Report on Section 2 of the Civil Liability (Amendment) Act, 1964: The Deductibility of Collateral Benefits from Awards of Damages

By Órla Gillen, Friday, 22nd February 2002 | 0 comments
Filed under: 2002.



Press Release

The Law Reform Commission  publishes Report on Section 2 of the Civil Liability (Amendment) Act, 1964: The Deductibility of Collateral Benefits from Awards of Damages

The Law Reform Commission today publishes its Report on the Deductibility of Collateral Benefits from Awards of Damages. This Report responds to a request by the then Attorney General to consider whether and to what extent section 2 of the Civil Liability (Amendment) Act, 1964 should be amended to ensure a person who claims damages for personal injuries does not receive double compensation.

Section 2 deals with the interaction between payments that a victim of personal injuries may receive, such as insurance payments, pension payments, gratuities and other such payments (so-called "collateral benefits"), on the one hand, and damages awarded by a court in respect of the same injuries, on the other hand. That section provides that the collateral benefits shall not be taken into account in assessing the award of damages. As a result, victims of personal injuries may receive compensation from two sources in respect of the same loss.

There has been much public debate recently regarding the scale of damages awarded for personal injury claims. The high level of compensation that is often awarded has attracted considerable criticism. While court awards are the primary focus of this reaction, there are other payments that a person may receive as compensation for personal injuries. In particular, the collateral benefits that are addressed in section 2, are a notable source of compensation that are currently not taken into account in calculating damages.

The concern at the heart of this Report is that the victim of personal injuries should receive whatever monetary payments are necessary to compensate him or her for the loss suffered, but not more. At its core, this Report aims to reduce over-compensation of victims of personal injuries. One way of achieving this would be to reverse the policy of section 2, and deduct the amount of the collateral benefits from the amount of damages, on the basis that they are both designed to compensate for the same loss.

However, there are many conflicting policy and practical considerations that arise in the context of collateral benefits. For instance, where an individual has displayed prudence and caution in taking out a policy of insurance, should he or she not be entitled to retain the benefit of that policy? Where an individual wishes to make a charitable payment for the benefit of an injured person, should that not be encouraged? If it is determined that  the victim should be entitled to only one source of compensation, who should bear the burden of compensating the victim, the provider of the collateral benefit or the wrong­ doer? In addition to the many other considerations that arise in this Report, the basic premise is that double compensation is wasteful and contrary to the public interest and should be avoided.

Following a wide consultation process, including members of the legal profession, the insurance industry, the pensions industry and the Department of Social and Family Affairs, the Law Reform Commission now makes its final recommendations as to the changes that should be made to section 2 to ensure a victim of personal injuries receives adequate and full compensation for those injuries, but not double compensation.

Each chapter of this Report analyses individually the various categories of collateral benefit to assess whether they are duplicative of an award of damages and whether they should be deducted. The Commission considers the policies underlying each type of benefit as well as any practical questions that may arise from its recommendations.

The Report begins with an examination of insurance payments and concludes that insurance payments should be deducted from awards of damages for personal injury, unless the insurance premiums were paid out of an individual's own pocket. As regards charitable payments, it is important not to discourage benevolence and the Report therefore recommends that such payments should generally not be deducted from awards of damages. Pension payments attract different policy considerations, as beneficiaries have a direct proprietary interest in the fund from which such payments are made. The Commission accordingly recommends that pension payments should continue not to be deducted from awards of damages.

The Report recommends that sick pay should be taken into account in assessing damages, as sick pay compensates for the same loss as damages for loss of earnings. As regards social welfare payments, the Commission's recommendation is that they should be deducted from the appropriate head of an award of damages.

Throughout this Report, the Law Reform Commission balances the public interest in ensuring that a person does not receive double compensation in respect of personal injuries suffered, with the rights of that person to receive payments to which he or she is justly entitled.