Conventional wisdom among policyholders is that there is no point in pursuing costs against unmeritorious personal injury claimants of limited means (“impecunious plaintiffs”) because it can be expensive to pursue them with little chance of recovering the costs.
Court of Appeal decisions on legal fees provide welcome relief for personal injury defendants
Recent clarifications by the Court of Appeal in relation to the complex but costly issue of legal costs should be seen as a welcome development in the context of ongoing reforms to reduce the cost of litigation in this jurisdiction. In these ground-breaking decisions, the Court has confirmed the legal position** that successful “Injury Claims” brought in the wrong Court will result in substantial financial repercussions for the claimant as well as the claimant’s legal representatives in what is known as a “Costs Differential Orders”.
To fully appreciate the significance of these Court of Appeal decisions, it is worth understanding the makeup of our legal system when it comes to personal injury proceedings.
Should a claimant or defendant reject an award from PIAB (the Statutory Agency that almost all injury claims have to be submitted to prior to the institution of legal proceedings ), the next port of call is to issue legal proceedings. At this stage, the claimant with his/her legal team, has to decide which is the correct judicial Court to bring his or her case for compensation. By law, any injury claim with an estimated value of below €15,000 is heard by a Judge of the District Court whereas an injury claim valued between €15,000 & €60,000 is heard by a Judge of the Circuit Court. Any claim valued in excess of €60,000 is heard by a Justice of the High Court. Legally speaking, this is known as the “monetary jurisdiction of the Court”.
The selection of jurisdiction is also significant because the legal costs payable to the claimant’s solicitor increases dramatically as you move through the three tiers of these monetary jurisdictions. For instance, District Court costs are generally considered to be at least one third of Circuit Court Costs whereas Circuit Costs are a fraction of High Court costs, underlying criticism from commentators including the Judiciary regarding the problematic structure of Ireland’s legal costs system.
However, the Court of Appeal has now mandated that in circumstances where the claim is brought in the wrong Court e.g. the claim is brought in the High Court when the Circuit Court was the appropriate monetary jurisdiction, then the claimant will not only be refused the costs of the higher Court but is also responsible for the defendant’s costs of defending the claim in the higher Court. In such circumstances, the higher Court can accede to a request from the defendant’s legal team for a Costs Differential Order to be made against the claimant for the defendant’s costs.
In practice, this effectively means that the claimant’s award for damages will be greatly diminished whereas the claimant’s legal representative will in all likelihood be wiped out as these costs will be offset against the defendant’s legal costs.
As the Circuit Court and the District Court are equally bound by the decision of the Court of Appeal, it is not unreasonable to anticipate such Costs Differential Orders now being made in the Circuit Court in circumstances where the Court concludes that such a claim should have been brought in the District Court as opposed to the Circuit Court.
Insurance companies representing its members should not be reluctant to make such applications for Costs Differential Orders in circumstances where the Court deems that the claimant has brought his or her claim in the incorrect Court as such an order represents a saving to the policyholder in terms of the costs of defending the claim which will be inevitably loaded onto the defendant’s premium.
Clearly with the marking downwards of damages as per the Judicial Council Guidelines, the appropriate jurisdiction for minor soft tissue claims should be the District Court bearing in mind that the District Court can hear claims for injury valued up to €15,000 which in effect covers the value of the vast majority of minor soft tissue injury valuations. Furthermore and as previously set out, legal costs for the District Court – unlike the Circuit Court and High Court – are capped under the District Scale and in fact are a fraction of the costs in the higher Courts which ultimately would represent savings for insurers and ultimately policyholders. Were the monetary jurisdiction of the District Court increased, it would further widen the net for such claims to be processed in a quicker and more cost effective manner. The last occasion the District Court monetary limit was amended was 2014 when it was raised from €6,384 to its current cap of €15,000.
IMPORTANT NOTE: The Alliance brings together 45 civic and business organisations from across Ireland, representing over 55,000 members, 700,000 employees, 622,000 volunteers and 374,000 students in highlighting the negative impact of persistently high premiums and calling for real reforms that will quickly reduce liability and motor insurance premiums to affordable levels and keep them that way.
We are neither lawyers not insurers. This blog is based on the collective experience and opinions of our members. It does not constitute legal advice. Professional advice should be sought before acting on any of the issues raised in this blog.
COA decisions –
*Jibran Moin v Veronica Sickia
John O’Malley v David McEvoy
**S17.5 Courts Act 1981
(amended by S14 Courts Act 1991)