Compensation awards to be capped

The House of Representatives yesterday started debating a bill which caps the amount of damages which the courts may award in cases causing disability or death.

The opposition said it was against the bill, with justice spokesman Anglu Farrugia viewing it as an imposition by the executive which amounted to interference in decisions taken by the judiciary.

Justice Minister Austin Gatt, who is piloting the bill (which amends the Civil Code), explained that those who caused damages were required by law to make good the actual losses caused and, in cases of physical incapacity or death, to pay compensation for lost future earnings.

Because the current law was so brief, extensive case law had developed on how damages should be calculated by the courts.

It was clear that the amount of damages being awarded by the courts for partial incapacity or death was rising.

The courts were also tending to interpret the term "heirs" in a wide manner when they considered compensation in cases of death, included potential heirs such as brothers.

There were also variations in court judgments regarding the definition of "dependent." This formerly was taken to mean the wife and children, but in some cases it had since been widened much more.

Furthermore, in recent judgments, the courts had tended to apply these rules even to minors who were killed, say in traffic accidents, and given rights for compensation accordingly.

The government had decided that the time had come to establish guidelines for the courts regarding the definition of terms and in the calculation of compensation.

This was being done because insurance premiums, even of those who made no claims, were being affected by the huge amounts being awarded as compensation and because one could not have different interpretations by the courts on the definition of "heirs."

As in the case of libel suits, this bill would establish the maximum damages which may be awarded by the courts for permanent disability or death.

The total sum payable to a person suffering total permanent disability may not exceed Lm250,000 or any higher sum which the Minister of Justice may establish.

The bill also defined the meaning of dependents and close relatives and how compensation could be calculated in each case.

In terms of this bill, a dependent was "a spouse, descendent or ascendant of the deceased and the brothers and sisters of the deceased who at the time of death were being maintained by the person whose death has been caused."

In such cases compensation shall not exceed Lm250,000, reduced by 30 per cent in view of what the deceased would have required for his own consumption.

Close relatives were defined as being a spouse, descendant, ascendant or brother or sister who had been living in the same household of the deceased but were not maintained by him/her. In this case, total damages that may be awarded may not exceed Lm20,000.

Dr Gatt said this bill borrowed heavily from legislation in several European countries.

He said talks were being held with experts ahead of the publication of guidelines to be considered by the courts in establishing the damages due according to the degree of disability suffered.

The bill lays down that the regulations would establish the factors that are or may be taken into consideration by the courts in computing such damages, taking into account the employment history or prospects of the victim before the accident, his state of health, potential for retraining and rehabilitation and similar factors. They would also establish a percentage scale of partial incapacity in respect of particular injuries suffered by the victim.

Replying, Dr Farrugia said that while it was true that there had been variations by the courts on how compensation was calculated, this bill would create a barrier which the courts may not exceed in their award of compensation.

The Justice Minister was being given a direct power to control a decision by the courts. This was direct interference in the judicial system which the opposition was against.

It felt the courts should remain free to take their decisions according to the circumstances of the cases before them. There could, for example, be a case where the person who suffered permanent total disability was very young and the amount of damages which were deserved would be higher than the maximum established by the minister.

The courts, too, should be allowed to decide who were the heirs and dependents of the deceased. When compensation was viewed as being too high, there were various ways how the people could react and make their views known to the courts.

The courts were also under continuous scrutiny by the Commission for the Administration of Justice.

The proposed amendments were a step in the wrong direction, more so as the courts were going through a sensitive period following certain events last year.

Confidence in the courts could only be built by allowing the members of the judiciary to freely, transparently and without any guidelines, reach their own judgments.

This bill was dangerous and went against the spirit of the constitution. The legislative, the executive and the judiciary should remain separate.

Even if legislation to cap compensation existed abroad, Malta should not follow suit. Although a Lm5,000 limit had been established for libel cases, the courts had always used criteria acceptable to Maltese society and had always been reasonable.

Something would have had to be done had this not been the case. But even so, more subtle messages, rather than direct interference, should have been given.

Dr Farrugia said it was not the courts which had asked for the this bill to be moved. Nor was the subject being raised in public fora. If such messages were being sent by insurance companies, parliament should not be used to accommodate them.

This was dangerous as it would lead to private companies, through their own lobbies, to lead the House to legislate according to what they wanted. The courts had always given their reasons for awarding certain amounts in compensation.

So why had this bill been moved? Was there any sentence which had unduly enriched somebody? Was there any sentence where the court had not considered all factors and made its calculations accordingly? Why was the House now telling judges how they should work out their calculations and up to what amount?

In his speech Dr Farrugia also asked if the regulations being laid down in this bill would also apply to out-of-court settlements.

Dr José Herrera (MLP) spoke on the evolution of case law in the calculation of damages over the past 40 years. Malta was far from the sort of damages awarded abroad, but substantial progress had been made, he said.

Mr Justice Giannino Caruana Demajo recently moved the process further when he argued that it was an anomaly for the heirs of a deceased victim to receive less compensation than when a victim who suffered permanent total disability.

This case was still awaiting appeal, but the government had still gone ahead with this bill which would change the whole scenario.

The attorney general had told him he did not agree with the Caruana Demajo judgment.

Indeed, this bill appeared to have been moved on the prompting of the attorney general as the government faced claims for compensation, such as those by the heirs of the Drainage Department workers killed at Cirkewwa. Contrary to the Caruana Demajo judgement, in terms of this bill, the maximum compensation awarded to the heirs of deceased victims had to be reduced by 30 per cent in consideration of the victim's personal consumption.

Indeed, this bill could be retroactive.

Interjecting, Dr Gatt said this bill would not be retroactive and would not even apply to pending cases.

Continuing, Dr Herrera said the bill could still lead to pressure on the appeal judges.

This bill was shameful. In terms of its provisions, practically no compensation would need to be awarded in the case of, say, spinsters who left no dependents. Was the life of such people worthless? Was this justice? The father of a 14-year-old son killed in an accident may hardly be entitled for any compensation because he was not a dependent. People who were not working, because they were still young or they were unemployed, would be in the same situation if they became disabled in an accident.

Insurance companies, clearly, had a very powerful lobby, but this was vile, more so as premiums paid in Malta were very high and the insurance companies made hefty profits.

Would the heirs of the Sewage Department and Malta Drydocks workers killed at work be faced with the new scenario?

Dr Herrera said this was a "stupid" bill which the government should reconsider, appointing a board of experts for the purpose.

The bill should also lay down that the courts may award moral damages, up to a certain ceiling according to circumstances, where disability did not affect one's employment but still caused hardship.