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GAZETTE
NOVEMBER 1996
V I E W P O I N T
Rabbitte's caution on capping vindicated
by Deloitte & Touche report
"Before the inquiry was set up, there
was a considerable amount of
concern centering on expensive legal
procedures, the cost of motor cover
(particularly for young males up to
the age of 30) and the belief that
awards were grossly out of line with
settlements in other countries. The
broad sweep of the report effectively
undermines all three contentions."
- Irish Times Editorial following
publication of Deloitte & Touche
report
When Mr Pat Rabbitte became Minister
for Commerce Science & Technology in
December 1994, his in-tray contained a
well advanced proposal for legislation to
cap the level of general damages which
the courts could award as compensation
to the victims of personal injury caused
by the negligence of others. A powerful
lobby of industry, public authorities and
insurance interests, backed by an
uncritical media, had apparently
persuaded both political and departmental
policy makers of the validity of
contentions such as those above which
the
Irish Times
now recognises to have
been "effectively undermined".
No Minister could be in any doubt as to
what, at least in the short-term, would be
the overwhelmingly popular approach to
take on this issue. Public opinion had
been inflamed by an apparently endless
series of articles on "our compensation
culture", full of one-sided reports of
supposedly "true" cases. Most
insidiously of all, these reports were
typically laced with often mutually
contradictory and now demonstrably
spurious "statistics" about how Irish
court awards were, for example, four,
five, six or more times greater than those
made in the courts of the United
Kingdom and other countries. "Capping"
was obviously the answer if only the
relevant Government Minister would
stop stalling and get on with it.
This siren call of guaranteed political
popularity, at least in the short-term,
through the introduction of capping
Commerce, Science and Technology Minister
Pat Rabbitte.
legislation, must have been difficult to
resist for any politician. It is to the great
credit of Minister Rabbitte that he did
resist it. He applied his own judgment to
the so-called evidence for capping and
concluded it was at best anecdotal and
certainly was insufficient to form the
basis for the policy decision which vested
interests were urging him to take.
He decided to commission Deloitte &
Touche to prepare a report which would
seek to distinguish fact from fiction in the
propaganda with which he and his
predecessors had been assailed. He
insisted that Government policy on this
matter should be founded on professional
research rather than on myth. If, as
appears to be the case, the Government
has accepted the finding of the Deloitte &
Touche report that there is "no valid
case" for capping personal injury
compensation awards in this country then
the public interest has been very well
served by Minister Rabbitte's caution and
political courage.
In its submission to Deloitte & Touche,
the Law Society argued that the
introduction of a capping regime would
almost certainly lead to injustice for
people who had sustained injuries
through no fault of their own. The
Society was convinced, in addition, that
the crude capping proposal made no
sense in economic terms even apart from
the primary issue of justice. In this regard
it is worth quoting in full three
consecutive paragraphs from the report's
executive summary.
"The report's analysis of High Court
cases found that, contrary to the
general perception, the majority of
High Court awards of general
damages in the most serious ipjury
cases, clustered around an average
level of approximately twice the level
of average industrial earnings. Very
high awards (in excess of £60,000)
were the exception rather than
the rule.
"A comparison of the High Court
awards with the UK "Guidelines for
the Assessment of Damages and
Personal Injury Costs" found that
85% of the Irish High Court awards
examined fell within the range o^he
UK guidelines.
y x
"In the light of the analysis of High
Court awards for general damages,
the report found that there was no
valid case for introducing a capping
regime for general damages in
Ireland. Moreover, there would be
no guarantee that the introduction of
a capping regime would lead to
reductions in insurance premiums
in Ireland".
On the comparison of Irish legal costs
with those which prevail in the United
Kingdom, the report says:
"It would seem that legal costs in
both jurisdictions are broadly
comparable in that more expensive
solicitors' fees in the UK are offset
by greater involvement of solicitors
and barristers in Ireland".
On the much attacked "no foal, no fee"
arrangements between solicitors and their
clients, the report concludes that:
"Subject to consumer safeguards
there seems to be no reason why
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