that “awards be proportionate to social conditions bearing in mind the common good”. The insurance and legal sectors were interested to see how the Sinnott principle and its cap would play out in view of the more difficult economic environment and the opportunity came to test it in the Yun v MIBI and Tao case (2009). The Court gave extensive consideration to how awards affect “...the operation of public policy...” or “...the need” as stated in M.N. v S. M (2005) that awards are proportionate “...to social conditions bearing in mind the common good.” In the judgment, Justice Quirke expressly referred to the economic downturn and its influence on the approach of the courts in this case. Expert evidence presented to the Court confirmed that the country was presently enduring a period of unprecedented recession, with a significant drop in individual disposable income which was anticipated to last for several years. Those factors were relevant to the measurement of “contemporaneous standards” and current “social conditions” within the country and awards for general damages should reflect economic reality. Obviously, there is a clear argument that general damages should be lower in a time of national economic difficulty. However, Justice Quirke qualified that by emphasizing the importance of life expectancy as a factor to be considered where catastrophic injuries were suffered. He went on to state that “recessionary economic circumstances should not be visited upon the most vulnerable in society in order to regulate the damages which are intended to compensate them for the whole of the remainder of their lives”. Accordingly, awards of general damages in these cases should take into account historical evidence of economic and social fluctuations over relevant time periods, so that consequent adjustments can be made in the measurement of general damages which will be as accurate as possible. The Court set out to achieve its objective of arriving at a fair assessment “on a common sense basis”, which led to an upward adjustment to €500,000 on the cap in the Sinnott case (1984), arrived at by multiplying the €190,000 by a factor of 2.13 which was the difference in the Consumer Price Index between 1984 and 2009, which rounded came to €400,000, to which was added 25% or €100,000 for inflation. However, taking account of the evidence presented concerning the economic environment, a downward adjustment of 10% had to be made in order to reflect the anticipated reduction in wealth and living standards currently being experienced,
setting a revised and current cap on general damages at €450,000. Fortunately, cases of the magnitude of “Sinnott” and “Yun” are relatively few when compared to the total volume of litigation. But what of less serious cases, which make up the vast majority of the litigation portfolio? Section 22 of the Civil Liability and Courts Act 2004 was the subject of consideration in a number of less well known cases. Section 22, entitled “Matters to be taken into account by the court when assessing damages” requires the court to take the Book of Quantum into account when
So the courts have, in effect, remained true to the spirit of Sinnott and its “contemporaneous standards”, allowing for change both up and down in light of the prevailing economic realities.
considering the level of general damages it intends to award the plaintiff. The Book of Quantum was largely dismissed and treated with a high degree of scepticism until recently. In McFadden v Weir (2005) there were considerable reservations expressed about the usefulness of the Book of Quantum when considering the effect of particular injuries on the plaintiff, bearing in mind their circumstances and character. It was highlighted that it would not be of assistance in every case, a point made in Power v Governor of Cork Prison (2005) where there were “no indicated perimeters of compensation” for the type of injury suffered by the plaintiff. In my view, it is fair to say the document is not perfect, but it is a credible reference point. Therefore, it is worth noting the decision of O’Brien v Derwin (2009), a case involving a serious head injury. In the judgment it was
noted that while the Book of Quantum was formulated in 2004, it did not mean that the values therein were out of date, especially at a time when property prices were slipping rapidly and when the economy is in serious challenge. Taking account of the economic circumstances, the values seemed to be a good guide for the level of general damages a defendant could expect to be awarded against them. Furthermore in McDermott v McCormack (2010), the court while noting the Book of Quantum was published in 2004, pointed out that inflation during the intervening time was offset by the continuing economic difficulties. So the courts have, in effect, remained true to the spirit of Sinnott and its “contemporaneous standards”, allowing for change both up and down in light of the prevailing economic realities. As the number of personal injury summons issued spirals towards the number issued prior to the introduction of the Personal Injuries Assessment Board, at the very least the claims practioner has some degree of certainty concerning the attitude of the courts to general damages, in a market facing yet another year of thin premiums.
Expert evidence presented to the Court confirmed that the country was presently enduring a period of unprecedented recession, with a significant drop in individual disposable income which was anticipated to last for several years. Those factors were relevant to the measurement of “contemporaneous standards” and current “social conditions” within the country and awards for general damages should reflect economic reality.
risk manager magazine spring 2011