Insurance Law Ireland

Changes in how Future Damages are Calculated

State Claims Agency vows to Appeal decision of Irish High Court to apply a 1% multiplier to a future loss claim.

 

 

In a recent decision the Irish High Court varied the level of deduction on a large future loss claim from the traditional 3% rate to 1% per annum.

 

In a claim for significant loss damages for future loss are normally awarded in a lump sum although there can be provision for periodic payments.  Where damages are awarded in a lump sum the assessment requires the conversion of future cash flows into a capital sum.

 

In those circumstances experts would advise the Courts to apply a multiplier approach.  A multiplier based on the expected duration of the loss is applied to an amount representing the annual loss, (the multiplicand) producing a capital figure.

 

In claims in the Republic of Ireland the multiplier is the number of weeks of loss which is discounted to account for the early receipt of the lump sum.  The multiplier is adjusted downwards to take into account the time value of the money. For example if the loss is not expected begin until sometime into the future there must be an adjustment of the discount for accelerated receipt.  A further and separate downward adjustment would be made to reflect the contingencies of life.  The multiplier should also take into account contingencies and the rate of return on investment of the lump sum in the future.  These principals apply to both future expenses and loss of future earnings.

 

There are certain assumptions that underlie the multiplier to include an assumption as to what extent investment returns will exceed wage inflation over the period of a loss. 

 

In Ireland the leading case to date on the imprecise deduction made by Courts when calculating special damages to take account of future uncertainties is the case of Reddy .v. Bates.  In fact, the discount applied is commonly known as “Reddy .v. Bates Deduction”. 

 

The deduction in Reddy .v. Bates has been traditionally set at a 3% rate.

 

In the recent case before the Irish High Court of Russell V HSE, Mr Justice Kevin Cross said that in setting the level of the award, he would assume a rate of return from investing the money of 1% per annum.

 

In the case the Court was asked to assess damages towards the care for the rest of the life of a boy who had suffered brain damage at birth in a Cork Hospital.

 

The case saw detailed argument on the rate or return available to investors at the moment. Both sides relied on the evidence of a number of economic experts and the key issue was that the yields on relatively low risk investments such as Government Bonds are now at historic lows. 

 

The Defendant had argued that by investing in higher risk areas such as Equities, the traditional 3% return was still achievable. 

 

The Plaintiff's case was that the Court had to take cognisance of the low return now available on safer investments.

 

 

This issue was recently the subject of an assessment of the English House of Lords in the case of Wells .v. Wells.  In that case the Lordships had to consider whether the appropriate investment returns could be based upon Equities which involved significant risk or the Index Linked Government Securities (which are much safer and which provide a lesser return to the investor).  It was held by the House of Lords in a unanimous decision that the latter approach was the appropriate one. 

 

In that case, Lord Steyn said “The premise that the Plaintiffs’ who have perhaps been very seriously injured, are in the same position as ordinary investors is not one that I can accept.  Such Plaintiffs’ have not chosen to invest; the tort and the consequences compel them to do so.” 

 

The Court in that decision went on to say that by investing in Equities an ordinary investor takes a calculated risk which he can bear in order to improve his financial position but that the typical Plaintiff requires the return from an award of damages to provide for the necessities of life. 

 

In Ireland there is no equivalent of the Index Linked Government Securities.  In the Russell case the Plaintiff did ask the Court take cognisance of the low return now available on safe investments and in particular Index Linked Government Bonds from larger economies  which are currently offering no interest rate return to their investors.

 

Mr Justice Cross put heavy emphasis on this and further dismissed the argument that public policy would dictate the fact that the state was the Defendant should be taken into account.  He said “Arguments on public

 

 

policy, such as this, are in my view, more suited to lounge bars of Golf Clubs than to the Courts of Law”.

 

The Director of State Claims Agency has confirmed that the decision of Mr Justice Cross would be Appealed.  He estimated that applying the 1% rate instead of the traditional 3% rate would increase the cash cost of meeting claims made on the State by about One Hundred Million Euro per annum or One Billion Euro over the next decade. 

 

The decision of course has major implications for Insurance Companies and there is a suggestion that the decision could lead to a sharp increase in the costs of claims and potentially in the premiums charged to customers.

 

The written Judgment is awaited in the case of Russell V HSE.

 

Damian McGeady 23rd December 2014

                                                                                                                                                                                                                                                                                           

Insurers to provide clearer renewal quotes

Following pressure from consumer groups, it has been revealed that the FCA are currently drawing up new rules to ensure renewal quotes on insurance policies include previous premiums as well to make customers aware of when the cost of their policy is increasing.   

Another idea being studied is to make insurance companies come clean about introductory discounts on premiums.

In many cases, customers are charged less in the first year of a policy, as an incentive to switch.

But insurance companies could be forced to tell consumers what the premium is likely to rise to when that discount expires.

More on this story can be read at http://www.bbc.co.uk/news/business-28229282

 

S.Major, Lacey Solicitors

IRL High Court finds Defendant liable for injuries sustained by their employee whilst attempting to reach goods piled on a trolley.

Barry v Dunnes Stores Clonmel (Limited)

In dismissing the Defendant’s argument that the Plaintiff had acted in a manner contrary to her safety training and had caused the injury to herself, Irvine J stated:

“Every employee must take care for their own safety... However, the fact that an employer may train its staff at the time of recruitment and intermittently thereafter regarding the risk of injury to their back is significantly negated if, in daily practice, the methods for moving goods safely as advised in the course of training are not deployed by employees and managers do not enforce compliance with training and safe practice. In this regard I am satisfied from the evidence of the plaintiff... that it was not uncommon for trolleys to be stacked in the manner in which they were stacked on the day of the plaintiff’s injury.”

 

The plaintiff was not fully absolved of liability however, and in assessing whether there was contributory negligence, the court ruled:

“Regardless of these facts the Plaintiff should have known not to try to lift down the box which caused her injury. She did this without ascertaining its weight. Had the plaintiff ascertained its weight by getting a step ladder, albeit it that this may have taken some minutes, I think this injury would not have happened. Alternatively she should have recognized the risk of taking any load from over head height and she should have refused to do so. In either set of circumstances the plaintiff would not have been injured. Accordingly I have decided that she must bear 30% of the liability for her Injuries.”

The full judgement can be read here:

http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/5cec0c4aa23a55b180257b9400513b69?OpenDocument

S.Major, Lacey Solicitors

 

 

IRL High Court rules owners of children's play park are not liable for injuries sustained by child.

Byrne [A minor] & anor -v- Stephen Bell Trading as Bumblebees

Cross J ruled that the defendants, who owned a children’s play area, were not liable for injuries sustained by a child on their premises.

 

The plaintiff, bringing the action through his next friend, his father, alleged that the injuries sustained by him during a visit to the play area were caused by reason of a negligence of the defendants in the layout of the premises and their failure to have any adequate supervision or intervention to prevent danger, or the accident such as occurred.

 

In dismissing the action, Cross J stated: “You cannot ensure against all mishaps or accidents to young children. Accidents, injuries, do happen from time to time and do so without any fault. Play areas such as Bumblebees are an important part of the development of children who are, as in this case, generally far safer there than in some regimes where prudent parents will allow their children to play entirely unsupervised, for example, gardens with trees.”

 

The full judgement can be read here:

http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/8aa718002019a30380257b340058fecb?OpenDocument

 

S.Major, Lacey Solicitors

IRL High Court ruled that monies paid out of “Dunnes Stores Management Pension and Life Assurance Scheme” were not to be deducted from the Plaintiff’s loss of earnings claim pursuant to s. 2 of the Civil Liability (Amendment ) Act 1964.

Monahan -v- Dunnes Stores & Ano 

On the plaintiff’s behalf it was submitted that the payment which she received was payable by Friends First in respect of the injury which was the subject matter of wrongful act in the proceedings and was a payment that was paid under a contract of insurance which therefore was a sum which was not deductible by virtue of the provisions of s. 2(a) of the Act. They relied on the decision of Geoghegan J. in Greene v. Hughes Haulage [1998] 1 ILRM 34, a case in which the wording of s. 2 of the Act was considered.

 

In that case, the plaintiff’s employer, Elan Corporation, had an Employee Benefit Plan in place designed to provide its employees with certain pension, early retirement and death in service benefits. The Employee Benefit Plan also entitled its members to certain income benefits in the event of prolonged disability. The latter benefit, which was described as the “Disability Benefit Plan”, was operated by way of separate arrangement from the other benefits under an Employee Benefit Plan and was governed by a policy of insurance made between Elan and Irish Life. Geoghegan J. decided that the payments made under the Disability plan were not deductible against the plaintiff’s loss of earnings claim and that it was immaterial that she had not been a party to the contract. It was a contract that had been made for her benefit and was therefore to be considered as part of her overall remuneration such that she should be considered to have indirectly contributed to the premium.

 

In applying the authority, Irvine J stated “integral to both schemes is the fact that the policy was taken out for the benefit of the employee who might become disabled. Accordingly, I see no reason not to apply the principles outlined in Greene to the present case.”

 

The full judgement can be read at:

 

http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/24060a22e9fd5cf980257b260058024c?OpenDocument

 

S.Major, Lacey Solicitors

IRL High Court dismisses a claim under Section 26 of the Civil Liability and Courts Act 2004.

Salako -v- O'Carroll

  

Peart J, in his ruling, stated that there was no injustice in doing so, due to the lack of truth and attempts to mislead the court in the evidence given by the Plaintiff, a national of Toga, referring to her as “a very poor historian.”

 

Despite reporting back and neck pain, and the need to use a crutch on an intermittent basis, video footage obtained by private investigators showed the Plaintiff only making use of the crutch on days when she had medical appointments arranged by the Defendants which, along with the multiple inconsistencies and inaccuracies in her evidence, was enough to satisfy the Judge that dismissing the claim under the 2004 act would not be unjust.

 

The full judgement can be read here:

 

http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/309cea242f6e2d2080257b090056df8d?OpenDocument

 

S.Major, Lacey Solicitors

IRL High Court ruled plaintiff was 65% contributorily negligent in a difficult road traffic accident case.

Donohoe -v- Killeen

Hogan J stated that the case was of considerable difficulty to the court, due to the absence of independent third party evidence. Both forensic engineering experts who gave evidence agreed that it was almost impossible to determine by reference to some objective facts – such as, for example, an examination of the collision damage to the vehicles – which of the vehicles collided into the other. 

 

In making his determination, the Judge attempted to determine what the most likely sequence of events was. Given that the Court knew that one of the drivers had broken the lights,and that both vehicles were travelling at modest speed, he stated that this suggested that the driver who broke the lights did so inadvertently.

 

He ruled therefore that the plaintiff who was driving on a complex roundabout with awkward traffic sequences, had just come through an amber light at the second stop and was now facing a third set of traffic lights within the space of about 120m was the most likely one to have broken the lights. He stated however that if the defendant had kept a complete and proper look-out, he would – or, at least, might – have seen the plaintiff’s vehicle approaching and could have used the available few seconds to sound the horn or otherwise take evasive action. In that respect, therefore, there was, objectively speaking, a degree of fault on the part of the defendant, even if the degree of fault attributable to the plaintiff was greater than that applicable to the defendant.

 

The full judgement can be read at:

 

http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/3c7a83788105dd8680257b0800439e3a?OpenDocument

 

S.Major, Lacey Solicitors

IRL High Court found that a local authority was grossly negligent where they impeded the Plaintiff’s line of sight whilst crossing a road.

Burgess & Anor -v- Mulholland & anor

Irvine J ruled that the local authority was negligent in a number of respects in relation to its management of this dangerous junction as of the date of the plaintiff’s accident. Firstly, in setting up an alternative pedestrian crossing, it did so in circumstances where it made it extremely difficult for a pedestrian to access the pedestrian signal box to avail of what is commonly described as the “green man” phase provided for within the traffic light sequence. The pole upon which that signal was mounted was located amongst road traffic cones and other debris on an area of broken ground adjacent to the roadway. The location of the traffic light pole on which the pedestrian signal box was mounted was positioned so that any pedestrian trying to access it would have to try to reach their hand around in a blind type of fashion in order to try to depress the signal by exerting pressure on the glass plate to the front of the signal box.

 

The Court further found that the local authority’s negligence in respect of the configuration of the temporary pedestrian crossing was further severely compounded by the negligence of its servant or agent, Mr. Sutcliffe, in his driving the local authority truck. He drove the vehicle which had a cab 83 inches high almost 25ft beyond the stop line. It was found that the effect of his breach of duty in this regard was that the plaintiff’s intended path of travel across the temporary crossing was impeded, but more significantly, the positioning of his vehicle made it impossible for a pedestrian of the plaintiff’s height to see clearly the pedestrian red/green man signal on the traffic light on the central island to which he had intended travelling.

 

Irvine J found that in this regard, it was more than reasonably foreseeable that in these circumstances where the plaintiff’s line of sight to the red/green man signal was impeded and where he did not have ready access to the signal box controlling the pedestrian crossing and when traffic was stationary in his favour would decide to cross the roadway without seeking to deploy the pedestrian signal.

 

The full judgement can be found here:

 

http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/38bee5b544a73c2e80257b01005493ef?OpenDocument

 

S.Major, Lacey Solicitors

IRL High Court awards €282,540 in damages to a plaintiff who had sustained ongoing neck and back pain as a result of a road traffic accident.

Richardson -v- Premimionas & Ors

On the 17th January 2008 the plaintiff was in his VW Cabby Van waiting at a junction to make a right turn when a car being driven by the uninsured first named defendant came through a red light and collided with the plaintiff’s van.

After the accident, he continued to suffer back and neck pain which restricted him from carrying out his work. The challenge for the court in assessing the damages due to the plaintiff was that the work, as a scenic painter on the set of films, was of a specific and sporadic nature, with his pay ranging from €55,000 in one year to only €8500 in another.

In assessing damages, Peart J. stated “In arriving at a fair methodology for calculating a loss, I must take into account the sporadic nature of the work concerned… Accordingly I intend to begin from a headline annual average earnings of €36,000, rather than take the best of the years 2007-2011… If one was to work on the basis that in the future the plaintiff was likely to be able to earn a figure of €25,000 per annum, the capitalised loss to age 65 is €114,405.”

The total of general damages awarded came to €140,000. Agreed special damages and future loss of earnings amounted to €142,540, making a total for general damages and special damages of €282,540 for which there was judgment in favour of the plaintiff.

The full judgement can be read here:

http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/41353c13f66f23b780257adb003d8abd?OpenDocument

S. Major, Lacey Solicitors

Driver held not responsible for actions of egg throwing passenger

 

By Aoife O'Connor, on work experience with Lacey Solicitors from Rathmore Grammar School, Belfast.

 

Anne Doody v Niall Clarke 

 

The circumstances of this case are that on the 26th March 2008, the plaintiff was struck in the eye by an egg thrown by a passenger in the defendant's car. The plaintiff's injuries led to the loss of sight in her eye and subsequent removal and artificial replacement of her eye, and she continued to suffer pain and psychological trauma.  

 

 The defendant and his passengers had the intent of 'egging' a house where there was a party to which they were not invited. On a stretch of road between the store where they purchased the eggs and the house, one of the passengers threw an egg from the window at the plaintiff, who was walking with two friends. The defendant and his friends drove on after the incident, unaware of the severity of the plaintiff's injury, and 'egged' the house as well as several party guests. 

 

 The plaintiff believed that the defendant was vicariously liable for his passengers' actions and directly liable for his failure to properly control his motor vehicle, violating the Road Traffic Act 1961. The plaintiff argued that the defendant knew or ought to have known that the eggs were being 'messed with' by the passengers. Furthermore, that the backseat window was at least partially open, and the defendant should have taken further precautions, beyond a warning, to ensure the safety of his fellow road users, for example close the window, stop the car, remove the passengers from the vehicle or order the eggs be put away. 

 

 The defendant argued that the acts were his passengers and not his own, and that the plaintiff was creating an onerous standard and that the egg throwing was not foreseeable. 

 

 Evidence in the case included statements from the plaintiff and her companions with whom she was walking at the time of the incident, the defendant and his passengers, complaints from the residents of the subsequently 'egged' neighbourhood, CCTV footage of the eggs being purchased and the plaintiff's medical reports. 

 

 Mr Justice Kevin Cross delivered his verdict on 13th of November 2013. Although he accepted that  the defence and his passengers all had the common purpose of 'egging' and had general malice intended, and that the defendant knew or ought to have known about the passengers 'messing with' the eggs in the backseat as well as the open window, the judge dismissed the case on the grounds that he agreed with the defence, that the plaintiff was trying to impose an onerous standard for the defendant. However had there been any evidence of discussion in the car about 'egging' the pedestrians, this verdict would not have been given. He concluded that he did not believe from the evidence that the defendant was in breach of the duty of care that he undoubtably owed the plaintiff.

 

The case is reported here:

 

http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/43835d5a71a1ce2780257c2b003c36cc?OpenDocument