Introduction Non-Pecuniary Loss PDF

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Introduction + Non-Pecuniary Loss Damages Introduction: Differing perspectives upon damages  Damages non examined sufficiently in traditional tort texts o One chapter only in contrast to the many liability chapters.  Different perspectives upon damages: o (a) Practitioners:  Two basic questions in each tort claim:  (1) is there liability? And  How much damages (quantum)?  Many solicitors consider quantum more often than liability  Study reveals liability to be an issue in only 20% of settled cases.  By contrast, damages is very often the key issue. o (b) The General Public: the perception of tort  Tort victims as “pools” winners – portrayals by the media.  Misleading accounts about –  How much money tort claimants actually receive.  How that money is spent.  How disabled people are treated by the law.  Contrast the average tort payments – not very high damages awarded 1977 £1,000 =Average settlement out of court. = Median court award £1,800 1995 £2,500 = Half cases settled for less. 2011 £5,000 = Half conditional Fee cases settle for less. = 70 Day loss of average pay 2014 £2,300 = Average for PSLA settled within ‘portal’ Contrast £60,000 = Average cost of settling each clinical negligence case for other than brain damage in 1999/00/ o (c) Academic interest:  Damages distinguish tort from other compensation systems – only in tort can you get full earning compensation.  Full compensation=  Earnings related payments.  Private medical costs included.  Pain and suffering compensated.  Lump sum payments made, rarely periodical payments.  Need to appreciate theoretical philosophical bases for compensation to contrast what tort achieves in practice  What is the end result? o (d) Law Reform Issues:  Excessively complex and unrealistic  Artificial formulae used in calculations  Too much compensation?  Wasteful and overlapping with other systems.  Unnecessary compensation for trivial injuries  Too little compensation?  Lasting for too short a time.  Failing to take into account labour market difficulties.  Artificiality of award all in one lump sum instead of a pension. 

Introduction: A neglected area of law?  1978 – Despite Pearson’s 100 pages of recommendations on damages but little was then done.  1990’s Nothing came from Law Commission reform reports o Some important statutory changes (not via law reform bodies)  Damages Act 1996 & Social Security Recovery of Benefits Act 1997  Courts Act 2003 = Power to replace limp sum with periodic payments. o Some important case law  Egs Wells v Wells (1998).  Heil v Rankin (2000)  2000 – Civil Law Reform Bill abandoned o Various Law Commission proposals shelved.  2012-13 – Ministry of Justice Consultation about discount rate o No changes yet made. Introduction: Heads of Damage  Distinction Used in Itemising Damages (Misleadingly, practitioners often refer to ‘general damages’ to mean only non-pecuniary loss).

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Relative Importance of Heads of Damages in Tort

Source: Pearson Commission Report 1979 Figures n brackets refer only to “serious injuries = more than £25,000 In 2002 the NHA estimated 83% of claim over £250k = Future loss

Non- Pecuniary Loss – What is the award for?  = Intangible personal losses

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o e.g. pain and suffering and loss of function. o Not the financial losses e.gs costs of care or loss of earnings = PSLA = Pain, suffering and loss of amenity “A foot, a function or a feeling?” (tried to argue lawyers don’t break it down into its constituent elements, it is a combination of these three things) Apply too The injury itself = Foot o Loss of amenity = Function (functional aspect resulting from the anatomical loss) o Pain and suffering = Feeling (Pain and suffering from the loss) But the court does not subdivide the award o Therefore often difficult to itemise the award into its constituent parts.

Non- Pecuniary Loss: Factors affecting assessment  1. Intensity of pain o Difficult to assess the severity and impact of pain – how bad is it? o More and more technology are being used to measure loss of amenity but they are yet to his the UK legal profession – mainly used in US o Damages increased where pre-existing anxiety and depression make pain and suffering worse (similar to thin skull).  Mullins v Grey  2. Level of insight o How much do you know that you have suffered these losses? o Lower damages if only limited appreciation of loss o But how much for a permanent vegetative state?  Full compensation for the loss of amenity  But nothing for pain and suffering – West v Shepherd (1964) – Permanent vegetative state should there be awards for pain and suffering and HL sit on the fence – saying if you are in a PVS they think that person doesn’t feel anything os they will not provide compensation for pain and suffering as he doesn’t feel pain but compensation will be provided for loss of amenity.  Reform proposed = No recovery (Pearson & Law Commission – but not enacted). – Proposed no compensation (this is not what we have)  3. Age o Law Commission argue age should be irrelevant but  Do children appreciate and suffer loss?  Do older people suffer less than younger?  Nutbrown v Sheffield Health (1993) PSLA halved for 72 year old  PSLA for 72 year old was halved because he is essentially nearly dead anyway.  4. Reduced Life Expectancy o Either more compensation because knows of early death. o Or less because loss of amenity is for a shorter time?  5. Pre-injury hobbies and enjoyment of life o The more active will get more damages.  Contrast the skier with the couch potato  6. Offset damages for pre-existing condition o Condition that would materialise in the future anyways. o e.g reduce damages because of continuing effect of the illness which was being treated before the act of clinical negligence.  7. Failure to mitigate loss. o Duty to minimize the lost by dealing with someone else – have to try and reduce the effects of your injuries as far as is reasonable o = To take reasonable steps to reduce the effects of the injury.

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o E.g. reduce damages where C unreasonably refused medical treatment where there was no substantial additional risk to him, so damages were reduced – Selvanayangan v University of the West Indies (1983) 8. Loss of marriage prospects and companionship, o There is a sort of racial aspect on this as claimants on certain communities in the UK especially is women are concerned, there is a strong racial bias. 9. Gender o Women get more than men for facial disfigurement.  Highest award in 2004  Women = £78,000  Men = £48,000  Is sex discrimination lawful? 10. Circumstances of injury o Contrast for example –  A) traumatic amputation with  B) medical negligence during an operation under anaesthetic

Non- Pecuniary loss: Irrelevant Factors  1. Wealth o Rich person’s loss is not compensated by existing wealth. o Rich person does not get more damages because money means less to those already rich. o Although the rule is that wealth is irrelevant, in practice it might affect arguments based on loss of lifestyle, amenity, relevant hobbies etc?  2. Inability to use damages o I.e. stuck in hospital the rest of their life o The fact the claimant will not use the money is irrelevant. Non- Pecuniary Loss: How is award determined in practice?  A) Previous settlements o Solicitors own claims files and experience. o Experience of other office colleagues. o Local practice of insures? o Barrister’s opinion  But may not be as familiar as solicitors and insurers with patterns of settlement out of court.  Especially in lower value cases.  B) Court judgements and use of reference books o Kemp & Kemp – The Quantum of Damages o Goldrein & de Haas – Personal Injury Litigation Service. o Judicial College – Guidelines for the Assessment of General Damages  Booklet of 87 pages first published in 1992  Gives upper and lower limits of PSLA damages for different injuries.  Written by judges + practitioners + academics/  Judicial College = Trains judges. Judicial college guidelines  Guidelines for the Assessment of General Damages in Personal Injury Cases  Booklet revised ever y years or so o 1992 – 1st edn o 2013= 12th edn  PSLA damages increased by 10% from April 2013 to compensate for changes in rules on costs.  New cases must be assessed with comparable injuries listed o E.g compare case with the maximum award of £326,000 (i.e. total brain injury)

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Other examples are:

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Example of Level of Detail - £11,110 to £20,185 for: o “Neck injuries – moderate – involving soft tissue or wrenching-type injury and disc lesion of the most severe type resulting in cervical spondylosis, serious limitation of movement, permanent or recurring pain, stiffness of discomfort and the possible need for further surgery or increased vulnerability to further trauma.” Not a statute – but the guide has a similar effect o Contrast North American. Australian where they have statutes setting maximum awards Greater precision results from this quasi-legislation. Buto 1. Interaction of multiple injures can make assessment difficult. o 2. Sometimes there are fine dividing lines and difficult to apply them o 3. Guidelines can be departed from in appropriate cases

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Does tort really involve a much more individual (subjective) assessment of compensation compared to social security?  Comparison with social security industrial injury scheme o Scheme’s objective assessment o Based on a table of anatomical injuries = % of disablement  Eg index finger = 14% loss = £x a week  Tort said to be more personal and less mechanical  But does tort really involve a subjective assessment? – No there is no subjectivity as old academic history used to imply. Only in the high value cases where subjectivity becomes relevant.  Factors against o The use of Judicial College Guidelines o The use of past cases & textbook reports o Loss of amenity –West v Shepherd  Damages awarded even though no appreciation of loss Does Atiyah classify non-pecuniary loss as “secondary? Should any compensation be awarded for PSLA?  Distinguishing “equivalent” from “solace”/”substitute” compensation: is it an exact replacement? o For loss of earnings = equivalent (pound lost for a pound compensation)

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o For continuing headaches = solace/substitute (you cannot compensate for pound so you substitute it with money) Atiyah = Greater justification is required for compensating non-pecuniary loss as opposed to pecuniary loss because substitute compensation – o It is not an exact or even approximate replacement. o It is open to fraud and abuse o It is seen as less important than financial losses  Would you buy private insurance for it? Result= too much money spent on small claims for largely non-pecuniary loss at expense of injures causing pecuniary loss? o 66% of tort total damages are for PSLA! (He regards that as grossly inappropriate). But does Atiyah want to entirely abolish non-pecuniary loss? NO – but he argues PSLA is justified onlyo In the most serious cases o Involving long term pain and loss of faculty Can non-pecuniary loss be defended as – o 1) Increasing the value of claims from non-earners  egs women, students, the young and the old o 2) Making up for inadequacy of damages for pecuniary loss  but this should be done by reforming pecuniary loss?

Non-pecuniary loss: Proposed Reforms (not enacted)  1) Pearson Commission (1978) o Interesting proposal saying there should be no recovery unless the effects of injury continue for at least 3 months after the accident. (to get rid of whiplash claims etc). o Effect would have been to reduce damage bill by 20%  2) Law Commission Report (1999) – on Non-Pecuniary loss: o Opposed Pearson. o Rejected any threshold because:  It might encourage the exaggeration of symptoms  Exclusion for first few months would be when pain is most intense  Minor injures with no pecuniary loss would result in no damages.  1999 Report proposed instead to increase all awards over £3,000 by between 50% - 100% o Because PSLA damages had failed to keep pace with inflation in the last 30 years  Proposals were not costed o But Association of British Insurers estimated it would have added £1 billion a year to the total tort bill. Non-Pecuniary Loss; The Test Cases Heil v Rankin  Noted – Lewis [2001] Modern Law Review 100  Specially constituted Court of Appeal with 5 judges hear 8 test cases involving injuries of differing severity  Decision o 1) Maximum PSLA of £150,000  increased by a third to £200,000 o 2) Between £150,000 > £10,000  tapered increase from 0 to 33.33%. For example –  (a) middle range £80,000 increased by 17% to £95,000  (b) £30,000 for a lost eye increased only by £1,500 o 3) Below £10,000 PSLA – not increased at all  Results

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o Very few cases affected because the majority settle below £5,000 – well below the £10,000 threshold  With no continuing ill effects and no social security claim o Insurers were therefore happy with the very limited increase in damages  Contrast claimant lawyers Reasons given by judges for the increase (each is criticised in (2000) MLR 100 Article) o 1. “Fair just and reasonable” & corresponds with views of society. o 2. Some reliance upon “voice of the people” surveys o 3. 75% of Law Commission respondents thought damages had failed to keep pace with inflation o 4. Accident victims now live longer and PSLA thus last longer

Non-Pecuniary Loss: Criticisms of Heil v Rankin  A Distributive Justice Criticism: Being fair to all Accident Victims – o What are “society’s” views? Alternative questions to ask:  1) Two thirds of accident victims so seriously injured that they are unable to work for 6 months are unable to claim in tort at all. The remaining third are able to claim not only for all financial losses but also PSLA.  Should even more money be spend on those already receiving damages?  2) Place in order of importance the following losses you chose to insure against in the event of an accident:  (1) interruption in earnings  (2) medical & care costs  (3) PSLA  Would you pay at all to cover PSLA?  Even if doubted the cost of the premium?  Contrast Atiyah’s views of the PSLA (above)  Fault principle cannot justify generous payments provided to the few whilst excluding the many.  Reallocation of resources is required.  To extend the base compensation PSLA must be limited Non-Pecuniary Loss: Conclusions  Heil v Rankin – Is not as obviously in the public interest as the judges and the Law Commission would have us suppose.  The efficacy of reform in tort depends upon the political and social lenses through which it is viewed....