New legislation to provide for periodical payment orders (PPOs) in catastrophic injury claims

29 May 2015

On 27 May 2015 the Irish Government published a draft Bill that, when enacted, will for the first time allow for serious personal injury claims in Ireland to be resolved by way of annual periodical payments for future losses. The draft Bill adopts the recommendations of the working party lead by Quirke J and which first reported in October 2010. The proposals in the Bill will apply not only to public sector claims but also to claims indemnified by motor and liability insurers.

The 2010 working group’s proposals were refined by the Irish Justice Department and discussed with key stakeholders in the intervening five years, with significant pre-publication consultation from the second half of 2014 onwards.

The timetable for the new legislation is likely to have been accelerated by the decision of Cross J, in December 2014, to adopt at one per cent discount rate at common law when valuing future losses in a lump sum claim, in Russell v HSE [2014] IEHC 590. [It is understood that an appeal in this case has been listed for a two-day hearing in July 2015.]

The measures in the Draft Civil Liability (Amendment) Bill 2015 draw fairly heavily from a similar scheme in English law (set out in sections 100 & 101 of the Courts Act 2003 and at part 41 of the CPR) but make some notable adaptations, including: (i) limiting PPOs to catastrophic injury claims as defined and (ii) omitting entirely the prospect of variable PPOs (although the court making a PPO may, when doing so, incorporate steps up or down in annual future payments).

Gavin Campbell Head of Office BLM Dublin said that; "We welcome this development. We have been consulting and engaging with interested parties in the Irish insurance market for some time and have detected a keen interest in the BIll, which we believe will receive widespread support."

The Draft Bill now passes to the Joint Committee on Justice, Defence and Equality for pre-legislative scrutiny. The timetable for this phase is not clear, although Justice Minister Fitzgerald has stated that the aim is to legislate this year. The key features of the new Draft Bill are highlighted below.

Draft Civil Liability (Amendment) Bill 2015
  • Its key objective is to provide secure future annual payments for in personal injury claims
  • Applies only to catastrophic injuries (defined as involving serious impairment requiring life-long care)
  • Applies equally to claims indemnified by Government defendants and privately-insured defendants alike
  • Gives the court power to impose PPOs for future life time care, if it determines that this is in the best interests of the injured party, and having taken account of both parties’ views
  • Gives the court discretion to approve PPOs agreed by the parties for future loss of earnings
  • Prevents the court from making a PPO unless it is satisfied that continuity of payment is reasonably secure
  • Stipulates that public sector defendants and private sector defendants, whose insurers are covered by the statutory scheme to protect against insurance insolvency, will be reasonably secure but any other defendant will have to prove on a case-by-case basis that it can guarantee continuity of payment
  • Bolsters the statutory scheme to protect against insurance insolvency so that any PPO would be protected in full in that event
  • Mandates that annual payments shall be linked to consumer prices index (no other index to be permitted)
  • Allows the court to make stepped arrangements in the PPO, increasing or decreasing the annual payment, which must be set out when the order is made (there is no other provision for variable PPOs)
  • Notes that further provision will be made to ensure that;
  • costs-protected offers of settlement may include amounts by way of PP
  • the court must sanction any proposed assignment, charge or commutation of a PPO, and
  • the annual PP is ring-fenced against creditors in the event of the subsequent bankruptcy of the recipient

The full text of the Draft Bill and Explanatory Notes as published on 27 May 2015 may be viewed here

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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Gavin Campbell

Gavin Campbell

Partner and head of office,
Dublin


Alistair Kinley

Alistair Kinley

Director of Policy & Government Affairs,
London


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