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Who Benefits?

Neil Cahill
09/11/2021

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Ireland

Recently, in Fahy v Padraic Fahy Tiling Contractors Ltd and ANOR [2021] IEHC 682 Mr Justice Twomey sent out a further warning to parties looking to limit the amount that a compensator may be required to repay the Department of Employment Affairs and Social Protection under the Social Welfare Consolidation Act, 2005.  
 
The law
The Social Welfare Consolidation Act, 2005 states at section 343R:
(1) Subject to subsection (2), a compensator shall pay to the Minister the amount of recoverable benefits specified in the relevant statement of recoverable benefits before making any compensation payment to, or in respect of, an injured person. 

(2) Where the recoverable benefits specified in the relevant statement of recoverable benefits exceed the amount of the relevant compensation payment and that relevant compensation payment was the subject of an order of a court (our emphasis) or assessment by the Board in accordance with the Act of 2003, the compensator is liable only to the extent of that amount so ordered or assessed.

The practice
Since the introduction of this legislation it has been commonplace for parties, in cases they consider appropriate, to look to obtain a consent order to seek to limit a claim for loss of earnings or reduce the amount where contributory negligence is accepted. The court has been asked to note or provide a consent order to the effect that compensation was not paid in respect of loss of earnings, limited to a specific period of time or reduced for contributory negligence.  The effect of such an order was to comply with the requirement of an order of the court as set out in section 343R(2) and limit the compensator's liability to the Department.

The Turning Tide
Mr Justice Twomey, in Fahy, suggested these orders should not be granted as a matter of course.  He considered this practice was not appropriate as the financial interest of the taxpayer was not represented.  He queried whether a Plaintiff and a Defendant should be able to effectively decide amongst themselves what money is to be paid back to the taxpayer.  He considered that whilst there were scenarios where the Court would make an order they should only do so after a hearing and the evidence had been tested.  Furthermore, he considered this the case regardless as to whether the defendant was ultimately an insurance company or another arm of the state.

An Alternative View
This view has been subject to challenge by others on the bench.  In July this year in Matthews v Eircom Mr Justice Cross explicitly rejected Twomey J. in Condon and Szwarc.  Instead, he considered that the practice of consent orders were a necessary to save on Court time and not clog up the system.   He argued that a "consent" order had no less standing than an Order that was made after weeks of hearing.

Conclusions
The effect of this decision will further reinforce the importance of defendants properly considering any RBA when considering whether to and the terms on which they enter into settlement discussions.  It is unlikely to be the last word in this matter and does create uncertainty for parties entering settlement negotiations, particularly, in cases that have a large liability issue or a nuisance value but it would be a brave defendant to disregard this issue.

Written by Neil Cahill
 

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