By David Marshall, Anthony Gold, London


Surveying the damage

The eagerly awaited government consultation on track limits and the personal injury claims process has got all of the headlines, but equally important to injured people, and indeed to insurers, is its other consultation paper on damages.



This is a long-delayed response by the government to a series of weighty Law Commission papers, following exhaustive consultation dating back to the mid to late 1990s.



The basic principle of tort is that the wrongdoer should compensate the claimant for loss and damage, so as to put the claimant in the same position as he or she would have been in but for the injury, so far as this is possible. The financial effect on the defendant is not relevant, as restated in recent years in Wells v Wells [1999] 1 AC 345, where Lord Hutton said: 'Under the present principles of law governing the assessment of damages, which provide that injured persons should receive full compensation, plaintiffs are entitled to such increased awards. If the law is to be changed, it can only be done by Parliament, which, unlike the judges, is in a position to balance the many social, financial and economic factors which would have to be considered if such a change were contemplated.'



Nowhere in the government's paper is such a fundamental shift in the basic principle canvassed overtly. But in rejecting many of the commission's recommendations, the government appears to have been terrified by the 'compensation culture', despite publicly accepting the clear evidence that it does not exist (and saying that only a 'perception' exists). Perhaps the fact that the government itself is a significant payer of compensation, particularly through clinical negligence claims against the NHS, is partly behind this.



Psychiatric injury

The most extraordinary omission in the paper is that no direct questions are asked relating to the commission's paper on psychiatric injury. In fact, the government is specifically rejecting the recommendations of the commission - and perhaps it wants to hide this. For the government to say that 'it is preferable for the courts to continue to develop the law', is to ignore pleas from the House of Lords itself for the government to consider the public policy arguments and to legislate.



Lord Steyn, in White v Chief Constable of the South Yorkshire Police [1999] 1 All ER 1, said 'the recovery of compensation for pure psychiatric harm is a patchwork quilt of distinctions which are difficult to justify' and that 'there are no refined analytical tools which will enable the courts to draw lines by way of compromise solution in a way that is coherent and morally defensible. It must be left to Parliament to undertake the task of radical law reform.'



The commission considered these difficult issues and recommended that 'shock' should no longer be a pre-condition. It also recommended the abolition of the requirements to be close in time and space and that the victim should directly perceive it (all increasingly absurd in this digital age). The commission helpfully provided a draft Bill to assist the legislators. The government seems to have decided to put this in the 'too difficult' box. This is an abdication of its responsibilities.



Fatal accident claims

With regard to bereavement following fatal accidents, the government again largely rejects the recommendations of the commission, limiting the proposed changes largely to those required by equality legislation (for example, same-sex couples), and to children under the age of 18 on the loss of a parent. The commission proposed instead a significant extension of the statutory categories. In particular, the non-availability of bereavement damages for children over the age of 18 causes considerable anger in the real world following fatal accidents.



So far as the amount is concerned, the government proposes no immediate increase to the £10,000 sum, described as a 'token', but with a three-yearly uplift in line with the retail prices index (RPI). Even though a 'token', it needs to be sufficient to command public respect. The commission recommended the increase to £10,000 in 1997 (belatedly implemented by the government in 2002), and also recommended it should be index-linked annually to RPI. This would suggest an immediate increase to perhaps £15,000, which is just a little more than the increase in RPI since 1997, with future annual index linking.



If the statutory list were to be extended, a lower figure (perhaps half, as suggested by the commission) may be more appropriate for some categories such as brothers and sisters. But all of those eligible who suffer bereavement should be entitled to the payment without abatement. Wrongdoers should take their victims as they find them (with or without relatives) - it will still continue to be far cheaper to kill than to maim.



On dependancy claims following a fatal accident, the government does sensibly propose adding a residual category of dependant 'maintained by the deceased', although again it is probably the equality legislation that is the driving force behind this. The consultation paper also examines reasonably neutrally the issue of prospective divorce before the death and prospective remarriage afterwards. Hopefully the balance will be struck to avoid intrusive prying by insurers and the courts at a time of grief, so that only the fact of service of divorce petition or the fact of remarriage/civil partnership should be taken into account.



And among all these issues the government has forgotten about the one single change to fatal accident claims that most practitioners would support - namely a statutory reversal of the Lords decision in Cookson v Knowles [1979] AC 556. This sets out the nonsensical approach of taking multipliers for future loss in fatal accident cases from the date of death rather than the date of trial, and which leads to the award for the 'future' being eaten up in the past and overall lower damages for victims of fatal accidents.



For many years, the Ogden tables have included an alternative statistical approach, but the judiciary is bound by precedent to ignore this.



Collateral benefits

The proposals in the consultation paper for reform of the treatment of collateral benefits are unfortunately half-baked.



There are many objections to the way in which they are formulated - to name but one, they ignore the problem of private personal provision. It is proposed that this should now be taken into account. But why should a claimant who has had the foresight to make personal provision for accident be penalised? He will have made considerable payment of insurance premiums. Are these to be refunded if a wrongdoer repays the personal accident insurer's outlay? Would the public even then consider this to be fair reward for prudence? What would be the point of anyone buying personal accident cover?



The proposals in respect of sick pay and pensions are also confusing. The current law works perfectly well to allow proper compensation, but prevent double recovery, and should not be amended.



The government ignores the commission's recommendation that the rule in Hunt v Severs [1994] 2 All ER 38 - that gratuitous care provided by the defendant should not be compensated - be statutorily reversed. It is distasteful that there is a financial incentive on a defendant spouse to buy in care that can be recompensed rather than provide it gratuitously, which cannot. Instead, the government focuses on the practical non-issue of whether in general terms there should be a personal obligation on the claimant to account in respect of compensation for gratuitous care rather than a trust.



The government asks whether section 2(4) of the Law Reform (Personal Injuries) Act 1948 should remain. This allows the possibility of choice of private rather than NHS medical treatment. The government's difficulty here is that the Chief Medical Officer's review of clinical negligence concluded that the NHS should provide redress (and so be allowed to provide treatment to put right what it has done wrong) rather than paying money for private treatment.



The government, however, appreciates that it cannot have one rule for claims against the NHS and another for claims against private insurers. This would lead to a transfer of cost from wrongdoers to the state. Also, injured people, except for acute or highly specialist services, usually choose private rather than NHS provision. The commission recommended no change to the status quo. The government seems more equivocal.



Non-medical care

The potential provision of non-medical care by local authorities is subject to different and rather convoluted requirements in statute and subsidiary legislation. There is a vast number of statutes, regulations, directions and guidance, some very old, which inter-link in this area. Some provisions incorporate specific duties to provide services that can be relied on directly by individuals. Some merely provide targets that are general aspirations. The law is totally unsatisfactory.



But surely the basic principle should remain 'polluter pays'. Wrongdoers should not be permitted to transfer cost back to the taxpayer, at a time when other demands have placed pressure on these scarce public resources. It is difficult to see how an increased use of public resources by tort victims could be justified or funded. The better outcome would be 'for legislation to provide that both national health trusts and local authorities could recover the costs of medical expenses and care respectively from the tortfeasor as the Law Commission recommended (at any rate in relation to medical expenses) in 1999' (per Lord Justice Longmore, Sowden v Lodge [2004] EWCA Civ 1370).



With regard to accommodation expenses, Roberts v Johnstone [1988] 3 WLR 1247 causes problems in practice, particularly in London and for older claimants. The claimant only needs new accommodation because of the tort. The award for this is often much less than the cost of accommodation. The claimant therefore has to 'borrow' from the other heads of loss to fund the property purchase. This can leave too little for care or as a reserve. The preferred choice for claimants would be to allow for the actual cost of accommodation. The paper asks for suggestions as to how this issue could be addressed.



Aggravated, exemplary and restitutionary damages

Finally, so far as aggravated, exemplary and restitutionary damages are concerned, the commission proposed modest reforms, mainly for clarification and rationalisation. In a written answer on 9 November 1999, the then minister David Lock announced that 'the government accepts the recommendations on aggravated and restitutionary damages that the Law Commission made' and that they 'will legislate when a suitable legislative opportunity arises'. This was reconfirmed in a written answer on 10 April 2002. There is no explanation in the paper for the change of view that no legislation is now appropriate.



The consultation paper is unsatisfactory and a missed opportunity. It highlights the problem in dealing with reform in a controversial, political arena like personal injury. The issues are complex. The point of the commission is presumably to examine such matters in detail and to make non-partisan recommendations. It is not helpful that these are ignored for many years and then largely rejected without good reason. There must be a better way.