Introduction

There are various categories of damages that may be sought as a remedy in tortious claims. A successful claimant in a Negligence personal injury action is likely to be awarded damages. Special damages may be calculated precisely (actual loss) and general damages require the court's assessment. There are two types of damages: pecuniary and non-pecuniary and these are further divided into heads of damage. The overriding principle of compensation is to restore the claimant to the position they would have been in if the negligence had not occurred.

Pecuniary expenses

Pecuniary losses capable of being calculated in money terms and can relate to losses suffered pre-trial or post-trial.

Pre-trial loss of earnings

These are special damages. Calculating pre-trial loss of earnings is relatively easy as a precise figure should be available. If a claimant usually worked overtime or regularly received other benefits such as a company car then this should also be figured into the calculation.

• British Transport Commission v Gourley [1956] AC 185

  The figure used for pre-trial loss of earning is net earnings (after tax and national insurance deductions).

• Dews v National Coal Board [1987] 2 All ER 545

  Pension deductions, normally made at source, can be deducted from the gross earnings to determine figure for pre-trial loss of earnings.

Post-trial loss of earnings

These general damages as they are unable to be precisely calculated and in practice are far more complicated to assess. Courts will have to consider whether a claimant is unable to work again due to his injuries or if his earning potential may have been reduced due to a loss of capacity. The court will make an assessment at trial and award one lump sum to the claimant. Therefore the courts have developed a formula to aid in their assessment of future loss of earnings.

• Multiplicand

  The multiplicand is the court's assessment of the claimant's net annual loss. This is determined by the gross annual loss up to the trial, which is modified by any potential increase, for example if promotion was likely. Then from the gross annual figure, the court will deduct tax, national insurance and pension contributions. This figure will be the net annual loss (multiplicand).

• Multiplier

  The multiplier is the period of the future loss. If a claimant is unable to work after the accident, the number will be based on the pre-accident working life expectancy (retirement age). The multiplier is produced by taking this figure and converting it using Ogden tables (actuarial tables based on risk factors). The multiplier is taken from the 2.5% column. The conversion is used to try to avoid a claimant being overcompensated because if he received the lump sum it could be invested and would attract high interest. In reality a claimant would not have had this potential to make money from the investment prior to the accident.

• Calculation

  multiplicand X multiplier = future loss of earnings

Lost years

If a claimant's life expectancy has been shortened by the accident then future loss of earnings are adjusted.

Therefore, if a claimant's life expectancy has been shortened by the negligence then loss of earnings can be recovered for lost years. These will be subject to a deduction representing an amount that the claimant would have spent on himself. This deduction is usually 25% for a claimant who is married with dependent children and 33% for a claimant with no dependants. However, this deduction may be altered on the facts.

• Calculation

  Therefore, the multiplier and multiplicand are assessed in the same way as post-trial loss of earnings. A two- stage calculation is then made:

  multiplicand X multiplier (proportion for years claimant will survive)
  +
  multiplicand (reduced by amount claimant would have spent on himself) X multiplier (remaining proportion: lost years)
  = future loss of earnings

Other considerations in loss of earnings calculations

In addition to tax, national insurance and pension contributions which are deducted from the net annual loss, further deductions may be made from the loss of earnings claim: Sums paid to the claimant by their employer, under a legal obligation, for example statutory sick pay. Tax rebates or tax holidays received due to the claimant not receiving his full salary. Redundancy payments received by the claimant. If the claimant has spent time in hospital deductions should be made for daily living expenses he has saved (under the Administration of Justice Act 1982 S5).

There are also sums which the claimant may have received which do not need to be deducted: Ex-gratia payments made by his employer (if the employer is not the tortfeasor), State retirement pension or insurance monies received.

Loss of earnings of children

Assessing a figure for loss of earnings of a child claimant is very difficult. In some cases the courts have taken the approach of looking at the claimant's family circumstances in order to determine future loss of earnings.

• Connolly v Camden & Islington Area Health Authority [1981] 3 All ER 250

  Facts:

  The plaintiff was injured at the age of five and would never be able to earn a living.

  Issue:

  How should loss of earnings be calculated?

  Held:

  The court used the parent's earnings as an indicator of the plaintiff's earning capacity.

• Cassel v Riverside Health Authority [1992] PIQR Q168

  Facts:

  The plaintiff, an eight year old, was injured at birth and would be able to not work in his lifetime.

  Issue:

  How should loss of earnings be calculated?

  Held:

  The Court of Appeal used a multiplicand over double the national average wage, based on the pliantiff's family history (high academic achievers and successful professionals).

  Rose LJ: .. [the plaintiff is likely to possess] legal, artistic and entrepreneurial genes....

Using family circumstances can be seen as an unfair approach and the courts have developed an alternative method of calculating potential earnings.

• Croke v Wiseman [1982] 1 WLR 71

  The court used the national average wage to calculate the child's loss of future earnings.

Medical expenses

A claimant may claim for any medical expenses, including cost of adaptations or aids and travel expenses. Pre-trial medical expenses, will be available to the court and therefore can be easily totalled and awarded as special damages. General damages will be awarded for the post-trial medical expenses. These will be calculated by multiplying the annual cost of treatment (multiplicand) by the number of years the treatment will be required (multiplier).

• Poh Choo v Camden & Islington Area Health Authority [1979] 2 All ER 910

  Under the Law Reform (Personal Injuries) Act 1948, a plaintiff has the right to choose private healthcare and claim the cost in damages, even when the NHS provides equivalent treatment.

• Law Reform (Personal Injuries) Act 1948

  S2(4): In an action for damages for personal injuries... there shall be disregarded, in determining the reasonableness of any expenses, the possibility of avoiding those expenses or part of them by taking advantage of facilities available under the National Health Service Act 1977...

Third party losses

A third party have been required to provide services for the claimant, due his incapacitation, for example as a carer or more generally household chores. The claimant is able to recover the value for these services.

• Schneider v Eisovitch [1960] 2 QB 431

  Facts:

  The plaintiff was hospitalised after an accident in which her husband was killed. Two of the victim's family members travelled to France to assist the plaintiff and she claimed for their expenses as part of her damages.

  Issue:

  Could the family member's expenses be recovered?

  Held:

  The expenses could be recovered. The expenses were reasonably necessary as a result of the accident and were also for reasonable amounts.

However, if the services are provided by the defendant then the cost cannot be recovered.

• Hunt v Severs [1994] 2 All ER 385

  Facts:

  The plaintiff was cared for by her husband, the defendant.

  Issue:

  Could the plaintiff claim for the value of the voluntary services?

  Held:

  The House of Lords found that awards made for the voluntary care were for the purpose of compensating the voluntary carer. It is contrary to public policy to allow a plaintiff to recover money for services rendered by the defendant.

The decision in Hunt v Severs [1994] has been criticised as there is no obligation on the plaintiff to pay the money to the third party, unless they had a contract to do so. A third party would have no cause of action against the defendant themselves.

The court will have to determine an appropriate amount payable for third parties, whether it is a professional carer or relative that provides the assistance.

• Donnelly v Joyce [1973] 3 All ER 475

  Facts:

  The plaintiff was 6 years old at the time he sustained his injuries in a traffic accident caused by the defendant's negligence. He required care from his mother and a number of medicial aids.

  Issue:

  How should the plaintiff's loss be valued?

  Held:

  The plaintiff's loss is the need for the items and these should be valued at the proper and reasonable cost of supplying those needs.

  Megaw LJ: .. The loss is the plaintiff's loss. The question from what source the plaintiff's needs have been met, the question who has paid the money or given the services, the question whether or not the plaintiff is or is not under a legal or moral liability to repay, are...all irrelevant. The plaintiff's loss... is not the expenditure of money... to pay for the nursing attention. His loss is the existence of the need for... those nursing services... [the plaintiff] is entitled to recover damages in respect of the fair and reasonable cost of the special attention, necessitated by the defendant's wrongdoing....

• Housecroft v Burnett [1986] 1 All ER 332

  Facts:

  The plaintiff suffered severe injuries in a car accident, caused by the defendant's negligence. The plaintiff's mother gave up her paid employment in order to provide substantial care for her daughter.

  Issue:

  How should damages for the care provided be calculated?

  Held:

  There are two extremes for valuing the services of a third party in these circumstances: awarding the full commercial cost for supplying the services or awarding nothing. The value of the services of a third party who gives up paid employment to attend to the plaintiff would be either the value of the loss of earnings to a maximum of the value of the commercial rate for providing the services.

  O'Connor LJ: .. in cases where the relative has given up gainful employment to look after the plaintiff, I would regard it as natural that the plaintiff would not wish the relative to be the loser and the court would award sufficient to enable the plaintiff to achieve that result. The ceiling would be the commercial rate....

Loss of earning capacity

Claimants who are able to continue working but have suffered a continuing disability may have difficulties if they need to seek new employment.

This head of damage cannot be awarded if loss of future earnings is awarded. If a claimant is not working by the time of trial or is already in a lower paid employment he will be compensated under the loss of earnings head of damage.

Other pecuniary expenses

Any reasonable loss suffered due to the defendant's wrongdoing may be compensated. Therefore, a claimant may include pecuniary expenses such as clothing, damaged at the time of the incident.

Non-pecuniary expenses

Non-pecuniary losses cannot be mathematically calculated in money terms. Clearly in personal injury claims it is not possible to restore the claimant to his position prior to the incident. Therefore, the aim of damages for non-pecuniary losses is to compensate the claimant.

Pain and suffering

The pain and suffering head of damage covers past, present and future: pain and physical and mental anguish. This may include fear of future treatment or anguish caused by knowing that your life expectancy has been shortened.

Loss of amenity

This is a broad head of damage to aiming to compensate the claimant for loss of enjoyment of life. The areas that may be compensated include loss of senses, reduced marriage prospects and inability to pursue interests or hobbies. The amount is calculated on the basis of the degree of deprivation. Therefore, a court will take into account the claimant's lifestyle prior to the incident and a larger award is likely to be made to those who were previously very active.

Quantification

There is no quantum for assessing non-pecuniary damages and therefore, the courts will make an award based on the facts and considering relevant case law.

Interest on damages

The courts have always exercised a discretionary power to award interest on damages and there is now some statutory guidance on the matter.

• Senior Courts Act 1981

  35A Power of High Court to award interest on debts and damages

  35A(1): Subject to rules of court, in proceedings (whenever instituted) before the High Court for the recovery of a debt or damages there may be included in any sum for which judgment is given simple interest, at such rate as the court thinks fit or as rules of court may provide, on all or any part of the debt or damages in respect of which judgment is given, or payment is made before judgment, for all or any part of the period between the date when the cause of action arose and -
  35A(1)(a): in the case of any sum paid before judgment, the date of the payment; and
  35A(1)(b): in the case of the sum for which judgment is given, the date of the judgment.

  35A(2) : In relation to a judgment given for damages for personal injuries or death which exceed £200 subsection (1) shall have effect -
  35A(2)(a): with the substitution of 'shall be included' for 'may be included'; and
  35A(2)(b): with the addition of 'unless the court is satisfied that there are special reasons to the contrary' after 'given', where first occurring.

Therefore, under the SCA 1981 S35A, interest must be awarded on damages recovered for personal injury claims over £200 unless there are special reasons to the contrary.

Case law provides principles for determining the rates of interest for different heads of damage.

• Jefford v Gee [1970] 2 QB 130

  Facts:

  The plaintiff suffered several minor injuries and a badly broken leg in a road traffic accident. The plaintiff's leg injury required numerous operations and he did not regain proper use of his leg.

  Issue:

  How should interest be calculated?

  Held:

  The court explained the principle underlying interest payments and set out guidelines for interest awards.

  .. Interest should not be awarded as compensation for the damage done. It should only be awarded to a plaintiff for being kept out of money which ought to have been paid to him...

  .. special damages should be dealt with on broad lines... In all ordinary cases we should have thought it would be fair to award interest on the total sum of special damages from the date of the accident until the date of trial at half the rate allowed on the other damages...

  .. [for non pecuniary losses] he should be awarded interest on the compensation payable. But such interest should not run from the date of the accident: for the simple reason that these misfortunes do not occur at that moment, but are spread indefinitely into the future: and they cannot possibly be quantified at that moment, but must of necessity be quantified later.... interest on this item (pain and suffering and loss of amenities) should run from the date of service of the writ to the date of trial. This should stimulate the plaintiff's advisers to issue and serve the writ without delay - which is much to be desired. Delay only too often amounts to a denial of justice...

• Cookson v Knowles [1979] AC 556

  Interest on special damages should be awarded at half the investment rate for money paid into court, from the date of the accident to the date of trial.

• Wright v British Railways Board [1983] 2 AC 773

  Interest on non-pecuniary loss should be awarded at 2%.

Therefore, interest on special damages should be awarded at half the short-term investment rate, from the date of the accident to the date of trial. Interest on damages for pain and suffering and loss of amenity should form date of service of proceedings to date of trial at the rate of 2%.

Provisional damages

Damages in personal injury claims are awarded in a lump sum at the date of trial to cover the claimant's past, present and future losses. This may result in the claimant being under or over compensated. Therefore, the courts may award provisional damages in some cases.

• Senior Courts Act 1981

  As amended by S6(1) of the Administration of Justice Act 1982.

  S32A Orders for provisional damages for personal injuries

  S32A(1) This section applies to an action for damages for personal injuries in which there is proved or admitted to be a chance that at some definite or indefinite time in the future the injured person will, as a result of the act or omission which gave rise to the cause of action, develop some serious disease or suffer some serious deterioration in his physical or mental condition.

  S32A(2): .. any action for damages to which this section applies in which a judgment is given in the High Court, provision may be made by rules of court for enabling the court, in such circumstances as may be prescribed, to award the injured person -
  S32A(2)(a) damages assessed on the assumption that the injured person will not develop the disease or suffer the deterioration in his condition; and
  S32A(2)(b) further damages at a future date if he develops the disease or suffers the deterioration.

Therefore, an order for provisional damages may be made if there is a chance the claimant's condition may seriously deteriorate or a serious disease may develop as a result of the original tort (S32A(1) SCA 1981). Provisional damages may be awarded if the judge awards the damages at trial as if the disease or deterioration will not occur (S32A(2)(a) SCA 1981) and the claimant returns to court for further award of damages because the specified deterioration or disease occurs (S32A(2)(b) SCA 1981).

• Hurditch v Sheffield Health Authority [1989] 2 All ER 869

  A court can set a time limit within which the claimant must return to court for further award of damages, if the specified deterioration occurs.

• Willson v Ministry of Defence [1991] 1 All ER 638

  Provisional damages can only be awarded if there is a clear and severable risk, a continuing deterioration is insufficient.

• Johnston v NEI; Grieves v FT Everard [2007] UKHL 39

  Facts:

  The claimants had been exposed to asbestos due to the defendants' negligence. The claimants developed pleural plaques due to this exposure. Pleural plaques have no symptoms and do not cause other asbestos related diseases. However, pleural plaques may indicate presence of fibres in the lungs, which may independently cause life threatening diseases. Therefore, the claimants suffered severe anxiety and depression.

  Issue:

  Could provisional damages be awarded?

  Held:

  The House of Lords ruled that provisional damages could not be awarded where the claimant had failed to establish a cause of action.

  Lord Hoffman: .. Proof of damage is an essential element in a claim in negligence and in my opinion the symptomless plaques are not compensatable damage. Neither do the risk of future illness or anxiety about the possibility of that risk materialising amount to damage for the purpose of creating a cause of action, although the law allows both to be taken into account in computing the loss suffered by someone who has actually suffered some compensatable physical injury and therefore has a cause of action. In the absence of such compensatable injury, however, there is no cause of action under which damages may be claimed and therefore no computation of loss in which the risk and anxiety may be taken into account....

Periodical payments

Periodical payments provide a more flexible way of paying damages, where payments are made at regular fixed intervals based on the claimant's current circumstances. Periodical payments avoids difficulties of a claimant investing the lump sum badly and losing the money and makes the court's assessment easier as the future costs do not need to be so accurately predicted. However, periodical payments carry huge administrative costs and leave defendants and insurers uncertain about their liability.