Legal Updates

The High Court has highlighted what it describes as “a far from satisfactory” situation whereby there is a divergence in the approach adopted by the courts to the insertion of certain terms into Personal Injury Settlement Orders. The court was referring to terms agreed between parties to a personal injuries action, which may prevent the Department of Social Protection (‘Department’) obtaining a repayment of monies that it might otherwise be entitled to from a defendant/insurance company, pursuant to Section 343R(1) of the Social Welfare Consolidation Act 2005 (‘2005 Act’).

Background to the High Court Judgment

Moloney v Dunne and Bus Eireann [2024] IEHC 84 came before the High Court after the Circuit Court had previously dismissed the claim for personal injuries. Bus Eireann agreed to pay the plaintiff €10,000 in return for the plaintiff withdrawing his appeal. Counsel for Bus Eireann applied to the High Court for an order striking out the proceedings and vacating all existing orders. The court was further asked to include a term to the effect that there was no claim for loss of earnings in the proceedings and/or that settlement did not reflect any claim for loss of earnings.

Uncertainty over the Approach Adopted by the Courts

The court detailed the contradictory approaches that have been adopted by the High Court to such applications, with, on the one hand, findings that these terms are legal and can be included as an agreed term in Personal Injury Settlement Orders while in other instances, the High Court has held the terms to be unlawful on the basis inter alia they are to the detriment of an unrepresented third party, namely the Department, and are a means by which the taxpayer ends up funding settlements of personal injury claims.

Section 343R(2) of the 2005 Act limits recovery by the Department, in relevant circumstances, to the compensation amount allowed for in a court order. The High Court has held that this section does not apply to the court orders that derive from a private settlement between the parties as the court does not, in these instances, make a determination after hearing a case. However, in other High Court cases, including Wilson v Leonardi & anor [2022] IEHC 670, it has been held that it is appropriate for a court to include consent terms in relation to loss of earnings or determination of liability “provided there is some rational and fair basis for making those determinations".

In this judgment, the High Court noted that there has been no clarification from the Court of Appeal or the Supreme Court on the correct approach as there has been no appeal taken to a decision of the High Court in this regard. This has resulted in the courts having an arbitrary choice as to which approach to adopt, with the resulting uncertainty exacerbated by the fact personal injury cases are one of the most common types of cases heard in Irish courts, with the vast majority ending with a Personal Injury Settlement Order.

Moloney Judgment

In this instance, the court rejected the application made by counsel for Bus Eireann to include the term in the court order, noting that whether or not there was a claim for loss of earnings is a factual matter but not one that had been determined by the court. Instead, the proposed term arose from a private settlement between the parties.

The court noted that if the term was included, there would then be a court order to that effect which could be relied upon to claim to the Department that it is not entitled to a repayment of recoverable benefits, despite the court having made no finding in this regard.

The court held that the insertion of such a term in this manner, in its view, would be “wrong” as it would provide a financial advantage to the parties settling the case, to the financial determinant of the Department, and ultimately the taxpayer. The defendant avoids having to pay the Department any recoverable benefits and so has more funds to pay an increased settlement to the plaintiff. As such, it gives a direct financial benefit to a defendant/insurance company and an indirect financial benefit to the plaintiff.

Further, the Department is not a party to the proceedings and has no say on the term proposed to be included in the order.

A Possible Appeal

Despite the current legal uncertainty, the High Court is not permitted to state a case to the Court of Appeal, while the Department has no right of appeal as it is not a party to such proceedings. No party to a claim, which has sought the insertion of such a term into a Personal Injury Settlement Order, has appealed a High Court decision in this regard.

Notably, the High Court in this judgment explicitly referred to the fact that Bus Eireann, a defendant in the case, is funded by the taxpayer, as is the Department, which is prejudiced by such orders. It was, therefore, possible that Bus Eireann might conclude that there is merit in appealing the refusal of the court in this instance to accede to its application in order to clarify this aspect of personal injury law.

The court further outlined how the State itself might seek to clarify the position by having the Minister be a party to proceedings to determine the meaning of Section 343R(2) of the 2005 Act, for example, by seeking a declaration that it does not apply to orders made on the settlement of personal injury claims.

Conclusion

Unusually, the High Court has called for an appeal to be lodged to its own judgment, citing the need for clarification of the law in this area and also, public interest concerns, including the fact that taxpayer funds are at stake and public confidence is being undermined by the absence of uniformity in the courts. The court went so far as to indicate in its judgment that it was asking the registrar to provide a copy of the judgment to the Minister, given the discussion on possible proceedings by the State on Section 343R(2) of the 2005 Act, which could clarify the position for litigants and the courts.