Compensation Culture in Ireland

 

Introduction

“Compensation culture” is a phrase, coined by the media, which describes a society in which individuals pursue compensation for every slight infraction and injury, by way of litigation. While the existence of a compensation culture is debated,[1] it has supposedly delayed the courts with a heavy influx of personal injury claims, led to an increase in legal fees and insurance premiums as a result of high damages, and caused employers to have to take drastic health and safety steps to protect themselves from potential liability, among many other things. In this piece I will not attempt to prove or disprove the existence of a compensation culture, instead I will explore the methods put into place to attempt to combat and limit an increase in litigation and damages, the effectiveness of these methods, recent developments and the effect that the perception of there being such a culture is having in Ireland, and some of the issues that are potentially limiting the action that can be taken against this issue in Ireland.

 Measures Taken Against Compensation Culture in Ireland

Government concerns about a compensation culture developing in Ireland led to a series of reforms in the early 2000’s, primarily being the establishment of the Personal Injuries Assessment Board and the implementation of the Civil Liability and Courts Act 2004. These measures, coupled with the increased judicial focus on individual responsibility, have had varying degrees of success throughout the years. The PIAB was established in an effort to limit the number of personal injuries claims which actually made it to court. Before the plaintiff in a personal injuries action can actually bring a claim to court, they must first bring it before the PIAB, which attempts to mediate between the two parties and evaluate the claim at hand, allowing the claimant to pursue an action without incurring legal costs.[2] The PIAB are also responsible for the creation of the Book of Quantum, which provides a series of guidelines in regards to appropriate amounts of damages for certain injuries.

However, the PIAB has no authorisation to actually declare liability, and so if it fails to resolve a case, it is then admitted to the courts. In 2017 there were 33,114 applications to the PIAB, which was a 2.8% decrease in applications from 2016.[3] Out of these applications, 12,633 awards were granted, though only about 53.6% of awards were accepted.[4] This seems to demonstrate that in almost half of all PIAB applications, the parties involved are rejecting the offered award and bringing the case either to court or an external settlement with the other involved party. This indicates that this particular action against compensation culture is not as effective as desired, as it suggests that many of those who reject the PIAB offer believe they will receive a higher award of damages in a private settlement or from the courts.

The Civil Liability and Courts Act 2004 was implemented to tackle insurance costs and insurance fraud and change the way in which personal injuries actions are processed. It, inter alia, reduced the limitations period of personal injury claims from 3 years to 2,[5] implemented serious penalties for making a fraudulent claim,[6] and introduced an early-notification system for defendants.[7] It also grants the courts the power to instruct parties involved in a personal injuries action to partake in mediation.[8] In keeping with the general thinking behind these reforms, this section was implemented as the costs of mediation tend to be significantly lower than the costs of actually going to court, and it helps to reduce the number of cases which actually go to court. This concept of mediation has been built upon further in recent years, particularly in the Mediation Act 2017, which provides further conditions and codes for the process of mediation. Giving the parties involved an opportunity for mediation under an independent chairperson can help resolve disputes and lead to settlements without the need for time-consuming and costly litigation, which no doubt helps combat the idea of a compensation culture in Ireland.

However, should the parties involved in mediation fail to reach a settlement, the next step would be litigation. This is notably similar to the process of appearing before the PIAB: in both instances the parties can reject the solutions put before them and continue on to litigation. As demonstrated above in the PIAB statistics, this ability to reject the solutions put forward by mediation/PIAB severely limits the effectiveness of this system. There are also the issues of mediation not always being appropriate, such as in situations involving a novel legal issue, and the potential for procedural injustice.[9]

Overall it appears that the steps taken by the legislature to combat compensation culture have been met with both success and failure: while almost half of all PIAB awards were rejected last year, just over half of them were accepted, and as such just over half of all personal injury claims in 2017 did not bloat the already heavy workload of the courts. Similarly, while the mediation process implemented in the Civil Liability and Courts Act 2004 may be flawed, in situations where a settlement can be reached through mediation, it does allow the parties involved to avoid costly and time-consuming litigation.

Recent Developments:

As explored above, the methods employed to combat compensation culture in Ireland have been somewhat successful. However, these measures alone are not enough to eradicate the symptoms of compensation culture outlined above; a relatively recent shift in the judicial approach to compensation and personal injury claims has had a major impact on claims and compensation in Ireland. Increased importance is being placed on individual responsibility, which has resulted in awards of damages being slashed and claims rejected.

In O’Flynn v Cherry Hill Inns Ltd,[10] damages awarded to the plaintiff in the High Court after the tip of her finger was severed by an automatic door on the defendant’s premises were completely overturned, due primarily to evidence which opposed the plaintiff’s claims, though Irvine J. made several interesting comments in relation to individual responsibility, which seem to reflect the current opinion of the Court of Appeals: “Adult members of society are obliged to take care for their own safety and cannot divest themselves of responsibility for their actions”. The Court of Appeals generally appears to be adopting a more reserved approach to personal injury claims, though it remains to be seen whether or not this focus on individual responsibility will continue.

Despite the work of the PIAB, the changes implemented in the Civil Liability and Courts Act 2004 and the increased judicial focus on personal responsibility, there seems to be a continued belief that the courts lean too far in favour of the claimant in personal injuries cases, and that the damages awarded are too high. This belief is well illustrated in the recent and widely publicised “Luas Surfing Settlement”. In 2010, a young woman suffered a head injury after falling from the side of a Luas while Luas surfing. Towards the end of 2018, after a long mediation process, the woman received €550,000 in a settlement with Veolia, the company which operates the Luas service and did not admit liability for the claimant’s injuries, despite Cross J’s comment that if the case had reached the court, the claimant likely would not have won the case.[11] This seems to demonstrate the tangible symptoms of the perceived compensation culture: companies are more willing to settle for extremely high sums of money than they are to face the court process and potentially be ordered to pay even more in damages after the long and potentially widely publicised court process.While this seemingly pro-settlement attitude is positive in the sense that less time is spent on personal injuries claims in court, it raises the question of how the concept of justice will be affected in Ireland if claims are more likely to be settled outside of court than in.

Barriers to Legislative Change

The methods employed through legislation to deal with compensation culture in Ireland have been explored above, though it is still worth investigating the particular limitations that prevent or deter the legislature from making certain changes which would directly combat some of the key issues related to a compensation culture, namely being high damages and the overburdening of the courts.

One of the most frequently complained of aspects of the alleged compensation culture in Ireland is the idea that damages are excessively high, particularly in comparison to other countries: damages awarded for soft-tissue injuries in Ireland are approximately 5 times those awarded for similar injuries awarded in the UK.[12] However, damages are very difficult to regulate, due to the potential for constitutional issues. Although the law of torts is compensatory in nature, and usually not punitive, the argument could be made that damages are inherently punitive: a guilty defendant is obliged to pay for the injuries, pain and suffering of the plaintiff, and because of this, only the judiciary should be able to award damages, and decide on the amount of the award, as only the judiciary can impose penalties.[13] Currently, the judiciary only have to have regard for the Book of Quantum and its guidelines,[14] they are not compelled to follow it exactly and they can award damages as they see fit. Through the PIAB and the Civil Liability and Courts Act 2004, the legislature have taken most of the major steps they can take, or at least are willing to take, to combat excessively high damages being awarded in Irish courts. A true change in this regard can only be affected by the courts themselves, and we are beginning to see a change of this nature in the Court of Appeals, particularly in cases such as O’Flynn v Cherry Hill Inns Ltd[15] and Shannon v O’Sullivan,[16] and it is worth noting the guidelines and questions for awarding damages set out by Irvine J. in Shannon.

Another major issue associated with a compensation culture is that of the courts being overburdened by personal injury cases, which causes a delay in court proceedings and therefore justice. As was the case with damages, it is incredibly difficult to legislate for this, as the government cannot deny people access to the courts. Instead, systems like PIAB, and alternate dispute resolution methods such as mediation have been legislated for. These systems, which provide avenues of dispute resolution prior to litigation, appear to be the extent to which the government can deal with this issue, beyond vastly expanding the courts.

Excessively high damages and overburdened courts are the root cause of the various other symptoms of a compensation culture outlined earlier, but they are also the most difficult issues to legislate for and ultimately deal with, as they appear to lie beyond the government’s sphere of influence.

Conclusion

Overall, the primary attempts to deal with concerns of a compensation culture in Ireland, the PIAB and the Civil Liability and Courts Act 2004, have had reasonable success in achieving this goal, though it is obvious from the presented statistics that certain improvements could be made. Recently, the Court of Appeals has adopted a pro-individual responsibility attitude which is helping to lower awarded damages, though current examples, such as the Luas-Surfing Settlement seem to demonstrate that the public at large and private companies are still wary of excessively high damages. There also appears to be some limitations which prevent the government from properly legislating to counter some of the most pressing issues related to compensation culture, which serves to highlight the overall complexity of compensation culture, and how difficult it is to tackle it.

 

 

[1] Hand J, 'The Compensation Culture: Cliche or Cause for Concern.' (2010) 37(4) JL & Soc'y 569.

[2] Bryan McMahon and William Binchy, The Law of Torts (3rd edn, Bloomsbury Professional 2003) 62 [1.157].

[3] <https://www.piab.ie/eng/news-publications/PIAB%20Annual%20Report%202017.pdf> accessed 28/12/2018.

[4] <https://www.lawsociety.ie/gazette/Top-Stories/piab/> accessed 28/12/2018.

[5] Civil Liability and Courts Act 2004, s 7.

[6] Ibid. s 29.

[7] Ibid. s 10.

[8] Civil Liability and Courts Act 2004, s 15.

[9] Garrett Sammon, ‘Mediation in Ireland: Policy Problems’ (2017) IJ 57

[10] O’Flynn v Cherry Hill Inns Ltd. t/a The Oliver Plunkett Bar [2017] IECA 211

[11] https://www.irishtimes.com/news/crime-and-law/woman-in-luas-surfing-case-initially-said-claim-worth-4m-1.3672167 accessed 03/01/2019

[12] Personal Injuries Commission, Second and Final Report of the Personal Injuries Commission, 2018.

[13] Deaton v Attorney General and Revenue Commissioners [1963] IR 170.

[14] Civil Liabilities and Courts Act 2004, s. 22.

[15] O’Flynn v Cherry Hill Inns Ltd. t/a The Oliver Plunkett Bar [2017] IECA 211

[16] [2016] IECA 93.