DÁIL ÉIREANN AN ROGHCHOISTE UM GHNÓ, FIONTAIR AGUS NUÁLAÍOCHT SELECT COMMITTEE ON BUSINESS, ENTERPRISE AND INNOVATION. Dé Máirt, 4 Nollaig 2018

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1 DÁIL ÉIREANN AN ROGHCHOISTE UM GHNÓ, FIONTAIR AGUS NUÁLAÍOCHT SELECT COMMITTEE ON BUSINESS, ENTERPRISE AND INNOVATION Dé Máirt, 4 Nollaig 2018 Tuesday, 4 December 2018 The Select Committee met at 6.40 p.m. MEMBERS PRESENT: Deputy Heather Humphreys (Minister for Business, Enterprise and Innovation), Deputy Lisa Chambers, Deputy Billy Kelleher, Deputy James Lawless, Deputy Tom Neville, Deputy Maurice Quinlivan. DEPUTY MARY BUTLER IN THE CHAIR. 1

2 SBEI Personal Injuries Assessment Board (Amendment) (No.2) Bill 2018: Committee Stage Chairman: I welcome the Minister, Deputy Humphreys, and her officials. Before we begin, I ask members to switch their phones onto flight mode as it is not enough to keep them on silent as that interferes with the recording equipment. Sections 1 to 7, inclusive, agreed to. SECTION 8 Deputy Billy Kelleher: I move amendment No. 1: In page 6, lines 6 and 7, to delete may, in its discretion and substitute shall. There have been parliamentary debates for years on the difference between shall and may. Our intention is to ensure there is an obligation on the judicial system to sanction in some way persons who do not co-operate with the system. While I accept the Minister s argument that it would interfere with the independence of the Judiciary, I would like to hear why she cannot accept the amendment. We are trying to send a message that people must be more co-operative with the system itself, which was set up to ensure there would be a seamless, less adversarial and less costly system in place. As I said, there should be some sanction for people who do no contribute in a co-operative way to the system when they assess damages or make their case. We made the point in the Dáil earlier during parliamentary questions that there seems to be no sanction for people who engage in a process to scam people, fraudulently secure money by false means, present false evidence to courts, lie under oath or view the system as an opportunity for scams. In my role as spokesperson in this area, I will seek to ensure measures are put forward that oblige the Judiciary, the prosecution services and the investigative services to be as hard as possible on persons who are non-co-operative or who use the system in an abusive way to secure funds through fraudulent means or the pretence of being injured. That is the purpose of the amendment but if the Minister can convince me otherwise, I will revisit it. Minister for Business, Enterprise and Innovation (Deputy Heather Humphreys): I understand what the Deputy seeks to achieve. The effect of the amendment is to remove the discretion of the court as to what order it may make on what costs, if any, it will allow a claimant or respondent, taking into account the failure by the claimant or respondent to comply or submit in the manner specified in subsection (1). It raises constitutional concerns because it would cut across the constitutional principle of the separation of powers and the discretion of the courts to make an order for costs. Section 8(1) lists the circumstances under which the court can consider an adverse costs order: where the assessors have requested the claimant under section 23(1) to furnish additional information or documents relating to his or her claim for special damages and the claimant has not complied with the request; where the assessors have requested the respondent or respondents under section 23(2) to furnish additional information or documents and the respondent or respondents have not complied with the request; where the assessors have requested the claimant or respondent or respondents under section 23(4) to assist or co-operate with retained experts, and the claimant or respondent or respondents have not complied with that request; or where the assessor has requested the claimant to submit himself or herself to a medical examination arranged by the Personal Injuries Assessment Board, PIAB, and the claimant has not submitted himself or herself to the medical examination. 2

3 4 DECEMBER 2018 The section provides that the court may order certain matters, taking into account the failure to comply or submit in the manner specified in subsection (1). The word may in the section refers to the order a court may make on what costs, if any, it will allow a claimant or a respondent. The making of an order is, and must remain, a discretionary matter for the judge. The court must take the matters referred to in subsection (1) into account when deciding on whether to make an order. When the general scheme of the Bill was published in June 2017, it was proposed under head 7 that a court shall have regard to the failure to respond to a request for further information, documents or medical reports in determining the admissibility of evidence in subsequent proceedings and that a court shall have regard to a failure to attend an independent medical examination in determining what medical evidence is admissible in the court case. The Bill was drafted in consultation with the Office of the Attorney General, which was involved directly in the wording of the section. It was decided that a proposal to limit a court s discretion as to the admissibility of evidence would raise constitutional issues because it would cut across the constitutional principle of the separation of powers. It is the function of the court and the constitutional duty of a judge to hear all the available evidence, arrive at a decision on foot of that evidence and determine issues of liability and quantum. Furthermore, the plaintiff has a right to tender evidence before the courts. The court must retain discretion in any given case to ensure constitutional rights are vindicated and fair procedures are followed. By providing for potential financial consequences to be applied for non-compliance with requests by PIAB assessors, the section, as drafted, should have the desired effect to change behaviour and encourage parties to adhere to the requirements set out in the Act. For the reasons I outlined, I ask the Deputy to withdraw his amendment because I cannot support it. Deputy Billy Kelleher: I asked a question in the Dáil earlier about the Minister of State, Deputy D Arcy s, proposals to bring forward next year a constitutional referendum to allow for a cap on awards. It gives an indication that this Government is not always in favour of the autonomy and independence of the Judiciary. I am not trying to hamstring the Judiciary into having to do something but rather ensure it must, at the least, take into account the non-cooperation of a claimant, which is the purpose of the amendment. The Minister said it runs contrary to the advice of the Attorney General because it would be in breach of the separation of powers, a principle I support, although the Minister of State may not. I will, therefore, withdraw the amendment, reserving my entitlement to reintroduce it on Report Stage. Amendment, by leave, withdrawn. Deputy Heather Humphreys: I move amendment No. 2: In page 6, to delete lines 23 and 24 and substitute the following: (2) The amendment effected by subsection (1) shall apply to (a) an application under section 11 of the Principal Act made on or after the date on which this section comes into operation, and (b) an application under section 11 of the Principal Act made before the date on 3

4 SBEI which this section comes into operation, where (i) the assessors have not, before that date, requested the claimant to furnish to them additional information or documents pursuant to section 23(1) of the Principal Act, (ii) the assessors have not, before that date, requested the respondent or respondents to furnish to them additional information or documents pursuant to section 23(2) of the Principal Act, (iii) the assessors have not, before that date, requested the claimant or the respondent or respondents to provide assistance to retained experts or furnish information or documents or co-operate with those experts pursuant to section 23(4) of the Principal Act, or (iv) the assessors have not, before that date, requested the claimant to submit himself or herself to a medical examination pursuant to section 24(2) of the Principal Act.. The purpose of the amendment is to delete section (8)(2) and substitute a new subsection. Section 8 applies to applications made to PIAB on and after the enactment of the section, and applications made to the PIAB on enactment of the section where the assessors have not requested information or documents from the claimant, respondent or respondents regarding special damages, or where the claimant, respondent or respondents have not been requested by the assessors to co-operate or assist retained experts or where the claimant has not been asked by the assessors to submit himself or herself for a medical examination arranged by PIAB. The amendment was drafted by the Parliamentary Counsel in consultation with the Office of the Attorney General. I am conscious that where the State sets up a system where people s rights are engaged, it is critical that the procedural and administrative system is clear and transparent. People need to know what they are and are not required to do. The amendment makes clear the applications that will be covered by the section on commencement of the legislation. It is important that claimants fully co-operate with the PIAB process to maximise the model and ensure as many claims as possible are settled in a timely, cost-effective manner. This Bill will cover all the new claims and any claims that are in the system, subject to the circumstances that I have just described. We are trying to capture as many as we can with the new legislation. Amendment agreed to. Section 8, as amended, agreed to. SECTION 9 Question proposed: That section 9 stand part of the Bill. Deputy Billy Kelleher: From what I can remember of the first reading of the Bill, the book of quantum was to be reviewed every five years, but this has been amended to a review every three years. Deputy Heather Humphreys: Yes. It will be reviewed every three years. Deputy Billy Kelleher: In the context of discussions arising from parliamentary ques- 4

5 4 DECEMBER 2018 tions, we raised the possibility of comparing awards with those made in other common law countries. We were told at the time that the awards made in Ireland could not be compared with those made in other countries. I would like an explanation as to why we cannot benchmark the awards made in Ireland across the norms. We benchmark the cost of medicines in Ireland with the cost of the same medicines in OECD countries. In the context of personal injuries, we would want to draw a comparison of awards in Ireland with those in common law jurisdictions. I make this point because the awards made in our nearest neighbouring country, which has a similar legal system, are much lower. For example, the award for whiplash in the UK is about 4,000 compared with a figure of 20,000. I know that we have a problem when it comes to awards vis-à-vis other countries. I wonder at the reason for the great difference in the level of awards. I would like to see an explanation in the review of the book of quantum as to how a particular figure is arrived at. It is fine to publish the details as to what awards should be for various injuries, but there must be some broader assessment as to why a specific figure is arrived at as opposed to the arbitrary announcement that an amount should be paid out when a person suffers a personal injury. The people as well as the Judiciary have a difficulty with the large disparity between awards across jurisdictions. The book of quantum will be a discretionary tool for the Judiciary. There needs to be research and analysis and a broad assessment of the figures that are awarded for specific injuries. This is an important point and goes beyond the scope of this Bill. The Judicial Council Bill 2017 is under consideration, which will in effect take its potential instructions from the Personal Injuries Assessment Board, PIAB, in terms of assessing awards. I am led to believe that PIAB will assist the Judicial Council in assessing what should be the broad benchmark. I would appreciate clarity on section 9 in respect of a benchmark which is not self-explanatory in terms of advising and helping the proposed Judicial Council Deputy Heather Humphreys: PIAB has offered to help the Judicial Council, but it will be up to the Minister for Justice and Equality, Deputy Flanagan, to deal with this during the passage of the Judicial Council Bill Deputy Billy Kelleher: Would it not be up to Parliament? Deputy Heather Humphreys: Yes, it will be up to the Parliament to decide. It will probably be up to the Judicial Council to decide when it has the power to do so. At the time of the publication of the Bill, the second and final report of the Personal Injuries Commission had not been published. This report was subsequently published on 18 September 2018 and a key recommendation of the report was that the Judicial Council, when established, should be requested by the Minister for Justice and Equality to compile guidelines for appropriate general damages for various types of personal injury. When the judicial guidelines are in place, it is intended that they will supersede the book of quantum. The intention for the future is that the Judicial Council will take ownership of the judicial guidelines for personal injury compensation and it will recalibrate them when it considers it necessary. That should be better because the Judicial Council can change it easily. Question put and agreed to. Section 10 agreed to. 5

6 SBEI SECTION 11 Question proposed: That section 11 stand part of the Bill. Deputy Maurice Quinlivan: I am opposing this section. Section 11 seeks to reconstitute the nomination process to the board of PIAB. As it stands, two members of the board are nominated by the Irish Congress of Trade Unions, ICTU, one person is nominated by IBEC, and one person by the Irish Insurance Federation or any successor of it. The proposed change contained in section 11 would remove the power of ICTU to nominate two people to the board and replace it with one nomination from Insurance Ireland and one nomination from the Central Bank. The balance of the two nominations from ICTU and one from IBEC reflects injured parties and premium paying policyholders who should be the principal stakeholders in PIAB. I do not see the need for the composition of the board to change in this way and I think it would affect the balance on the board. Therefore, we are opposing section 11. Deputy Heather Humphreys: Section 11 amends the composition of the board of PIAB in line with Government policy to have more board members appointed through the Public Appointments Service, PAS. Section 11 removes ICTU and IBEC as bodies designated under the Bill to nominate members to the board. As I mentioned during the Second Stage debate, it will be open to members of ICTU or IBEC to apply through the PAS process when vacancies arise. Seeking expressions of interest for board appointments through the PAS process allows for appointments to be made from a greater number of potential candidates with the desired skill sets, which can vary over time, depending on the skills available to the board. Board members are appointed as individuals by the Minister where, in the opinion of the Minister, they have the expertise in a field relevant to the board s functions. The code of practice for the governance of State bodies published in 2016 provides that board members should have the appropriate skills and knowledge appropriate to the activities of the State body to enable them to discharge their duties and responsibilities effectively. The code of practice also requires that, in determining the criteria for board vacancies, the Minister consult the chairperson of the board to identify the appropriate and collective mix of experience, knowledge and skills required to oversee the board s performance of its functions successfully. All applicants who meet the criteria may apply to PAS and be assessed. Corporate governance standards require that the board members act in good faith and in the best interests of the State body. The duty of the board member is owed to the agency and not to any specific stakeholder. Under the Bill, it was proposed that five board positions would be filled through PAS, through open advertisement operated by PAS, which since 2014 has been responsible for putting in place an open, accessible, rigorous and transparent system to support Ministers in making appointments to State boards. I wish to clarify for the Deputy that the current board consists of a Chairperson, the chief executive of PIAB, and nine ordinary members, of whom six are nominated by external bodies designated under legislation. The Minister normally nominates a senior departmental official to the board. The external bodies are as follows: two persons nominated by ICTU, one person nominated by IBEC, one person nominated by the Irish Insurance Federation, one person nominated by the Central Bank, and one person nominated by the Competition and Consumer Protection Commission. Under the Bill, it is proposed that the five positions will be filled through the Public Appointments Service, PAS. 6

7 4 DECEMBER 2018 When the board was established social partnership was in place. The chair of the board, along with the two board members appointed via PAS, decide what skill set is needed. It is for that reason they will have the flexibility to appoint or recommend an appointment of people with different skill sets. For the reasons I have outlined I ask the Deputy to withdraw his opposition to section 11. Deputy Maurice Quinlivan: I appreciate the Minister s response but she has not addressed the fact that IBEC will lose two seats on the board. Deputy Heather Humphreys: ICTU will lose two seats and IBEC will lose one seat. Deputy Maurice Quinlivan: Yes, I apologise. Deputy Heather Humphreys: Insurance Ireland can still nominate somebody. Deputy Maurice Quinlivan: I am concerned that the proposal makes the board more corporate Ireland because Insurance Ireland, the Central Bank and another entity will have a nomination each but ICTU loses two places and IBEC loses one place. If there is no support for my proposal then I shall withdraw my opposition with the proviso that---- Chairman: As other members wish to comment, the Deputy can come back in afterwards. Deputy Maurice Quinlivan: Yes. Deputy Heather Humphreys: To follow up, it is open to them to apply through the PAS system. Deputy James Lawless: I wish to understand the amendment in order to assess it and then in turn understand Deputy Quinlivan s opposition to it to enable me to adopt a balanced view on what might be the right course of action. We must be careful not to be overly prescriptive about these boards. Sometimes we can get into the habit of saying there must a representative from X sector, Y sector, the voluntary sector, the business sector, the corporate sector and the regulatory sector and then, before one knows it, there are 20 people on a board and we start asking why the board is so big and suggesting that something be done to reduce its size. One can become trapped in that mindset. I am unfamiliar with the original composition of the board. Deputy Quinlivan has said that ICTU and IBEC almost mark each other on the board. I understand why IBEC would be on the board. Part of the reason that we seek reform is to reduce the cost to business and make insurance more affordable. Chairman: I wish to clarify that ICTU can nominate two persons and IBEC can nominate one person. Deputy James Lawless: I am not entirely clear but I am open to discussing the specialist knowledge that ICTU could bring to bear on personal injuries awards. I can see the benefit of including representatives of the Irish Patients Association and there might be other associations. It is not obvious to me why trade unions should be included. Trade union members are not the only people who slip and fall coming out of a shop. Maybe there is a particular focus on employee and employer injuries but I believe that the PIAB is far more wide reaching. The inclusion of ICTU and IBEC strikes me as a hangover from the days of social partnership, which the Minister mentioned. The inclusion of the social partners and every board going was 7

8 SBEI in vogue when PIAB was originally established ten or 15 years ago. The inclusion of ICTU and IBEC may no longer be appropriate but I am open to persuasion. I remain unconvinced that we should continue with something just because we always did it like that. Perhaps the board needs a different composition but I suggest that we do not make it too big or too prescriptive. The Minister seemed to say that it is open to all parties and none to nominate people, and if they pass the test and get on the board then so be it. Her suggestion has a lot of merit but I am open to persuasion about nominations. I would like to understand the issue a bit more. Chairman: How many members are entitled to be on the committee through the PAS system? Deputy Heather Humphreys: The board is comprised of 11 people in total. I suggest that we have three nominations, with one person nominated by Insurance Ireland, one person nominated by the Central Bank and one person nominated by the Competition and Consumer Protection Commission. The Minister also normally nominates a senior departmental official to the board, which brings the number to four. Therefore, seven positions remain. Chairman: How will the remainder be appointed? Deputy Heather Humphreys: They will be appointed via PAS. The chairperson, in conjunction with whomsoever sits on the PAS board, would consider the skill set needed. Corporate governance standards require that board members act in good faith and in the best interests of the State body. The duty of the board member is owed to the agency and not to any specific stakeholder. That is what we are trying to achieve with the provision. Chairman: Do any members wish to comment further? No. I call Deputy Quinlivan. Deputy Maurice Quinlivan: It is not simply a case that we want ICTU to be included in order to represent trade union members. That is not what we are about at all. There has been a lot of talk about fraud and people making false claims. We all agree that has happened and we want to deal with the issue. We must also remember that people do get injured and they must be compensated. We want to make sure that someone speaks on their behalf and ICTU could be that voice. That is why we oppose the section. Deputy Heather Humphreys: The assessors in any of these situations are independent from the board. The board acts as an oversight for the agency and makes sure that it fulfils it functions. The Central Bank operates both a regulatory function and consumer protection function, and brings experience of both aspects to the corporate governance of the board. That is why we have the Central Bank on it. The Competition and Consumer Protection Commission brings its financial management and information function to the corporate governance of the board, as well as its consumer welfare knowledge. I believe it is important that the Central Bank and the Competition and Consumer Protection Commission are designated because they bring that experience and aspect to the board. Chairman: The Deputy can consider this matter again on Report Stage. Deputy Maurice Quinlivan: I am happy to withdraw my opposition to the section and I may restate my opposition on Report Stage. Chairman: Deputy Quinlivan may oppose section 11 on Report Stage. Question put and agreed to. 8

9 4 DECEMBER 2018 Section 12 agreed to. SECTION 13 Question proposed: That section 13 stand part of the Bill. Deputy Maurice Quinlivan: My party opposes section 13 in its entirety. This section seeks to give the Minister power to take the financial reserves of PIAB, which currently stands at 19 million. I oppose the change as PIAB has built up the reserve over years, since its establishment, by continually re-engineering efficient processes and fighting judicial reviews by vested interests. This money was collected for the purpose of assessing injury claims, as provided for under legislation, and for no other purpose. Perhaps the reserve should go back to the policyholders who paid it in either directly or through their insurance premiums, which has already happened to an extent. For example, the fixed fee for an assessment has reduced from 1,500 in 2004 to 600 currently for respondents and their insurers. In addition, the Exchequer has been repaid a loan of 5 million for set-up costs. PIAB has been very successful in being self-funding and the reserve gives the board a certain degree of independence. I do not believe it would benefit PIAB if the reserves were taken. It is for those reasons that we oppose section 13. Deputy Heather Humphreys: Section 13 inserts a new section 74A into the 2003 Act. The Comptroller and Auditor General recommended to the Department that the Department and the board agree an appropriate level of revenue reserves to be retained by PIAB and the basis for holding such a reserve. The Comptroller and Auditor General also recommended the introduction of appropriate legislation to deal with excess funds held by PIAB. Legal advice obtained by the Department is to the effect that legislative change is required to enable the board to remit excess moneys to the Exchequer. The proposed amendment at section 13 of the Bill implements the recommendation from the Comptroller and Auditor General. It provides for a reserves policy for PIAB. It also provides that PIAB shall remit to the Minister, for the benefit of the Exchequer, any moneys in excess of those authorised to be retained by the Minister, with the consent of the Minister for Public Expenditure and Reform. The Bill specifically provides that the Minister will have regard to the operational, capital and contingency costs of PIAB when determining the sum to be retained. In 2011, PIAB refunded its establishment costs of 6.9 million to the Exchequer. PIAB is independent in the exercise of its statutory functions and the Minister is not permitted in his or her executive function to interfere in any way with the day-to-day operations and functions of PIAB. Section 74 of the Personal Injuries Assessment Board Act 2003 provides a role for the Minister in the provision of funds to the Personal Injuries Assessment Board, PIAB. On the basis that this section implements a recommendation of the Comptroller and Auditor General, as I outlined, I ask the Deputy to withdraw his opposition to section 13. Deputy Billy Kelleher: We may need to revisit this matter on Report Stage. I have not tabled an amendment but I would like to get some clarity. While our concerns do not apply to the current Minister, a future Minister may not be as supportive of the Personal Injuries Assessment Board as the current Minister. Similarly, a future Minister for Public Expenditure and Reform may not be supportive of PIAB. From my reading of the legislation it will be a matter for the Minister, in discussions with the Minister for Business, Enterprise and Innovation, to decide what are appropriate funds for the running of PIAB, both to meet operational and capital costs. I am aware that the Comptroller and Auditor General has made a report. We certainly do 9

10 SBEI not want to have millions of euro in public funds not being used in a fitting manner and there should be remittance to the Exchequer. Who evaluates the cost of running PIAB and ensuring it can operate in a manner we hope it will operate? I make this point in view of the fact that in the event of a downturn, public expenditure could be cut without any real evaluation being done of the impact such a cut would have on the capital investment PIAB requires to operate over a period of time. Should we accept that there may be a role for some form of independent evaluation of the funding required annually for the purposes of running PIAB, both in current and capital costs? Beyond this, there would then be a remittance to the Exchequer? The summary account of a report by the Office for the Director of Corporate Enforcement discussed in the Dáil today is a case in point. We all know that the reason the office did not function was that it was starved of resources. We need to have some independent evaluation as to what is required to run an entity. Assuming always that the Minister for Finance and Public Expenditure and Reform is the person responsible for public funds, it would be reasonable to provide for an independent evaluation to be carried out to determine how much funding PIAB would need to operate and the funding threshold below which the board would be unable to guarantee a service. We may revisit this section on Report Stage to ascertain whether we can provide for an independent assessment that would determine how much funding would be needed to ensure PIAB can function, both in terms of current expenditure and capital investment requirements. Deputy Maurice Quinlivan: Again, I reserve my position. We may return to this section. The reason I want PIAB to retain unspent money is to allow it to do other things. We are talking of changing the book of quantum every three years and PIAB would require funding for this task. As Deputy Kelleher said, a future Minister for Finance may decide not to provide the funding needed. Fees have come down already in recent years and may reduce further. The reason we want PIAB to retain unspent money is to help it work more efficiently. I will withdraw my opposition to the section with the proviso that I may oppose it on Report Stage. Deputy Heather Humphreys: For clarification, the Bill specifically provides that the Minister will have regard to the operational, capital and contingency costs of PIAB when determining the sum to be retained. The Department and PIAB must agree an appropriate level of revenue reserves. The Comptroller and Auditor General has recommended this. The funding it requires is also a matter for the PIAB board, which will establish what it needs. This will be agreed with the Minister of the day. The Office of the Comptroller and Auditor General, which also audits PIAB, has made this recommendation. That is why we are following through on it. Chairman: I thank the Minister. Deputy Quinlivan has withdrawn his opposition to section 13 and both he and Deputy Kelleher have flagged that they may revisit this matter on Report Stage. Question put and agreed to. Sections 14 and 15 agreed to. Title agreed to. Bill reported with amendment. 10

11 4 DECEMBER 2018 Chairman: As the Bill has now completed Committee Stage it is recommended that members submit Report Stage amendments to the Bills Office without delay as Report Stage may be tabled at short notice. I thank the Minister and her officials for attending today s meeting. Message to Dáil Chairman: In accordance with Standing Order 90, the following message will be sent to the Dáil: The Select Committee on Business, Enterprise and Innovation has completed its consideration of the Personal Injuries Assessment Board (Amendment) (No. 2) Bill 2018 and has made an amendment thereto. The select committee adjourned at 7.25 p.m. until 2 p.m. on Wednesday, 5 December