Tort: Damages

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 -          Or 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? ·         Previous 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. ·         A ‘correction’ cannot be made. ·         Few other systems have PSLA. ·         Greater justification is required for compensating non-pecuniary loss as opposed to pecuniary loss because: -          It is not an exact or even approximate replacement -          It is open to fraud and abuse -          It is viewed as less important than financial losses ·         PSLA justified only: -          In the most serious cases -          Involving long-term pain and loss of faculty   Proposed Reforms ·         Pearson Commission (1978) -          No 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. -          By 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 C? →   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