Local authorities and major semi-state companies have warned the Government that plans to allow the District and Circuit Courts award higher damages could force cuts in services.
The Minister for Justice, Mr O'Donoghue, intends to allow the Circuit Court award up to £78,756 (€100,000), rather than £30,000, and the District Court £11,813 (€15,000), rather than £5,000 from next year.
The Government-appointed Motor Insurance Advisory Board has already warned that the move could double motor and personal liability premiums.
The semi-states and local authorities, which largely cover liability claims from their own budgets, urged the Department of Justice five months ago to drop the proposal.
"We would request that further consideration be given to the financial consequences of increasing the limits," a Department of Justice assistant principal, Ms Mary Joy, was told on July 6th.
In a detailed four-page letter, a committee, drawn from the semi-states and local authorities, rejected all of the Government's arguments for change.
Solicitors are already delaying cases in the hope of getting higher awards. "It appears that legal advisers are delaying proceedings until they can avail of the new limits. We suggest that cases that currently average £7,500 will ultimately double in cost after 2002." The last increase in Circuit and District Courts limits in 1992 forced insurance premiums up by 20 per cent over the following year: "That is the highest level of increase on record."
Damages would inevitably rise once the limits were raised. Once that happened, the cost of settling the 90 per cent of cases that never went to hearing would rise accordingly.
"Until the new levels are established, there will be a reluctance to settle at today's values and the extended period of ongoing litigation will add further to unnecessary expense."
The semi-states and local authorities rejected the Minister for Justice's argument that higher Circuit Court limits would take pressure off the High Court and speed up hearings.
"There is now only a matter of months between setting down and allocation of a hearing date, subject only to agreement of the parties. If there are difficulties with the availability of High Court judges, because of assignments to tribunals and other important work, this may indicate the need for a larger number of appointments rather than a radical alteration to the financial limits of the lower courts."
The number of accidents dropped by 21 per cent between 1999 and 2001, but employers' liability insurance rose by 40 per cent. Employers' liability and public liability insurance were now costing businesses 2.73 per cent and 1.95 per cent respectively of payroll.
The Minister for Justice's move would hurt the new State Claims Agency, which has been created to try and cut the size of the State's own annual multi-million pound liability bill, it said.
The agency would be judged by comparison to past results. "However, any success will be reflected in a poor light if levels of comparison and costs increase significantly after 2002." In addition, the higher Circuit Court limit would raise the public's perception about what was "adequate compensation" from the High Court, the committee feared.
Efforts in the past to cut damages, such as the abolition of juries, banning the presence of two senior counsel and better pre-disclosure of documents, had failed.
Because of the possibility of higher losses before the Circuit Court, defendants were likely to require the expertise of more expensive senior counsel, the letter went on.
