Phased Compensation Orders

Yesterday’s talk about compensation put me in mind of a recent very positive development in this area.

Monetary awards are the only means we have for compensating individuals for injury or loss suffered by them. The courts have placed a cap on what will be awarded as general damages for pain and suffering. Therefore, there is a very finite limit to that type of compensation that will be payable even in the very worst cases, and less seriously cases will be scaled back from there proportionately.

However, there is no limit to what are called special damages. This is the compensation paid to a person to provide for specific items of loss or expense incurred. It can refer to things in the past such as medical expenses or loss of earnings.

But it can also refer to losses or expenses expected to be incurred in the future, such as future loss of earnings or future costs of care.

In catastrophic injury cases, it is the latter, the expected costs of future care, that can result in huge awards having to be made to provide a capital sum capable of providing an adequate level of care for the rest of the unfortunate victim’s life. This gets extremely complicated using actuarial calculations involving factors like life expectancy, interest rates and future expected returns. Currently, we have no system for phasing these awards over the lifetime of an injured person.

The lump sum system is a very blunt instrument and can result in a situation where a person is under compensated if life expectancy exceeds the projections and future expected returns do not deliver. On the other side of the coin, if a person awarded a multi-million euro capital sum to provide for future care dies prematurely there may be a windfall inheritance by someone that was not intended.

Phased compensation plans or periodic payment orders are the answer, but until now these were not possible in Irish law. They’re still not just yet; but they soon could be as legislation providing for them has recently been approved by the government.

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Flor specialises in the area of commercial law and the area of probate, trusts and estates. His commercial practice consists mainly of commercial litigation, commercial property and SME commercial advisory work. In the area of probate, trust and estates, Flor deals with wills and estate planning for clients; complex probate and administration…Read More