Who Benefits now?

Almost exactly a year ago, Mr Justice Twomey in Fahy v Padraic Fahy Tiling Contractors Ltd and ANOR [2021] IEHC 682 raised the issue of how parties were dealing with settlements and specifically consent orders where there were large certificates of recoverable benefits
 
These certificates (often referred to as RBAs)  are required where the compensator is to repay the Department of Employment Affairs and Social Protection under the Social Welfare Consolidation Act, 2005 ("the Act").  In that judgement, he questioned the practice of obtaining consent orders and whether these orders were sufficient for limiting the compensator's liability under the Act.  This view was not supported by some other members of the judiciary and we discussed this in our previous blog "Who Benefits?" Click here

Since that time whilst the issue has certainly been more to the forefront of practitioners and insurers minds, the practice of obtaining these consent orders ha not changed substantively.

Judge Towmey, in the case of Kuczak v Treacy Tyres [Portuma] Limited (No2) [2022] IEHC 619  has now doubled down on his view that orders of this nature are undesirable as they potentially enable Insurers to limit their obligations at the expense of the taxpayer.

In that case, the Judge refused to grant a "Consent Order" to the effect that the Defendant was only 50% liable and accordingly would only be required to pay 50% of the RBA as the Court Order satisfied the terms of 343R(2) of the Act. 
 
Prior to the perfection of the Order, the Defendant asked whether the Court would permit them leave to ask the Minister whether she considered the terms of the consent order to be sufficient to comply with the terms of the Act.
 
Unsurprisingly, the Minister, who holds the public purse strings, confirmed to the Court that she did not consider that these type of "Consent Order" satisfied the Act.  The significance of this is that whilst up to that point there was some judicial comment on the validity of these Orders the Department were accepting them for the purposes of a reduction of the RBA. 
 
However, now, we are in a position whereby we not only have a decision of the High Court condemning the use of these Orders but also an indication from the Minister in charge of the administration of the benefits recovery scheme that this type of order is not sufficient.
 
What Next?
 
The Kuczak decision leaves parties in a state of flux when looking to resolve personal injury disputes where there is a RBA certificate.  The defendant is left in the invidious position that where there are scenarios that the Plaintiff's claim is reduced on agreement due to genuine issues on liability or causation around any claim for loss of earnings, it will be difficult for the claim to settle without the Court being provided with some evidence to substantiate that claim. 
 
In essence, this may require a ruling or "mini hearing" on a single issue which will ultimately make cases more difficult to settle and could have the opposite effect of its intention by putting more pressure on court time, increasing the burden on the Courts and ultimately the taxpayer in administering the scheme.
 
It remains to be seen whether the Kuczak case  will be appealed as the writer's view is that it is not for the Minister to interpret the legislation, as to take Mr Justice Twomey's reasoning, she too, has a financial interest in the outcome and that it is the role of the Court's to interpret the legislation. 
 
It is apparent that the Judges in the High Court have taken different interpretations of the legislation and as such the High Court is not ad idem on whether these "consent orders" represent an order of the court and a definitive pronouncement from the Court would be welcome.  Whilst the writer accepts the Court's concerns regarding potential abuse of this practice, it is difficult to comprehend how an order on consent made by the court can be treated in any other way than being a court order.  It seems there is some way to run on this.
 
Some clarification from the Department would be welcome as to whether they are prepared to accept these orders as in the absence of this defendants are left with the stark choice of either still looking to obtain consent orders and take their chances with the Department accepting them or simply running the matters to trial.  Neither option being very satisfactory for the courts or parties.
 
The only other option available to Insurers is to simply settle the matters and pay the RBA and seek to appeal the certificate at the conclusion of the case. That brings its own difficulties, among which is the requirement to discharge the liability in full before an appeal can be progressed.

Written by: Neil Cahill and Leanne Kiernan