Personal Injury Update - March 2008
7 Apr 2008Contents
- FARRAR’S BUILDING NEWS Nigel Spencer Ley
- PERIODICAL PAYMENTS AFTER THOMPSTONE Peter Freeman
- EXTENDING LIMITATION IN SEXUAL ASSAULT CLAIMS Matthew Hodson
- CASE LAW UPDATE David Roderick
FARRAR’S BUILDING NEWS
This month’s PI Update contains articles on two of the most important judicial decisions of recent years: Thompstone, in which the Court of Appeal finally provided guidance on the correct approach to the indexation of periodic payments, and Hoare where the House of Lords has re-interpreted the Limitation Act to allow an extension of the time limit where justice requires it.
The case law update has been prepared by David Roderick
topPERIODICAL PAYMENTS AFTER THOMPSTONE
You may not have been dealing with Periodical Payment Orders, but you will!
For almost 20 years, periodical payments have been to PI practitioners what sex is to teenagers: everyone has been talking about it but few people have actually been doing it. After many false dawns, there is likely to be less talking and more action since Tameside & Glossop Acute NHS Trust v Thompstone. There will be many reasons why PI practitioners might have put off reading the 50 pages and 145 detailed paragraphs of the Court of Appeal's judgment. Traditional lump sum awards are all we need in the vast majority of claims where recovery takes place by, or shortly after, trial. Yet even in larger claims, with considerable future losses, periodical payments have been a rarity. Whatever stage your practice is at, you will almost certainly come to treat PPO's as the norm when dealing with compensation for large future loss claims. This article is intended as a guide only to one of the most important judgments for PI practitioners for many years.
When the effects of injury persist beyond trial, lump sum awards for future losses and expenditure are calculated by reference to a series of multiplicands and multipliers, which are based on educated guesswork about the claimant's estimated life expectancy, inflation and the assumed rate of return on the sum invested sum. Any inaccuracy in the guesswork inevitably leads to over- or under-compensation: severely injured claimants might die far sooner than imagined, whereupon the Insurer will be aggrieved about the windfall profiting the Estate and beneficiaries, or might live longer than anticipated and be aggrieved that the insurer is no longer meeting his care needs.
Historically, a major restriction on the numbers of structured settlement was that, they could only be implemented with both parties' consent, and one or both parties inevitably had a reason for preferring a lump sum. Since 1st April 2005[1] the Courts have had the power to impose PPO's, irrespective of whether the parties seek such an order or agree to a PPO, and yet still the numbers have been limited. Perhaps the principle reason for the persistent reluctance, which Thompstone has resolved, arose from sections 2(8) and 2(9) of the Damages Act and the reference to RPI:
"(8) An order for periodical payments shall be treated as providing for the amount of payments to vary by reference to the retail prices index (within the meaning of section 833 (2) of the Income and Corporation Taxes Act 1988) at such time, and in such a manner, as may be determined by or in accordance with Civil Procedure Rules.
(9) But an order for periodical payments may include provision –
(a) disapplying subsection (8), or
(b) modifying the effect of subsection (8)."
In cases concerning long-term professional care, it is essential that the PPO's income increases to cover rising care costs. RPI measures a wide variety of goods and services including care services and wages. However, evidence confirmed that between 1998 and 2005, RPI was on average 1.73% lower than the growth in earnings measured by the Average Earnings Index. Therefore, any long term PPO for wage related costs or losses linked to RPI would cause a claimant's annual payments to fall further and further below the level that was assessed as being necessary to meet his needs when the PPO was made. While defendants wanted to hang on to RPI in preference to less favourable indices, the claimants were able to argue that it could not have been Parliament's intention to create a scheme that no properly advised claimant would ever pursue. Claimants understandably want either an adequately inflation-proofed PPO, or no PPO at all.
The Court of Appeal concluded that RPI was not a suitable index for PPO's covering losses relating to wages, and that s. 2(9) should be interpreted as allowing alternative indices where they were 'fair in all the circumstances' and not just in exceptional circumstances. The aim of indexation of PPO's is to ensure, so far as possible, that the real value of annual payments needed over the whole period is achieved. In relation to care costs, RPI would not achieve this and would lead to injustice to claimants and a breach of the '100% recovery principle'.
The Court of Appeal approved the use of ASHE, which is an annual survey of actual earnings of employees and not in itself an index, but provides a sub-group for the earnings of care assistants and home helps. When looking for a fair and reasonable estimate of the average wage to be paid to a claimant's carers in the future, the Court of Appeal's judgment means RIP for RPI. There were numerous objections to the use of ASHE and the Court of Appeal effectively terminated them and made plain their hope that claimants and defendants should take the law as settled and use PPO's to compensate future losses:
"We hope that …defendants in proceedings that involve catastrophic Injury will now accept that the appropriateness of Indexation on the basis of ASHE 6115 has been established after an exhaustive review of the all the possible objections to its use, both in itself and as applied to the recovery of costs of care and case management. It will not be appropriate to re-open that issue in any future proceedings unless the defendant can produce evidence and argument significantly different from, and more persuasive than, that which has been deployed in the present cases. Judges should not hesitate to strike out any defences that do not meet that requirement".
[1] The Damages Act 1996, as substituted by the Courts Act 2003, section 2(1).
topEXTENDING LIMITATION IN SEXUAL ASSAULT CLAIMS
The recent decision of the House of Lords in the conjoined appeals of A v Hoare; C v Middlesborough Council; X & Another v London Borough of Wandsworth; H v Suffolk County Council; and, Young v Catholic Care (Diocese of Leeds) and others [2008] UKHL 6 has changed the way the courts must apply the Limitation Act 1980 (‘the Act’) to cases involving sexual assault.
Background
The claimants in these conjoined appeals were all the victims of historical sexual assault. Their claims had been barred by limitation in the lower courts.
The general rule is that the period of limitation for an action in tort is six years from the date on which the action accrues. This is derived from s.2 of the Act. All the claimants in these conjoined appeals started proceedings well after six years had expired and so, if s.2 were to have applied, their claims would have been barred. However, sections 11 to 14 of the Act create a different regime for "damages for negligence, nuisance or breach of duty", where the damages are in respect of personal injuries. There are three main differences to that regime:
(i) the period of limitation is reduced to three years;
(ii) the date that limitation starts to run is now either the date the action accrues or the ‘date of knowledge’ as defined in s.14, whichever is the later; and,
(iii) the court has a discretion under s.33 to extend the period of limitation when it appears it would be equitable to do so.
The Questions
The House of Lords were therefore asked to decide the following questions:
1) Whether sexual assault is an action for ‘negligence, nuisance or breach of duty’ so as to fall within the meaning of s.11(1) of the Act.
2) Whether the definition of a ‘significant injury’ contained in s.14(2) of the Act allowed account to be taken of a claimant’s personal characteristics, either pre-existing or caused by the assault, in determining the claimant’s ‘knowledge’ of the injury (and if it did not, whether these matters impacted upon the discretion under s.33).
Does Sexual Assault fall within s.11?
In answering the first question affirmatively the House of Lords departed from the approach set out in Stubbings v Webb (1993) AC 498 in favour of the reasoning found in the earlier case of Letang v Cooper (1965) 1 QB 232.
Lord Hoffman, with whom the other Lords unanimously agreed, considered the history of the phrase ‘negligence, nuisance or breach of duty,’ noting that it first appeared in the Personal Injuries (Emergency Provisions) Act 1939. It had been considered in that context by Lord Greene MR in the case of Billings v Reed [1945] KB 11 who had concluded that it was wide enough to cover the case of ‘trespass to the person’. Indeed this was supported by the Australian case of Kruber v Grzesiak [1963] VR 621 in which Adam J had said:
"I would see no sufficient reason for excluding an action for trespass to the person from the description of an action for damages for breach of duty, especially when it is provided that the duty may be one existing independently of any contract or any provision made by or under statute. After all, do not all torts arise from breach of duty – the tort of trespass to the person arising from breach of a general duty not to inflict direct and immediate injury to the person of another either intentionally or negligently in the absence of lawful excuse?"
Kruber was approved by Lord Denning MR and Diplock LJ in the case of Letang v Cooper which was concerned with an unintentional trespass to the person. It was then unsurprising, as Lord Hoffman puts it, that in Long v Hepworth [1968] 1 WLR 1299 Cooke J decided that the same reasoning applied to intentional trespass to the person. This was the state of the law in 1975 when the Limitation Act 1975 introduced the radical changes to the law that are now encapsulated within sections 11 to 14 of the Limitation Act 1980.
At this stage, therefore, there could be little doubt that sexual assault would have been included within the meaning of s.11 of the Act. Then, however, came the case of Stubbings v Webb in 1993 in which the House of Lords unanimously decided that s.11 did not apply to cases of deliberate assault.
Lord Hoffman criticises this decision for one main reason: it was decided as though the Limitation Act 1954 had just been passed, without regard for later case law. Too much weight had been placed on the Report of the Committee on the Limitation of Actions 1949 (Cmd 7740) (‘The Tucker Report’) and on Hansard, which weight neither could properly bear. In fact the statutory language did not derive from the Tucker report or Hansard but actually from Billings v Reed. Further, the House had only considered one line of Hansard while failing to take note of other statements.
This criticism was not enough on its own, however. In order to consider overturning a previous decision of the House of Lords Lord Hoffman needed to satisfy himself that the decision was "thought to be impeding the proper development of the law or to have led to results which were unjust or contrary to public policy" in accordance with the requirement set out in R v National Insurance Comrs. Ex pp Hudson [1972] AC 944 which considered the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234.
Lord Hoffman decided that there had indeed been a number of unjust cases pursuant to Stubbings, the worst of which was S v W (Child Abuse: Damages) [1995] 1 FLR 862. In that case the claimant sued her mother and father for sexual abuse by the father. The action was commenced nearly 10 years after the last act of abuse. The cause of action against the father was intentional assault and was therefore struck out. The cause of action against the mother was negligent failure to protect the claimant from the father. This fell under s.11 of the Act and so was subject to discretionary extension under s.33 which was granted. The action against the mother was therefore allowed to proceed. This result was an example of many such unsatisfactory and unjust results.
Lord Hoffman therefore considered it right to depart from Stubbings and reaffirm the law laid down by the Court of Appeal in Letang v Cooper. Intentional assault therefore now falls under s.11 of the Act.
Should Account be Taken of the Claimant’s Personal Characteristics for s.14(2)?
In answering the second of the two questions, the House of Lords considered the wording of s.14 of the Act. A ‘significant injury’ is defined by s.14(2) as follows:
"For the purposes of this section an injury is significant if the person whose date of knowledge is in question would reasonably have considered it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy judgment."
Section 14(3) then provides that, for the purpose of deciding whether the claimant had knowledge of the various matters listed in section 14(1), including the fact that the injury was significant, one should take into account not only his actual knowledge but also what is usually called his imputed or constructive knowledge, defined as:
"knowledge which he might reasonably have been expected to acquire-
(a) from facts observable or ascertainable by him; or,
(b) from facts ascertainable by him with the help of medical or other appropriate expert advice which it is reasonable for him to seek."
The question asked of the House was whether account should be taken of the personal characteristics of the claimant. Lord Hoffman, who has previously considered in detail the appropriate personal characteristics to ascribe to the ‘reasonable man’ in the context of provocation in murder cases (see R v Smith (2000) 3 WLR 654), gives the view that the wording of the Act suggests an impersonal approach. In rejecting the suggestion that account should be taken of medical evidence that a claimant had been ‘in denial’ about the injuries suffered he stated (paragraph 43):
"I do not doubt the value of these explanations of the claimant’s mental processes when it comes to an assessment of whether he could reasonably have been expected to commence proceedings. But they are difficult enough concepts to apply in that context and I do not think that section 14(2) was intended to convert them into even more difficult questions of epistemology."
On the other hand, Lord Hoffman noted that one of the matters to be taken into account in the exercise of the discretion under s.33 is "the reasons for the delay on the part of the plaintiff" (ss.(3)(a)). This, in his view, is the correct place in which to consider the impact of the claimant’s personal characteristics and any suggestion of repression or denial. This was a point upon which, again, the House unanimously agreed.
How Should the Discretion Under s.33 be Exercised?
Finally, then, Lord Hoffman considered the application of the discretion under s.33. In particular he considered the decision in Bryn Alyn [2006] QB 1441 in which the Court of Appeal had said that the judge in that case had been wrong to give undue weight to his conclusion that the claimants’ reasons for delay were a product of the alleged abuse and that, accordingly, it would be unjust to deprive them of a remedy. Lord Hoffman declared himself to be of precisely the opposite opinion. He further approved the advice of the Law Commission Report (No 270) which provided as follows:
"We do have some concerns that claims may be brought many years after the events on which the claimant’s cause of action is based, at a time when it is difficult for a fair trial to be given to the claimant’s allegations. However, […] the victim is likely to have immediate knowledge of the relevant facts, so that the primary limitation period expires three years after majority. Although the court will have a discretion to disapply the primary limitation period, it must consider whether the defendant’s ability to defend the claim will be prejudiced due to the lapse of time since the events giving rise to the cause of action."
It can therefore be seen that it is a balancing act. Lord Brown (who provides a very useful summary of Lord Hoffman’s speech) adds three further points in respect of the s.33 discretion.
First, insofar as claims may be expected to be brought against employers (or others allegedly responsible for abusers) on the basis of vicarious liability for sexual assaults rather than for systemic negligence in failing to prevent them, they will probably involve narrower factual disputes than hitherto. This will bear significantly upon the possibility of having a fair trial.
Secondly, as indicated by the Law Commission Report, the effect of delay on the chance of having a fair trial must be considered. Lord Brown states that by no means everyone who brings a late claim for damages for sexual abuse, no matter how genuine his complaint may be, can reasonably expect the court to exercise the discretion.
Thirdly, the ability of a defendant to satisfy judgment at the material times is of great potential relevance: it would be most unfortunate if people felt obliged (often at public expense) to bring proceedings for sexual abuse against indigent defendants simply with a view to their possible future enforcement.
Conclusion
The law, then, has changed in the favour of the victims of sexual assault. Their claims will no longer be automatically barred by limitation but instead they will have a chance to put all the circumstances before a court in an effort to push back the date limitation begins to run or secure an extension of the period of limitation. But they must still be warned: the court must ensure a fair trial so if the bringing of the action has been unreasonably delayed then they cannot expect the court to extend limitation, however genuine the claim may be!
topCASE LAW UPDATE
David Roderick
Eileen Corr (Administratrix of the estate of Thomas Corr, Deceased) v IBC Vehicles Ltd
[2008] UKHL 13 (Bingham L, Scott L, Walker L, Mance L, Neuberger L) 27/02/08
The deceased (D) had been disfigured and suffered PTSD after being struck on the head in the course of his employment. D had begun proceedings against the appellant employer (V) claiming damages for the physical and psychological injuries suffered. However, D became depressed and nearly six years after the accident he committed suicide. The respondent widow (C) was substituted as a claimant. V accepted primary liability for the accident and also agreed that the depressive illness suffered by D was caused by the accident and that this depressive illness had caused D to take his own life. V appealed against the recovery by C of damages under section 1 of the Fatal Accidents Act 1976 in respect of the financial loss attributable to the suicide of D. V averred that such financial loss was too remote on various grounds, namely; the suicide was not reasonably foreseeable, the act of suicide constituted a novus actus interveniens; suicide was the voluntary act of D and so precluded by the principle of volenti non fit injuria, and that the suicide amounted to contributory negligence.
It was held that the duty owed to D included a duty to avoid causing psychological injury. D had not been fully responsible for his actions and had acted in a way in which he would not have done but for the injuries caused by V’s breach. Therefore, D’s conduct in committing suicide did not fall outside the scope of duty owed. Severe depression was a foreseeable consequence of V’s breech and C did not have to show that suicide itself was foreseeable. Although suicide was not a usual manifestation of severe depression it was not uncommon and therefore not outside the bounds of what was reasonably foreseeable. Whilst suicide could be novus actus if such conduct was a conscious decision in the absence of a disabling mental illness, in this case D was suffering from a severely depressive illness, attributable to V’s negligence, which impaired his capacity to make reasoned and informed judgements. It was not necessary to show that D was insane in M’Naghten terms. Furthermore, D had not consented to the accident and nor had he consented to the suicide which was a result of a psychological condition caused by V’s breach of duty. Although it was not appropriate to consider the matter in the instant case, a deduction for contributory negligence could be appropriate in circumstances of deliberate suicide committed in a state of depression induced by an accident.
Welsh Ambulance Services NHS Trust & Anor v Jennifer Mary Williams
[2008] EWCA Civ 81 (Smith LJ, Thomas LJ, Lloyd LJ) 15/02/2008
H was killed by an ambulance driven by an employee of the appellant NHS trust (T). H had established a successful family business in which his wife (W) and two eldest children (D and S) were equal partners prior to H’s death and in which the youngest child (R) had subsequently become a partner. H had been a man of flair and energy and was described as a "wealth creator". The judge assessed the cost of replacing the services rendered by H at over £1.7 million plus interest. T argued that there was no dependency and that through the family business the family was at least as well off after the death as before.
It was held that the judge had properly identified a qualifying dependency. W had played no significant role in wealth creation and would have benefited from H’s continued efforts: nothing could be more obvious than that W had lost a very valuable dependency. In relation to the children, D and S were in receipt of profit shares far in excess of the value of their labour as a result of H’s management of the company and, similarly, R had lost the expectation of a share of the profits which would have exceeded the value of her services. The fact that subsequent management of the company by D and S had provided equal or greater profit than before was irrelevant. A dependant could not by his or her own conduct after the death affect the value of the dependency at the time of the death.
Kylie Palmer v (1) Estate of Kevin Palmer, Deceased (2) MIB (3) PZ Products Ltd (4) Royal & Sun Alliance plc
[2008] EWCA Civ 46 (Pill LJ, Sedley LJ, Rimer LJ) 06/02/2008
The Claimant (K) sustained devastating injuries in a road traffic accident in which her father, the driver, had died. K sued the estate (E) but his insurers escaped liability on grounds of non-disclosure. MIB (M) were therefore joined as defendants, and while not disputing E’s liability to K, required K to also sue PZ Products (P), the manufacturer of a device that had been fitted to K’s seat belt, for their breach of statutory duty and in negligence as the device’s design was unsafe and defective. The trial judge ultimately found against P and damages were likely to exceed £2 million. However, as P’s product liability insurance with Royal & Sun Alliance (R) was limited to £500,000 for damages and costs, M sought to minimise its own potential exposure to damages and costs over £500,000 by seeking an order under section 51 of the Supreme Court Act 1981 that R personally pay the costs incurred by K, E and M in establishing liability against P. R had rejected a Part 36 offer from E and M of £300,000 but had rejected it without consulting P. The trial judge concluded that R had been motivated either exclusively, or at least predominantly, by its own interest in the manner in which it had conducted the defence and that that was a circumstance which made it appropriate to grant the order sought. The decision was upheld on appeal, the court inferring that the rejection of an offer to settle without a referral to P showed that R was not interested in a consideration of how to achieve the best commercial outcome for P. The judge had been able to conclude that the defence of the claim was throughout conducted on the basis that the only real interest being protected was R’s; that R was funding, controlling and directing of the litigation in its own interest.
Shane Anthony Cooley (By his Father & Litigation Friend Peter Anthony Cooley) v Thomas Richard Ramsey
[2008] EWHC 129 (QB) (Tugendhat J) 01/02/2008
The Claimant (C), a British citizen who had been on a working visa in Australia, had been left grossly handicapped after suffering severe injuries when his motorcycle collided with the Defendant's car. After hospitalisation and rehabilitation C was repatriated to England. It was C's case that he would remain in need of lifetime care and support and would have no residual earning capacity. C issued proceedings in England and obtained permission to serve the claim form out of the jurisdiction. C submitted that the court had jurisdiction as Booth v Phillips (2004) EWHC 1437 (Comm), (2004) 1 WLR 3292 was authority for the propositions that economic loss, in the form of loss of a source of income, counted as damage sustained within the jurisdiction under CPR r.6.20 (8)(a), and that where injury or death was suffered in one jurisdiction and consequential economic loss in another, then the economic loss in the latter was sufficient to found jurisdiction under CPR r.6.20. C further submitted that, with regard to the court's discretion under CPR r.6.21, England was the proper place in which to bring the claim as there were numerous factual and expert witnesses who were all based in England; that if the case were pursued in Australia C would have to remain in England; that the court would need knowledge of the environment in which C was to live in assessing the required compensation. The Defendant contended that the reasoning in Booth was flawed, it was not consistent with the cases under Regulation 44/2001 Art.5 (3), and had incorrectly applied considerations applicable to different jurisdictions within a single state.
However, it was upheld on appeal that Booth was properly decided. In states not a party to the Regulation the court was not obliged to apply the Regulation authorities. C had established his case that England was the proper place in which to bring his claim. The interests of justice for both parties required that the claim be prepared with the benefit of the close liaison between C's legal representatives, C's litigation friend, and the witnesses.
A v Iorworth Hoare; C v Middlesbrough Council; X & Anor v Wandsworth LBC; H v Suffolk CC; Young v Catholic Care (Diocese of Leeds)
[2008] UKHL 6 (Hoffmann L, Walker L, Hale B, Carswell L, Brown L) 30/01/2008
The House of Lords heard six unrelated appeals in claims for damages for personal injury caused by childhood sexual abuse. Each claim had been statute-barred as a result of the interpretation of the Limitation Act 1980 following the case of Stubbings v Webb (1993) AC 498 HL. The questions before the house were (1) whether Stubbings was wrongly decided and whether the court should depart from it and (2) whether the definition of "significant" injury in section 14 (2) of the Limitation Act 1980 allowed a consideration of the claimant’s personal characteristics, either pre-existing or consequent upon the injury suffered. In answering the first question, it was determined that Stubbings had been incorrectly decided and that the conclusion in that case had placed more weight upon the Report of the Committee on the Limitation of Actions 1949 (Cmd 7740) and on Hansard than they could properly bear. Stubbings was departed from and the law as laid down in Letang v Cooper (1965) 1 QB 232 CA was reaffirmed. The answer to the second question is that the test in section 14 (2) of the Limitation Act 1980 is an entirely impersonal standard: not whether the claimant himself would have considered the injury sufficiently serious to justify proceedings, but whether he would "reasonably" have done so. The correct approach was to ask what the claimant knew about his injury, add any "objective" knowledge which might be imputed to him under s.14(3) and then ask whether a reasonable person with that knowledge would have considered the injury sufficiently serious to justify his instituting proceedings for damages. Having ascertained what the claimant knew and what he should be treated as having known, the actual claimant dropped out of the picture, and judges should not have to consider the claimant's intelligence. Standards were, in their nature, impersonal and did not vary with the person to whom they were applied. Section 14 made time run from when the claimant had knowledge of certain facts, not from when he could have been expected to take certain steps and s.14 (2) merely defined one of those facts by reference to a standard of seriousness. The effect of the claimant's injuries upon what he could reasonably have been expected to do was irrelevant. The approach to the exercise of discretion under the 1980 Act remained as described in Horton v Sadler (2006) UKHL 27, (2007) 1 AC 307, but the court commented on the sort of considerations which ought clearly to be in mind in sexual abuse cases.
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