The Legal Pad

The sixteenth chapter of the laws of Malta, is to be amended once again! This time round it will be the laws regulating the award of damages that will be changed. Bill No. 78,  is currently before the House for consideration, and has been called the Civil Code (Amendment) Act and is the umpteenth legislative instrument to shake the foundations of our civil laws in less than four years.

Akin to any amendment to the Civil laws, no matter how minor, this Bill will (oh, dear!), once promulgated, have a profound effect on the manner of how damages and their quantum will be awarded by our Courts. For the less informed of you, damages consists of those sums of money that a person can recover from a third party who has caused him some form of harm. In some jurisdictions these are sometimes known as personal injury or worngful death cases. A brief explanation can be found here and this is an interesting article on personal injury, though for a case in Malta, one ought to consult a Maltese legal firm.

But I digress…so, back to the amendments! The most obvious and striking change being contemplated to the current state of the law is the complete and total ablation of the Court’s discretion in assessing the amount of damages to be awarded in any given case. The law, as it stands to-day, has permitted the Court to utilise a formula, allowing potentially limitless awards, in what consisted in the loss of future earnings (lucrum cessans)

The sum to be awarded in respect of such incapacity shall be assessed by the court, having regard to the circumstances of the case, and, particularly, to the nature and degree of incapacity caused, and to the condition of the injured party – Art. 1045 (2)

 No particular formula was ever used to compute actual loss arising from the incident causing damage (damnum emergens) - except a mere addition of the costs incurred, up to the time of the suit. However, in Butler vs Heard (Civil Appeal – Superior jurisdiction, 22/12/1967), the Court provided posterity with a rational and scientific method of assessing and liquidating, future loss of earnings. The learned judges confirmed the method used by the Court of First Instance, as one “…which is substantially just and practical“. They did go a step further by modifying the  variables included in the formula.

Thus, the age at which the injured party suffered the disability, the extent, in percentage terms of the disability itself, the injured party’s current earnings and his possibilities of future earnings prior to the incident, his (working) life expectancy, and chances and changes in life, are all factors included in the formula used to calculate this form of loss. Additionally, the Court considered the payment of a lump sum to be a mitigating factor, the rationale being that depositing that money with a bank would attract a sizeable interest. And the discount given is, to date, rather generous – 20% off the sum rewarded. At the risk of causing H.E. Justice Mamo to turn in his grave, I have to say that I am in complete and utter disagreement with this philosophy.

First off, who is to say, that the beneficiary would indeed deposit this money in a bank account, and who are we to dictate that he does. Furthermore, following the global banking crisis, generous interest rates figure in the bank statement only when they are to the institution’s favour – i.e. on loan or overdraft facilities! Otherwise, investing your money in a bank hoping that it’ll mature into anything worth more than duck manure, is quite simply foolish.

Now, with these amednments to the lw, at least part of the wisdom of this judgement, will be thrown out of the proverbial window. The reason is this. Capping is to be re-introduced. And I say ’re-introduced’ because the notion of capping damages is not exactly new. In fact it was there before the Butler case was decided, and the learned judges presiding in this landmark judgement had lauded the fact that the limit had been removed, albeit commenting that they were hoping for further and early reform of the law.

…it was only in 1962 that the limit of £1,200, previously established for damages due in respect of  future loss of earnings arising from negligence, was removed - a limitation this, that as this Court has frequently remarked, impeded the proper exercise of  justice with the injured party or his family…

Now, after almost fifty years, the “new” amendments have re-introduced capping once more. This time the amount of money that can be awarded to the injured party, his dependants or heirs, cannot exceed € 600,000. A paltry sum of money, particularly considering some recent rewards reaching into the million Euro mark already. There is one saving grace though – for the second time in Maltese law, moral damages have been introduced as non-pecuniary losses, which are again capped at  further € 600,000  [maximum non-pecuniary loss for heirs or dependants is set at € 200,000]

So, the main difference between the pre-1962 statute and the amendments as proposed, is that the Minister responsible for Justice together with the Finance Minister, are empowered to make regulations from time to time, and thereby change, by presumably increasing, the maximum award possible. There is, of course, no set date when these regulations have to be enacted. Neither is a period established for a mandatory review – which is all somewhat disheartening, seeing as how lethargic the administration can be at times.

Nor are there any transitory provisions, so we don’t know exactly when the new laws are to apply – this will be cause for many  an interesting discussion, with a lot of time wasted hotly debating and arguing whether the new laws should apply strictly to newly filed cases or whether they also ought to apply, across the board, to those which are still pending or whether still they ought to apply to those which though not as yet pending have still not been time-barred – something this which would create an immediate lagal paradox.

In any case, this Bill is, as I said previously, currently before Parliament for consideration (Ha!), and it will soon form part of our laws – so brace yourselves people, for a few heart wrenching judgements!