Personal damages cap could be subject to dispute

Imposing a cap on personal damages payable in compensation cases could be subject to constitutional challenges, the Law Reform Commission has warned.

The Commission has prepared an issue paper looking at whether it is constitutionally possible to cap damages in personal injuries actions. The paper maps out four potential models for determining the level of such caps. It also identifies potential legal challenges that could be mounted against the systems of imposing them.

The paper has been prepared against the backdrop of considerable discussion about the cost of motor, employer and public liability insurance. In the last decade, these have fluctuated between periods of low premiums and sharp increases.

There is also growing concern about the problems faced by some sectors, including pre-schools, adventure tourism, and leisure- related activities, when it comes to obtaining cover. There has also been debate about whether the fluctuation in insurance cost has been affected by the level of personal injury awards in the courts.

In 2016, the Department of Finance established the Cost of Insurance Working Group (CIWG). Among the recommendations from the CIWG was an examination of whether some form of statutory cap on damages would be constitutionally permissible or otherwise desirable.

The issue paper focuses specifically on capping general damages, which refers to the sum awarded for an injured person’s ‘pain and suffering’ and is dependent on the nature and severity of injuries. It is separate to ‘special damages’, which are for catastrophic injuries.

One such model would be to provide a maximum upper limit and link all other awards to this in proportion. A second is to provide a valuation range per injury based on severity, while a third proposes allowing a Minister or other regulatory body to set caps.

Similar models have been imposed in Australia, England, and Wales. The paper notes the constitutional provisions relevant to capping damages: (1) the right to bodily integrity; (2) property rights, and (3) the right to equality before the law. It also factors in the independence of the judiciary.

The issue paper identifies that any prospective caps could be subject to legislative challenge if it violated any of these rights.

For example, capping awards per injury could be challenged on the basis that it may not “achieve proportionate justice for the individual”. The commission noted that two people who suffered the same injury may not suffer the same outcome or severity and, as such, it may not be appropriate to simply cap damages per injury.

Providing a minister with these powers could risk a constitutional challenge if the minister is not provided “with a set of guiding criteria”, while there could also be concerns about breaching the separation of powers between the Oireachtas and the judiciary.

The commission’s issues paper invites all interested parties to give their views on which of these models they think could meet the constitutional criteria identified in the paper. The closing date is January 31 and emailed submissions can be sent to a dedicated address, [e-mail].

The commission will consider the views in the submissions received, and will then prepare and publish its report, which will contain the Commission’s final conclusions and recommendations.