Two recent judgments of the High Court have departed from the views on consent settlement orders in personal injury actions articulated by Mr Justice Twomey in Kuczack v Tracey Tyres (Portumna) Limited (No.2).
In Wilson v Leonardi and Virginia Park Lodge Limited, Mr Justice Barr acknowledged the recent conflicting High Court judgments on this issue. The Court set out the background to the Recoverable Benefits and Assistance (RBA) scheme under the Social Welfare (Consolidation) Act 2005 (the “2005 Act“) and the conflicting authorities.
The RBA scheme relates to a system of recoverable benefits whereby social welfare payments paid to an injured person must be repaid to the State by the person liable for the relevant personal injury (or their insurer). For personal injury cases which are settled on the basis that the defendant is not fully liable, it was usual for the parties to ask the court to insert a term in the order striking out proceedings (a ‘consent settlement order‘) that liability be apportioned, for example, on a 50:50 basis, as agreed between the parties. This request was often granted by the courts without issue.
However, the knock-on effect of including such apportionment in the consent settlement order was that, under S343R(2) of the 2005 Act, the defendant (and their insurer) would then only be liable to repay the same proportion of the recoverable benefits to the Department of Social Protection (“DSP“).
In Wilson, the Court stated that the issue with parties to personal injury actions seeking to include terms regarding apportionment of liability in consent settlement orders for the purposes of section 343R(2) of the 2005 Act was first raised in a judgment of Mr Justice Twomey in June 2021, where he held that the purpose of the reference to “order of a court” in section 343R(2) was to ensure that before an insurance company was able to benefit from the financial concession provided by that subsection, at the cost of the taxpayer, there must have been an independent and neutral verification process overseen by a judge, who makes a determination regarding how much of the compensation is made up of loss of earnings.
Having considered the conflicting authorities, Justice Barr concluded 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“. Whilst Justice Barr reached a different conclusion to Justice Twomey, he agreed that “there is the potential for injustice in a situation where A and B agree terms between themselves in a particular way and then consent to an order in these terms, which has the effect that the rights of C are adversely affected.” Justice Barr went on to state that the making of consent settlement orders following settlement of a personal injuries action “depends on trust between the bench and the barristers who applied for such orders. Every day judges rely on barristers to tell them the truth. The administration of justice is dependent on this principle.”
However, the Court stated that this was not to suggest that the court should “blindly rubberstamp” whatever determination the parties request when announcing the terms of a settlement. In cases where a determination is sought for the purposes of the RBA scheme, the court should be given sufficient information to satisfy the judge that the determination sought to be included in the order is appropriate in all the circumstances. Justice Barr held that “it is appropriate for a court to make declarations and determinations as part of a consent order, once a rational basis for such determinations has been properly put before the court.“
The day after the Wilson judgment, in Jarmula v DSG Solutions Limited, Mr Justice Coffey delivered his judgment in a similar case. The Court also acknowledged the recent controversy in the jurisprudence of the High Court on this issue and came to a similar conclusion to Justice Barr in Wilson, in that a court could make a consent order apportioning liability in a personal injury action even where it is sought solely for the purpose of section 343R(2) of the 2005 Act. Similar to Wilson, Mr Justice Coffey noted that in this case, he was informed of the factual and legal basis on which the apportionment was agreed and that “legal practitioners should follow this practice when seeking such orders“. He also noted that the court retains a residual discretion to refuse to make the order if no reason can be given for making it or where the reason given is unsatisfactory.
It seems as though this controversy is likely to continue for the foreseeable future, until the DSP seeks to introduce a clarifying amendment to the 2005 Act or one of these judgments is appealed to the Court of Appeal. In the meantime, based on Wilson and Jarmula, it seems that parties who are seeking to settle personal injuries actions can expect to at least have to set out a “rational basis” to the court for the apportionment of liability where they seek to have that reflected in the consent settlement order.