Tort: Damages

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The indemnity

principle

The

object of an award of damages is to give the claimant full compensation for the

damage, injury or loss that D’s tort has caused him.

Damages

awarded only to compensate the claimant, not punish the defendant.

Putting

C back into the position they were in prior to the tort occurring (Lim

Poh Choo).

Law Reform

Issues

Excessively

complex and unrealistic

Artificial

formulae used in calculations

Too

much compensation?

Wasteful

and overlapping with other systems

Trivial

injuries compensated

Too

little compensation?

Lasting

for too short a time?

Artificiality

of award

Lump

sum instead of a pension

Statutory

Reforms

Damages

Act 1996

Courts

Act 2003

Power

to replace lump sum with periodical payments

Distinctions

used in itemising damages

Special Damages

General Damages

Past loss of earnings

Past cost of care

Past expenses

Other past financial loss

(Must

be specially pleaded)

(Naturally

arising but not precisely quantifiable)

Future loss of earnings

Future cost of care

Future expenses

Non-pecuniary loss (PSLA)

(No

need to be specially pleaded)

Factors

affecting assessment

Intensity of

pain

The

‘thin skull rule’ (Mullins)

Level of insight

Vegetative

state: full compensation for loss of amenity but none for pain and suffering: West

Age

Law

Commission argued that age should be irrelevant

Children/older

people suffer less?

Reduced life

expectancy

Either

more compensation because C knows of earlier death

less compensation because loss of amenity for shorter time?

Pre-injury

hobbies and enjoyment of life

Offset damages

for pre-existing condition

Failure to

mitigate loss

Failure

to take reasonable steps to reduce the effects of the injury, e.g. refusal to

undergo medical treatment

Loss of marriage

prospects

Gender

Women

get more than men for facial disfigurement

Circumstances of

injury

Irrelevant Factors

Wealth

Consider,

however, loss of lifestyle, amenity, relevant hobbies etc.

Inability to use

damages

How is it

determined in practice?

settlements (own experience)

Court

judgments

Use

of reference books

Kemp & Kemp:

The Quantum of Damages

Judicial College

Guidelines for the Assessment of General Damages

Atiyah’s View

PSLA

is a secondary form of compensation.

‘correction’ cannot be made.

Few

other systems have PSLA.

Greater

justification is required for compensating non-pecuniary loss as opposed to

pecuniary loss because:

is not an exact or even approximate replacement

is open to fraud and abuse

is viewed as less important than financial losses

PSLA

justified only:

the most serious cases

Involving

long-term pain and loss of faculty

Proposed

Reforms

Pearson

Commission (1978)

recovery unless effects of injury continue for at least 3 months after the

accident

Effect

overall = reduce damages by 20%

Law

Commission Report (1999)

Rejected

any threshold because:

→

Might

encourage exaggeration of symptoms

→

Exclusion

for when pain is at its most intense

→

Minor

injuries with no pecuniary loss would result in no damages

Proposed

to increase all awards over £3,000 by between 50 and 100% because damages had

failed to keep in pace in inflation over the last 30 years.

Proposals

not enacted because they would:

→

Add

£1 billion a year to the total tort bill

→

Increase

liability premiums

→

Create

an exceptional cost for the NHS.

Lewis,

‘Increasing the Price of Pain’ (2001) 64 Modern Law Review 100

Heil v Rankin is by no means

radical. This case only affects a small minority of personal injury claims

which involve serious injury.

Reasons for an increase in damages

‘Fair,

reasonable and just’

Accords

to society’s views as a whole (voice of the people surveys)

Results

in ‘proportionate’ awards

Accident

victims now live longer so PSLA thus lasts longer

Problems

Emphasises

the disproportionate importance of PSLA in the award of damages

→

The

Law Commission notes that PSLA is a major cause of excessive cost, inefficiency

and injustice of tort system.

Contrasts

with corrective justice.

Calculating the limited increase in damages

The

Law Commission proposed a large increase in damages for PSLA

→

Awards

over £3,000 should be doubled.

contrast, Heil v Rankin makes no change

in damages for non-pecuniary loss assessed at, or below, £10,000.

Still,

there is no statutory cap on damages, as in parts of the USA and in Australia.

There

is no formal table yet of compensation based upon a percentage assessment as

being developed within the European Union.

Justifying the increase

Appropriate

for the courts to reconsider the level of damages, rather than Parliament.

Studies

include:

→

Office

of National Statistics (ONS) concerning public opinion about the level of

damages.

→

Hazel

Genn’s 1994 general report for the Commission’s damages project entitled ‘How

much is enough?’

These

studies were criticised by the defendants in Heil v Rankin.

The discount rate

Highlighted

in Wells v Wells.

Law

Commission, Damages for Personal Injury: Non-Pecuniary Loss (1995, Consultation

Paper No 140), pages 78 – 86

Some

uniformity and consistency in awards is achieved.

There

is a scope for assessments being highly particularised and flexible.

Awards

should be standardised to some degree.

PSLA

has no market value so is difficult to quantify.

Comparing

awards seems to be the most straightforward method for converting the

claimant’s loss into money.

Objectives

of Law Commission

Fair

compensation

Consistency

and uniformity

Predictability

Comprehensibility

Workability

and simplicity

Abolishing

PSLA

For

Against

Moral offensiveness

No sum can adequately compensate

The cost

Damages are a barrier to rehabilitation.

Only awarding damages for pecuniary loss would

discriminate unfairly against those who do not suffer any, or substantial,

loss of earnings e.g. children, the unemployed.

PSLA does not compensate for the trauma of living

in constant pain, but it ‘sugars the pill’.

Pecuniary Loss:

Medical and Care Costs

Costs that can

be claimed as ‘reasonable’

Therapy and non-therapy benefits

Cassel

C wanted to have a swimming pool built

in their house to increase their enjoyment of life.

Held: Not justified therapeutically,

claim refused.

McMahon

Aromatherapy used for pain relief. Despite

an expert testifying that it was of no medical value, claim succeeded.

Duty of local authority to

provide care – can affect what is ‘reasonable’

Smith v Lodge

Damages are reduced to take account of

free provision.

Private medical care costs are

not ‘unreasonable’ only because NHS care is also available

Law Reform: Personal Injury Act 1948, s.2(4): private care costs can be

obtained even if facilities just as good on the NHS (Rialas)

This was criticised by the

Pearson Commission.

Law Commission rejected proposal

because too uncertain.

Future costs cannot be claimed if

unlikely that private treatment will in fact be sought (Woodrup)

Assessing care

costs: Relatives who provide care for free

Donnelly v Joyce

Claimant can recover cost of:

Services voluntarily given by

loved one in caring for C from motives of affection or duty.

Even though no charge is made for

the care.

How much?

Wages lost from job (maximum –

market cost of supplying nursing care)

Possible 25% reduction if carer

is untrained/does not pay tax or NI (Evans)

Reduction may be avoided:

→ Care

is continuous (day and night)

→ Carer

has nursing skill

→ Care

is especially demanding

What if carer is the tortfeasor?

Hunt v Stevens

No recovery for cost of care because

otherwise tortfeasor would end up paying twice.

Advice to claimants

Purchase outside nursing care

Offer D a deal – pay for care

from the tortfeasor OR professional carers will be employed.

Civil

Law Reform Bill 2010

Still refuse recovery for D’s

past care to trial/settlement

But allow recovery for future

care provided by D.

Expenses other

than care

Home help

Travel

E.g. taxis, adaptation of car,

purchase of special vehicle.

Housing costs

Modifications to the home

Other costs of disablement

Cost of administering fund

By Court of Protection

For claimants mentally unable to

manage affairs (Lister)

Divorce costs

No recovery – public policy not

to encourage a marriage breakdown.

Pecuniary

Loss: Loss of earnings

Importance

Past loss earnings comprise a

major part of past financial losses – 24% of all damages.

Predominance of small claims in

tort.

Distinctive features of tort

compensation compared to other systems.

Atiyah’s Criticisms of Two Tort Principles

100% replacement of lost earnings

Contrast to the social security and

private insurance rules

→ ‘Waiting

days’ for benefit

→ Capped

flat rate recovery with no earnings – related payments.

The earnings-related principle

The reliance upon maintaining

existing income

→ Should

tort recovery be capped to encourage high earners to take out private

insurance?

→ Or

should tort continue to maintain some claimants at a higher standard of living?

The expectation of obtaining

higher income

→ Should

claimants expect to be maintained by tort as an income which they have yet to

attain? For the rest of their lives?

→ Even

when the majority are unable to claim?

Problems

Need to forecast the future

Prediction of what would have

happened to C if the accident had not happened:

→ Future

job

→ Level

of earnings

→ Tax

What is now likely to happen to

→ Earnings

→ Risk

of losing job

→ Retirement

→ Recovery

→ Complications

→ Level

of care (costs)

→ Life

expectancy

Need to reduce the cost of future

losses to a present day value

Investment return

Three conceptual

tools

Multiplicand

= net annual

loss

Deductions

Tax

NI contributions

Expenses, e.g. travel to and from

work

Residual earnings

Additions

Estimate for prospects of

advancement/promotion

But no increase for rise in

standard of living cost

Where children are injured:

Estimate of future prospects (Cassel)

Multiplier

= number of years of loss

Deductions

The ‘contingencies of life’

Uncertainty of what might have

happened

No deductions for possibility

of premature death

‘Conventional’ reductions by

judge without reason

Present day value of damages

C is obtaining damages earlier

than would have received wages

Presumption of investment

Discount Rate

Currently at 2.5%

C is expected to invest the

lump sum payment

Reform

The

Law Commission recommended that the discount

rates should not be based on returns from risky investments. Instead, returns

of safe, index-linked government securities should be taken into consideration.

Wells v Wells

Moved away from 4.5% discount

rate to one based on index-linked government securities.

Damages

Act 1996

Discount rate lowered to 2.5%

Introduction

Non-Pecuniary loss

pecuniary loss

Future Pecuniary Loss

Tort: Damages

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