(eds), Tort Law and the Legislature (Hart Publishing 2013) (footnotes omitted) 285, 286.
ibid, 289.

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