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Recoverable Benefits and Consent Orders: Matthews – v – Eircom [2021] IEHC 456

July 2021
Martin Browne and Carina Schauer

In a potentially consequential decision – and in direct response to an ex tempore judgement of Mr. Justice Twomey delivered in relation to two High Court cases on 29 June 2021[1] – Mr. Justice Kevin Cross on Friday, 2 July 2021 delivered what is understood to be the first formal written judgment dealing with the issue of the compatibility of so-called ‘consent orders’ with section 343R of the Social Welfare (Consolidation) Act 2005. In his strident decision in the matter of Matthews – v – Eircom, Cross J. affirms the jurisdiction of the courts to make consent orders in settled cases without the need for a hearing of evidence and sufficient to satisfy s.343R (including in relation to loss of earnings and the treatment of recoverable benefits).

The Social Welfare (Consolidation) Act, 2005

The Recoverable Benefit and Assistance Scheme which has been in operation since 2014[2], makes it compulsory for tortfeasors (or “compensators” as referred to in the 2005 Act) to reimburse the Department of Employment Affairs and Social Protection for any amounts which have been paid by the State to an injured person arising from the injuries sustained in an accident for which the compensator is deemed responsible. The compensator’s exposure in that regard is limited to such an amount as is ordered by a court (or assessed by reference to the apportionment of liability) pursuant to section 343R (2) of the Act, which expressly provides that:

where the recoverable benefits specified in the 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 or assessment by the Personal Injuries Assessment Board in accordance with the Act of 2003 (i.e. the Personal Injuries Assessment Board Act), the compensator is liable only to the extent of that amount as order or assessed.

(our underline)

The Debate / Decision

The proceedings in Matthews came before the court to be ruled on consent on the basis of the case being struck out with an order for costs to the plaintiff to be adjudicated in default of agreement. The proceedings had been settled between the parties on a 50/50 basis, and a corresponding reduction of the amount of recoverable benefits for which the defendant was responsible was sought.

In considering the jurisdiction of the court to make such consent orders, Cross J. noted that … :

” … since the introduction of the Recoverable Benefits Scheme in 2014 this court and indeed to my knowledge all of my colleagues in the personal injury list have made orders on consent with determinations either as to the liability of the parties or the amount of recoverable benefits paid. This court has also pronounced on a number of occasions that it has jurisdiction under the provisions of s.343R and at law to make such determinations. One of the duties of a judge is to solve problems and not to create them. Certainly it is not the function of a judge to cause problems where none exist.”

Cross J. explicitly rejected the contention in a recently published academic article by Mr. Justice David Keane[3] that “the issue of settled cases has never been determined judicially”. Whilst he accepted that it was correct that no written judgment had been given on the point, Cross J. noted that the “universal practice in personal injuries cases was that in consent cases the agreement of the parties as to what the position was in relation to the RBA was accepted by the judges”.

Cross J. also goes on to explicitly reject the recent ex tempore judgment of Mr. Justice Twomey in two High Court matters by reference to what he describes as a misapprehension on the part of Justice Twomey as to the issue having never been previously determined (and consequently Cross J. found in this matter that he was not bound by the usual provisions of stare decisis in relation to the Twomey J. decisions).

In his earlier decisions, having considered the provisions of s.343R(2), Twomey J. had refused applications to make an order (insofar as it relates to loss of earnings / recoverable benefits) in line with the terms of a settlement reached between the parties on the basis that:

the term court order in the context of s. 343R […] accounts to the requirement of an independent and mutual determination of the evidence which was subject to cross examination or other testing during an adversarial process at a time when the defendant’s and the plaintiff’s interests were not aligned.”

In Twomey J.’s view, the principles of fair procedure dictated that an order of such nature could only be made where there was evidence that the party whose reimbursement rights are being prejudiced (i.e. the Department / the Minister) “was also consenting to the proposed terms”.

Cross J. disagreed entirely with this conclusion and rather – referencing the daily practice of the court in making orders in personal injuries actions on consent (which are just as much “orders” as an order which resulted from days or weeks of trial and evidence …) – stated that s.343R(2) does not give any limitation as to the type of court order and it expressly does not stipulate that this court order must only be an order made after a hearing of evidence or even of any hearing of particular submissions.

It is the view of Cross J. that:

“Had the legislature intended that “order” in this sense only meant an order as a result of a hearing it would have said so. Accordingly, the general principle of interpretation applies and that the word “order” includes all orders. I disagree with the view of Twomey J. on this point. Normal interpretation of the English language leads me to this decision and I do not need to rely on any interpretation which would be required to avoid absurdities.”

As for the proposition that the making of determinations by a court in consent matters is improper as it is done without the participation of the Minister, Cross J. pointed out that section 343r makes no provision for the joining of the Minister and/or does not create any right for the latter to be a notice party. Whilst the Minister is clearly affected by a court’s decision as to whether a case is fully or partially decided in favour of the plaintiff or the defendant(s), this does not in and of itself create an automatic right to be heard.

It is the conclusion of Cross J. that if the logic applied by Twomey J. was to be followed, “the Minister would have to engage counsel or probably a number of counsel in the personal injury list to supervise each case and to be informed as to each settlement, in order to ascertain whether or not fraud on the Revenue was being perpetrated by any of the parties”.

Such a result would be “even more absurd than the court itself embarking after settlement on a rehearing to ascertain the basis of the settlement”. Notwithstanding the fact that – as pointed out by Twomey J. – there may be an identity of interest between the plaintiff and the defendant(s) following settlement, the Court found that there was “absolutely no evidence” that the current practice resulted in a general defrauding of the Department / taxpayer, such that it would be unreasonable and unwarranted for the Minister to take such measures as described above.

In his conclusion, Cross J. draws particular attention to the fact that over 90% of cases in the personal injury list settle, and he further points out that the demands on judicial time and resources would be enormous if that figure was any lower. Consequently, the additional burden which would be placed on paymasters (i.e. insurance companies and the State) in and of itself should “result in the current practice being preferred”, even if there was some ambiguity in the interpretation of the 2005 Act (which was denied). Although it is open to a Court to embark on a hearing of a settled action where there appears to be doubts as to the basis / validity of a settlement, “there is no legal obligation that a judge should take such extraordinary a step”, and indeed, it was Cross J.’s opinion that “such a step would be most unwise” absent compelling reasons, if regard is had to the usually ambiguous nature of personal injury litigation and the law of Torts.

Conclusions

Borne – as it clearly is – of a significant difference of judicial opinion as to the correct interpretation of the provisions of s.343R(2) of the 2005 Act, the judgment of the court in Matthews seems unlikely to represent the ‘last word’ on this issue. To the extent, however, that it is the most recent (and the first formally reported) decision on the issue of such consent orders, and given Cross J.’s experience in dealing with such matters, it is a judgment which will undoubtedly be relied upon in particular by defendants in the context of any future disputes with the Department of Social Protection in relation to recoverable benefits and the level of any payments due on settlement of a claim.

The question of a compensator’s liability for recoverable benefits is often considered to be one for defendants alone (and in particular insurers). That, however, is to misunderstand the often-stultifying impact which the potential exposure to a significant RBA liability can have on the conduct and speed of litigation. It can in some cases be a very real consideration for defendants / insurers in their attitude to settlement. It is not at all uncommon for the potential RBA exposure in any given case to outweigh the ‘settlement value’ of the claim.

There is also the further extremely unsatisfactory issue for policyholders in some ‘settled’ claims of the closure of those claims effectively being held in abeyance pending a response from the Department of Social Protection to the final RBA20 Form – with the attendant impact on a policyholder’s claims history and potentially also on premium considerations etc.

To the extent, therefore, that the decision of Cross J. in Matthews provides some certainty as to the compatibility of ‘consent orders’ with section 343R of the Social Welfare (Consolidation) Act 2005, it is to be welcomed by all sides to personal injuries litigation.

[1] In the matters of Aileen Condon – v – The HSE (2015/10070P) and Monika Szwasc – v – Hanford Commercials Ltd t/as Maldron Hotel Wexford (2018/9268P)

[2] Following the insertion of s.343R of the Social Welfare Consolidation Act, 2005 by s.30 of the Social Welfare and Pensions Act, 2013

[3] “Friends with Collateral Benefits? Consent recitals on the loss of earnings in orders striking out settled personal injury actions and the recovery of State benefits from tort damages” – Irish Judicial Studies Journal Vol.4(2)

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