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Published 20 April 2023
In 2002, the Law Reform Commission made a recommendation that a reimbursement system be set up under which the amount by which a compensation award has been reduced by virtue of the payment of Social Welfare payments including Health allowance, should be reimbursed by the Defendant to the Department of Social and Family Affairs or a Health Board, as appropriate. It was in response to this recommendation that certain provisions of the Social Welfare and Pensions Act 2013 were enacted and the Recovery of Benefits and Assistance Scheme implemented. The commencement date for the RBA Scheme is 1 August 2014.
Section 343R (1) of the Act imposes an obligation on the Compensator (usually an Insurer), providing compensation including payment of loss of earnings or loss of profits to an injured person, to refund to the Department benefits which were paid by the State to that injured person as a result of the personal injury suffered.
Section 343R (2) provides the exception where:
In the intervening years, the Courts readily adopted a practice of making consent settlement orders “consent orders” that reduced a compensator’s liability to the State upon compromise of a claim. Examples of such circumstances include where there is an apportionment of liability, where causation issues arise or where there is no claim for loss of earnings.
In June 2021 Mr Justice Twomey delivered extempore Judgements in Aileen Condon -v- Health Service Executive (2015)10070P and Monika Szwasc -v- Hanford Commercials Limited (2018) 9268 in which he refused to make such a consent order as he felt that the ‘Orders sought should only be granted if there was evidence that the party prejudiced, the Department, was also consenting to those terms being made an Order of the Court”. He felt that that proviso in Section 343R (2) indicated 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” was required.
However shortly after that decision in Maurice Matthews -v- Eircom (unreported 2nd July 2021), Mr Justice Cross fundamentally disagreed with Mr Justice Twomey’s interpretation of the legislation and commented as follows:
“It is important to know that a Court Order is what is says, a Court Order. Section 343R (2) does not give any limitation as to the type of Court Order. 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”.
In November 2022, in the matter of Kuczak v Treacy Tyres (Portumna) Limited, Mr Justice Twomey held that a “consent settlement” order was not an “order of the court” for the purpose of the legislative regime in relation to recoverable benefits. In the course of his Judgment, Mr Justice Twomey noted that another High Court Judge had found that a consent order for liability was an order of the Court and he noted that the inconsistency in approach could affect public confidence in the overall system.
Mr Justice Barr in Wilson v. Leonard and Anor  IEHC 670 and  IEHC 674 disagreed with Mr Justice Twomey and decided that it was appropriate for a Court to make a consent Order “provided there was some rational and fair basis for making those determinations”. He suggested that if the Department genuinely believed it was being wrongfully denied the full amount of recoverable benefits, then it could take Judicial Review proceedings to address the issue of whether consent Orders were orders for the purposes of s.343R. He stated that it was appropriate for a Court to “be given sufficient information to satisfy the judge that the determination sought to be included in the order, is appropriate in all the circumstances”. If this procedure was followed, the court held that personal injuries actions could still be settled with an apportionment of liability.
In December 2022, Mr Justice Paul Coffey in Jarmula v. DSG Solutions Limited  IEHC 674 noted the parties were seeking to limit the plaintiff’s loss of earnings by 50% as there was a disagreement as to the extent to which the Plaintiff’s injuries related to the accident. Mr Justice Coffey noted that prior to the commencement of section 343R in 2014, a court had jurisdiction to make a consent order for the apportionment of liability. Similarly, if parties agreed issues of negligence, causation and quantum of damages, this could also form part of a consent order. He was satisfied that parties could similarly reach agreement on loss of earnings. He held that it was not for the court to compel parties to litigate issues which had been agreed otherwise there would be the “alarming consequence” of forcing parties to litigate issues no longer in dispute.
He stated that it was desirable in the interests of transparency that legal practitioners should inform the Court ‘of the factual and legal basis on which the apportionment was agreed’. He also stated that the court retains a residual discretion to refuse a consent order if no reason can be given for its making or where the reason offered is unsatisfactory. At present there are clearly different approaches from the Judiciary to the making or not of consent Orders re RBA repayments. Ultimately, the position is likely to be in a state of flux until such time as there is a determination on the matter by the Court of Appeal and in the meantime, “compensators” are in the hands of the Judge.
Finally we note there are different approaches to calculating repayment of RBA.
One practice which has emerged is that Insurers will only pay the agreed percentage split of a total RBA Statement balance no matter the total Loss of Earnings claim being made is.
For example in a claim where a 50% reduction for contributory negligence was agreed, with a RBA statement balance of €20,000 but a Loss of Earnings claim of €100,000 being made, some Insurers will only repay €10,000 of the €20,000 balance.
Our view is that this practice is incorrect as the wording of the legislation states that an insurer must repay the lower of (1) the amount stated on the RBA statement or, (2) the amount assessed in relation to loss of earnings therefore it is the amount of the loss of earnings ordered that dictates the amount of recoverable benefits to be paid.
In our example above, we caution that Insurers should be repaying 50% of the Loss of Earnings i.e. €50,000 and not 50% of the RBA, €10,000.
If the Order simply states that liability is agreed on a 50/50 basis then you could infer that the loss of earnings was reduced similarly, however at present we believe that it is best practice for the Order to reflect the exact amount assessed in relation to loss of earnings.
We would strongly caution that the Department may still seek to look behind consent Orders and therefore this area remains pitted with rabbit holes for the unwary to trip into.
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