Wilson v Leonardi

• Jurisdiction: Ireland
• Judge: Mr Justice Barr
• Judgment Date: 01 December 2022
• Neutral Citation: [2022] IEHC 670
• Court: High Court
• Docket Number: Record No. [2020/1877 P]

Between:-

Jean Wilson

Plaintiff

and

Peter Leonardi and Virginia Park Lodge Limited

Defendants

[2022] IEHC 670

Record No. [2020/1877 P]

THE HIGH COURT

JUDGMENT of Mr Justice Barr delivered extempore on 1 ^st day of December, 2022.

Introduction.

1 . This action concerns personal injury proceedings brought by the plaintiff against the defendants arising out of an accident on 10 ^th July, 2017. The action has been settled between the parties.

2 . The parties have requested that the Order of the court should include a term that liability was determined on a 50/50 basis between the plaintiff and the second defendant. The court will return to the specifics of the order sought by the parties in this case, later in the judgment.

3 . First the judgement will deal with the question of whether it is appropriate for the court to insert certain terms into the order of the court, by agreement of the parties. Such terms are sought by defendants so as to relieve them of the obligation to pay to the Minister for Social Welfare the entire amount of the benefit specified in the Recoverable Benefits and Assistance certificate (hereinafter “RBA certificate”) that issued in respect of the plaintiff.

4 . There are conflicting judgments in the High Court concerning this issue. It is for that reason that the court has felt it necessary to give a judgment explaining its approach to the matter.

Background to the RBA Scheme.

5 . From as far back as the Social Welfare (Consolidation) Act 1993, certain social welfare benefits were deductible when assessing the compensation to which a plaintiff, who had suffered personal injuries as a result of an accident, might be entitled: see ss. 75, 236 and 237 of the 1993 Act. The purpose of these deductions was to prevent a plaintiff receiving compensation “on the double”, i.e. by getting a benefit by way of social welfare payments and then subsequently receiving compensation for the same head of loss in his damages.

6 . The deductibility of these benefits when assessing damages, was carried over by ss. 96 and 286 of the Social Welfare (Consolidation) Act 2005 (hereafter, the “2005 Act”). The fact that these payments were deductible when assessing damages meant, in effect, that the tortfeasor and/or his indemnifier, received a windfall, in that they were relieved of the obligation to pay an amount of compensation, because that head of loss had been catered for by way of social welfare benefits, which were deemed deductible from the amount of damages payable by the tortfeasor.

7 . This aspect was addressed by the Law Reform Commission in its ‘Report on Section 2 of the Civil Liability ( Amendment) Act, 1964: The Deductibility of Collateral Benefits from Awards of Damages’ (LRC – 68/2002). It recommended that where an injured person had received social welfare benefits as a result of his injuries, the tortfeasor should pay the value of such benefits to the State, as it had been due to the fault of the tortfeasor that such benefits had had to be paid to the injured person. The LRC recommended as follows at paragraphs 5.108 et seq:

“5.108 To state a straightforward principle: it seems to the Commission to be wrong for the Department (and beyond it, the taxpayer) to have to foot the bill for what might be regarded as a business expense of the insurance companies who have taken premiums to insure a negligent defendant. There seems to us to be no practical or other reason not to require the insurance company to shoulder its own business expense.

5.109 The practical design of a system of reimbursement is very much a matter of specialised public administration to be settled by the Department, in consultation with the insurance companies, bearing in mind both the British model and the sophisticated information technology which is now in use in both the insurance industry and the Department. Accordingly, we say nothing further about the design of the reimbursement system.

5.110 The Commission recommends that the Department give consideration to the setting up of a reimbursement system under which the amount by which a compensation award has been reduced, by virtue of the payment of social welfare payments including health allowance, should be reimbursed by the defendant to the Department of Social and Family Affairs or a Health Board, as appropriate.”

8 . The recommendation of the LRC was given statutory effect in Part 11B of the 2005 Act, as inserted by s. 13 of the Social Welfare and Pensions Act 2013. This section repealed and replaced s. 96 (1) and (2) and s. 286 of the 2005 Act.

9 . The newly inserted statutory provisions provide that the specified period in respect of which specified benefits are recoverable, is the period beginning on the date on which the injured person first becomes entitled to a specified benefit as a result of the personal injury and ending on the earliest of the following: (a) the expiration of the period of five years from that date; (b) the date on which a compensator makes a compensation payment in final discharge of any claim made by or in respect of the injured person as a result of the personal injury, or (c) the date on which an agreement is made under which agreement an earlier payment is treated as having been made in final discharge of any such claim. The section goes on to detail which social welfare benefits are “specified benefits” for the purposes of the Act.

10 . The section also provides for the provision of a statement of recoverable benefits by the Department of Social Welfare in respect of the benefits that have been paid to a plaintiff.

11 . The obligation on a compensator to pay recoverable benefits to the Minister is set out in s. 343R, which is in the following terms:

“(1) Subject to subsection (2), a compensator shall pay to the Minister the amount of recoverable benefits specified in the statement of recoverable benefits before making any compensation payment to, or in respect of, an injured person.

(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.

(3) A compensator who fails to comply with subsection (1) or otherwise fails to pay the amount of recoverable benefits due to the Minister is liable to pay on demand to the Minister that amount of recoverable benefits so due.”

12 . The net effect of the statutory changes in relation to the recovery of benefits, is that where a compensator settles with a plaintiff simpliciter, the compensator is liable to repay the full amount specified in the statement of recoverable benefits; the obligation is not limited to cases where there is a loss of earnings aspect to the claim. It applies irrespective of whether the compensator is able to deduct the recoverable benefits from the damages to be paid to the injured person. Apportionment of liability does not impact the amount of recoverable benefits to be repaid. Thus, if the defendant's insurer settles with a plaintiff, they must repay all of the benefits stated in the plaintiff's RBA certificate to the Minister for Social Welfare.

13 . In order to avoid that situation, the compensator must bring itself within s. 343R(2), by obtaining an order from the court, which limits or expunges his obligation to repay the total value of the social welfare benefits, by either making certain orders in relation to the extent or duration of the plaintiff's loss of earnings claim, or by determining an apportionment of liability between the parties.

14 . If the order of the court does either, or both, of these things, the liability of the compensator to pay the amount specified in the RBA certificate, is modified, or eliminated, in accordance with the terms of the court's order.

15 . Examples of the type of recital that are often sought to be included in a consent order made by the court, include the following: “the plaintiff has withdrawn the claim for loss of earnings”; “the plaintiff incurred no loss of earnings after a (specified date)”; “the plaintiff did not recover any payment in respect of loss of earnings in the settlement figure”; “liability is apportioned between the defendant and the plaintiff in (a specified ratio) on the basis of the plaintiff's contributory negligence”. The RBA scheme commenced operation on 1 ^st August, 2014.

Conflicting Authorities in the High Court.

16 . The practice of the court making orders, which contained determinations of the type set out above following the settlement of personal injury actions, was first questioned in two academic articles published in 2020. The first of these, was an article published by Mr. Justice David Keane in the Irish Judicial Studies Journal, vol. 4 (2) of 2020, entitled “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”. The second article was by Ms. Neasa Peters, former Judicial Assistant to Ms Justice O'Regan, in the Irish Law Times, Vol. 38 (19) of 2020, entitled “Litigation, Recovery of Benefits and Assistance Scheme: Aim and Implementation”. In each of these articles, the learned authors questioned the practice whereby, following the settlement of a personal injuries action, the parties would request the court to recite in its order various determinations or findings, which had the effect of reducing or eliminating the compensator's liability to repay the full amount specified in the RBA certificate that had been issued in respect of the plaintiff.

17 . The issue in relation to the making of such orders was first raised in a judgment delivered by Twomey J. in the joined cases of Condon...