Personal Injury Update May 2009
7 May 2009Contents
- FARRAR’S BUILDING NEWS Nigel Spencer Ley
- CLAIMS FOR THE COST OF FUTURE CARE: THE DECISION IN PETERS Peter Freeman
- CASE LAW UPDATE CHANGEZ KHAN
FARRAR’S BUILDING NEWS
In this month’s newsletter Peter Freeman examines the Court of Appeal’s decision in Peters v East Midlands Strategic Health Authority and the impact that this will have on claims for future care.
The Case Law Update was prepared by Changez Khan.
The Farrar’s Building Personal Injury Group is pleased to welcome Daniel Read to our team. Daniel has been invited to become a tenant following the successful completion of his third six month pupillage in chambers.
topCLAIMS FOR THE COST OF FUTURE CARE: THE DECISION IN PETERS
Claims for the cost of future care and accommodation in catastrophic cases have been areas of considerable difficulty and uncertainty for practitioners since the House of Lords, in Hodgson v Trapp[1], confirmed the general rule that any benefits received as a result of the tort, are to be deducted from damages to prevent double recovery. The sums at stake for these heads of claims can be huge, and this alone may explain the considerable resources that insurers have devoted to fighting them.
Insurers have increasingly argued that seriously injured claimants, who are entitled to receive care and accommodation from their Local Authority and Local Health Authority should do so, and their damages should be reduced to reflect such state assistance. Although the Courts had expressed unease with this approach, insurers undoubtedly enjoyed some success in a number of high profile cases, and the position pre-Peters was that damages would be reduced where:
i) the Claimant was eligible for state care and accommodation;
ii) the Local Authority (LA) or Primary Care Trust (PCT) arrangements would not fall significantly short of the Claimant’s reasonable requirements or could be ‘topped up’ privately to meet reasonable needs; and
iii) the LA or PCT is not able to charge the Claimant for the services provided.
Readers will be pleased to learn that I have no intention of dealing with the various statutory provisions within this article. They will be spared a trawl through what Mr Justice Munby referred to as "some of the worst, if indeed not the worst, drafted and most confusing subordinate legislation it has ever been my misfortune to encounter."[2] However, before turning to the decision in Peters it is useful to consider the previous cases and decisions:
Previous cases:
In Firth v Geo Ackroyd Junior Ltd[3] the LA was joined as a party and sought a declaration that it was entitled to recover the cost of past and future care it had and would provide from any award of damages the Claimant obtained. The court considered the statutory regime for provision of care under s21(1) NAA ‘48 and concluded that the whole of any damages awarded were to be disregarded when assessing the Claimant’s resources and determining whether he should be required to contribute to the cost of care. The first defendant (the tortfeasor) was therefore entitled to a reduction in damages on the basis that any award for the cost of care would lead to double recovery since the Claimant was entitled to receive care from the LA without charge.
In Bell v Todd[4] and Ryan v Liverpool HA[5], the LAs sought to take into account income generated by the award of damages, and argued that their obligation would be extinguished by any award of damages since care would be "otherwise available". Stanley Burnton J held that damages awarded for personal injury and any income generated from the award could not be taken into account in this way unless they could be taken into account in determining the Claimant’s ability to pay under section 22; and, if it was to be taken into account, its assessment should be subject to the means-test regime under section 22. Munby J arrived at the same conclusion in Ryan. In consequence the LAs were required to disregard income generated by any award of damages as well as the capital itself.[6] The tortfeasors were therefore entitled to a reduction in damages for the cost of care.
The Court of Appeal considered Sowden v Lodge and Crookdake v Drury together because they raised similar issues.[7] Both catastrophically injured Claimants had received care and accommodation from their LA, and the tortfeasors sought a reduction of damages for cost of care on the basis that the Claimants would continue to receive care from their LA without charge, and that such provision was adequate. The Claimant in each case argued for a full award in respect of the cost of care because the provision available would not meet their reasonable requirements. In the Court of Appeal Lord Justice Pill indicated that
"In general terms the approach is to compare what a claimant can reasonably require with what a local authority…are likely to provide in the discharge of their duties under section 21. If the second falls significantly short of the first … the tortfeasor must pay, subject to the argument … that … section 21 provision augmented by contribution from the tortfeasor meets the reasonable requirements."[8]
In Sowden there had been a paucity of evidence in relation to the proposed augmentation of the LA’s residential care. The Court of Appeal criticised this and allowed the Claimant to return to the trial Judge to explore the practicability of the augmentation or top-up. In Crookdake there had been no evidence from the LA as to what provision would be made under section 21. In the absence of that evidence, the Court of Appeal felt that the trial Judge was entitled to conclude that section 21 provision would not meet the Claimant’s reasonable requirements. The trial Judge was required to decide on the evidence before him and was entitled to draw inferences where necessary.
Similar arguments have been raised in relation to assistance provided under s29 of NAA ‘48. In Freeman v Lockett[9] the tortfeasor sought a reduction in damages for the cost of care on the basis that the Claimant was being provided with direct payments from her LA for this purpose. Mr Justice Tomlinson was hostile towards this approach commenting:
"Instinctively I recoil from the notion that a failure to avail oneself of a state benefit could in the circumstances be characterised as an unreasonable failure to mitigate loss."[10]
Mr Justice Tomlinson rejected the argument because there was no principled basis upon which the court could estimate what funding the Claimant would receive from the LA over the course of the rest of her life.[11] Furthermore, the Claimant’s independence would be compromised in that she would be reliant on her LA for the rest of her life.[12] For instance, if the Claimant were to move area she would incur an inevitable degree of anxiety owing to the process of applying to her new LA for direct payments or care under section 29.
In Crofton v NHSLA[13], there was a great deal of evidence of provision of care and accommodation by a LA that understood they were obliged to provide funding. The Court of Appeal refused to overturn the High Court’s ruling that damages would be reduced to reflect direct payments by a LA under section 29. Unlike Freeman, the court in Crofton had the benefit of calculations of the direct payments the Claimant would receive and the tortfeasor gave an indemnity against withdrawal of funding.[14] The position appeared therefore to be that where there was evidence that direct payments would be received then a reduction to damages should be made. Practitioners faced having to deal with an explosion in the volume of evidence surrounding these issues.
Lord Justice Longmore had already commented in Sowden that "some judges also have an instinctive feeling that if no award for care is made at all, on the basis that it will be provided free by local authorities, the defendant and his insurers will have received an undeserved windfall"[15] In Crofton, Lord Justice Dyson noted the counter-argument, namely that, "if the claimant does not give credit for benefits that he will receive from the state as a result of his personal injury, then on the law as it currently stands, he will make double recovery. To satisfy the ‘instinctive feeling’, a change in the law would be necessary. Such a change raises what is essentially a political question and, therefore, a matter for Parliament."[16]
The Department for Constitutional Affairs did look at these issues as part of a consultation exercise, The Law on Damages, in 2007, [17] and expressed their view that "the most appropriate outcome when collateral benefits arise is one where the claimant is compensated for his or her losses, but only once; and wherever practicable at the expense of the tortfeasor rather than a collateral benefit payer."[18] The DCA paper then identified two ways of achieving this outcome.[19] The collateral benefit is deducted from the Claimant’s damages and the collateral benefit payer is entitled to recover from the tortfeasor; or the benefit is disregarded in the assessment of the Claimant’s damages and the collateral benefit payer is entitled to recover from the Claimant (or in practice paid directly from the tortfeasor). The Government preferred the latter, but the consultation has not yet been acted upon.
The decision in Peters
In the face of Government inaction, a very strong Court of Appeal, consisting of the Master of the Rolls, the President of the Queens Bench Division and Lord Justice Dyson handed down their decision in Peters, and altered the legal landscape.
In Peters the Court of first instance held that there should be no reduction in damages to reflect the LA’s duty to provide care and accommodation. Four issues were raised on appeal:
i) On behalf of the LA, whether the award of damages could be taken into account under the amended secondary legislation when determining whether the LA was entitled to recoup the cost of any care provided. On this issue, the Court of Appeal followed the reasoning in Firth in holding that the whole of any personal injuries award would be ring-fenced from consideration.
ii) Whether the Court of first instance was correct to hold that even if matters were otherwise equal between relying on the LA and recovering from the tortfeasor the Claimant would be entitled to choose to pursue the tortfeasors. On this issue, the Court side-stepped Sowden on the basis that it was conceded by the Claimants in that case that if the compensatory principle required accommodation and care provided by the LA then damages could not be awarded as if they were not provided. The Court considered The Liverpool (No.2) where the Claimant had a choice between a wrongdoer and an innocent party.[20] The fact that a Claimant had a statutory right to have the loss made good in kind by state assistance was not sufficient reason to treat the cases differently. Provided therefore that there was no risk of double recovery the Judge at first instance was correct to hold that the Claimant had a choice. In this instance the risk of double recovery could be addressed by an undertaking that the Claimant’s Deputy would provide a copy of the Court’s judgment to the Court of Protection and seek that Court to limit the Deputy’s authority such that they would be unable to apply for state assistance without notifying the Defendant and without the leave of that Court.
iii) Whether the judge at first instance was right to hold that it was reasonable for the Claimant to choose her care accommodation to be self-funded rather than provided by the LA. On the facts of this case it was reasonable for the Claimant to prefer damages from the tortfeasor. The Court also provided an indication that it may be sufficient that the Claimant believes the tortfeasor should have to pay rather than the taxpayer.
iv) Whether the agreed whole life multiplier should be reduced to reflect the fact that the Claimant would be entitled to state funded care for at least a period in the future. No such reduction was appropriate because the Claimant was not going to receive any state assistance.
The most important point raised by the appeal, ii) above, is whether a claimant is entitled to recover damages from the tortfeasor as of right, or whether there needs to be investigation into the reasonableness of not taking up rights to care and accommodation provided by the State. The Court of Appeal stated:[21] "We can see no reason in policy or principle which requires us to hold that a claimant who wishes to opt for self-funding and damages in preference to reliance on the statutory obligations of a public authority should not be entitled to do so as a matter of right."
The Court of Appeal was eager to deal with the ‘claimant’s windfall’ counter-argument, noted by Dyson LJ in Crofton. At first instance, and in order to get around this issue, the Claimant’s Deputy had volunteered an undertaking not to seek statutory funding for care and accommodation. Neither the judge at first instance, nor the Court of Appeal were satisfied about such a scheme, describing it as "impractical and undesirable". However, during argument in the Court of Appeal , a different undertaking was held to be an effective way of dealing with the risk of double recovery in cases where the claimant’s affairs were being administered by the Court of Protection, because control was placed in the hands of that Court. The undertaking offered and accepted, and of importance for practitioners, was as follows:
The Deputy would:
(i) notify the senior judge of the Court of Protection of the outcome of these proceedings and supply to him copies of the judgment of the Appeal court and that of Butterfield J; and
(ii) seek from the Court of Protection: (a) a limit on her authority so that no application for public funding of the claimant’s care under s21 of the NAA can be made without further order, direction or authority from the Court of Protection and (b) provision for the defendants to be notified of any application for authority to apply for public funding of the claimant’s care under section 21 of the NAA and to be given the opportunity to make representations against such authority being granted.
If a Deputy wishes to apply for public provision where damages have been awarded on the basis that no public provision will be sought, the requirement that the defendant is to be notified of any such application will enable a defendant who wishes to do so to seek to persuade the Court of Protection that it should not allow the application because it is unnecessary and contrary to the intention behind the assessment of damages.
The decision in Peters has seemingly, and hopefully, avoided the need for practitioners and the Courts to trawl through considerable primary and secondary legislation; it might also have avoided the need for LAs and PCTs to become involved in litigation, whereupon they can re-direct resources away from litigation and back towards ‘welfare’. There is a strong argument that a tortfeasor should bear the cost of their wrongdoing both intuitively on grounds of fairness and economically. Taxpayers do not expect their tax to pay for tortfeasors’ wrongdoings. Welfare is generally intended to benefit people with a need that has not been caused by, and could be paid for, by a culpable party.
In an area where there is always going to be considerable uncertainty about the ability of the LA or PCT to provide care and accommodation, there is now far greater certainty and security for Claimants. While it is difficult to imagine insurers being able to recover the position where the Deputy is able to give the acceptable undertaking, it is more difficult to imagine the decision in Peters as the last word in cases where there is a finding of less than 100% liability.
[1] [1989] AC 807
[2] Munby J was referring to: The National Assistance Act 1948; the National Assistance (Residential Accommodation)(Disregarding of Resources)(England) Regulations 2001; the National Assistance (Assessment of Resources) Regulations 1992; and the Income Support (General) Regulations 1987
[3] [2001] PIQR Q4.
[4] [2002] Lloyds Rep Med 12.
[5] [2002] Lloyds Rep Med 23.
[6] The outcome in relation to income generated would be different if the award was not administered by the court of protection.
[7] [2004] EWCA Civ 1370.
[8] Above at [41].
[9] [2006] EWHC 102 (QB)
[10] Above at [6].
[11] Above at [35].
[12] Above at [34].
[13] [2007] EWCA Civ 71.
[14] Above at [33].
[15] [2004] EWCA Civ 1370 at [92].
[16] Above at [88] and [89].
[17] The Law on Damages, Department of Constitutional Affairs CP 9/07.
[18] Above at [107].
[19] Above at [108].
[20] [1963] P 64.
[21] Per Lord Justice Dyson at para 53:
topCASE LAW UPDATE
Maga (by his litigation friend the Official Solicitor) v Trustees of the Birmingham Archdiocese of the Roman Catholic Church
[2009] EWHC 780 (QB) (Jack J) 24/4/09
Significance: vicarious liability of an employer for acts of abuse by its employees; liability in negligence of an employer for failure to investigate complaints against employees.
M alleged that he had been sexually abused by C more than thirty years ago in 1976. At the time, C had been serving as assistant priest at a Catholic church run by the Trustees. M and his family had been living in the local parish, although they did not attend church and were not Roman Catholic. C had struck up a friendship with M by paying M to do small jobs for him: washing his car; ironing; cleaning the Presbytery. It was this friendship that had allowed C the opportunity to get close to M and sexually abuse him. A complaint of abuse had previously been made against C by another boy – some two years prior in 1974. However the Trustees had failed to follow this up.
M, who had learning disabilities, issued proceedings against the Trustees many years later. M framed his claim for damages in two ways: as C’s employers, the Trustees were vicariously liable for his acts of abuse; and/ or they were liable in negligence for failing to follow up the earlier complaint made against C. Before determining these claims the court had to rule on a preliminary issue as to limitation. Mr Justice Jack held as follows:
(i) Limitation
M’s claim was not time-barred. M qualified as a person of "unsound mind" within the meaning of s.38(2) of the Limitation Act 1980. The evidence showed that M had an IQ of 70, that he was unable to read or write and that he had difficulties in remembering instructions. M lacked the mental capacity to manage his own property. Accordingly, it was unlikely that M would be able to deal rationally with the problems arising in the course of litigation.
(ii) Vicarious liability
The relevant test was that set out in Lister v Lesley Hall Ltd (2001) UKHL 22, namely: was the tort so closely connected with the employment that it would be fair and just to hold the employers vicariously liable? The court held not. C’s status as a priest may have provided him with the opportunity to abuse M, but this on its own was not sufficient for liability. C’s relationship with M had been founded on the personal chores which M did for C. C had paid M handsomely as a reward and that is what had allowed him to keep a hold over M. The chores could not be linked to C’s employment by the Trustees, nor to his broader work of "evangelisation" even in its most extended sense.
(iii) Negligence
M’s claim in negligence against the Trustees also failed. The acts of abuse were not so closely connected with C’s employment that it was fair and just to hold the Trustees vicariously liable: see (ii) above. By the same token, it would not be "fair, just and reasonable" to impose a duty of care on the Trustees vis-à-vis M: Caparo v Dickman [1990] 2 AC 605. Alternatively, there was insufficient proximity between the Trustees and M for such a duty to arise. C had encountered his victim outside of work and his employers could not be held to owe a duty of care to the world at large.
Christopher Whippey v Andrew Jones
[2009] EWCA Civ 452 (Waller, Rimer and Aikens LJJ) 8/4/09
Significance: liability of dog handlers in negligence – standard of care
J had been running along a footpath in a public park. He was startled when a fully-grown, 12-stone Great Dane appeared from behind a bush and hit J in the shoulder. J lost his balance, skipped over a metal chain and fell down a slope. He broke his ankle badly. The dog had been under the supervision of W, who was an RSPCA Inspector. The evidence at trial was that this particular dog had a tendency to run up to people and bark at them from a distance (about 5 – 10 ft) in a manner that could frighten them.
J sued W under s.2 of the Animals Act 1971 and also in common law negligence. At first instance, the statutory claim failed but the common law claim succeeded. As to the latter, the trial judge held that W had failed to take sufficient care to ensure that there were no other people around before unleashing the dog. W appealed.
Held on appeal: the common law claim should also fail. The trial judge had not applied the test for standard of care correctly. Before a claim in negligence could succeed, the court had to be satisfied that a reasonable person in W’s position would have contemplated that injury was likely to follow from his acts or omissions. Importantly, a mere remote possibility of injury would not be enough: there had to be a "sufficient probability of injury to lead a reasonable person… to anticipate it". Bolton v Stone (1951) AC 850, HL applied. The evidence at trial had been that this particular dog did not have a tendency to jump up at other people. At most, he would stop and bark at them from a distance. There was therefore no reason why a reasonable dog handler in W’s position would have anticipated that the dog would have bounced up and hit someone. W’s conduct had not fallen below the objective standard of care.
R (on the application of Health & Safety Executive) v Shah Nawaz Pola
[2009] EWCA Crim 655 (Moses LJ, Hedley J, Judge Russell Recorder of Preston) 7/4/09
Significance: meaning of "employee" under s.53 of the Health and Safety at Work Act 1974; court’s power to make compensation orders under the Powers of Criminal Courts (Sentencing) Act 2000
P was in charge of building an extension to a house. He paid unqualified Slovakian nationals, including V, to work on site on a "casual as required" basis. V was working on a raised platform in order to demolish a wall, when he fell and the wall collapsed on top of him. V suffered severe brain injuries and was likely to remain in a state of dependency for the rest of his life.
P was charged with several counts under the Health and Safety at Work Act 1974. These included: s.33(1)(a), failure to discharge a duty pursuant to s.2(1); and s.33(1)(c), contravention of the Work at Height Regulations 2005. P accepted that the facts were such as to give rise to breaches, but he disputed that he fell within the material scope of the 1974 Act. P argued that casual labourers were not "employees" within the meaning of s.53 of the 1974 Act.
P was convicted by the jury on both counts and the judge made a compensation order for £90,000 under the Powers of Criminal Courts (Sentencing) Act 2000, s.130. P appealed.
The Court of Appeal held as follows:
(i) "Employee"
The essential issue was whether workers who did turn up for work on any particular day were under an obligation to remain at work until the end of that day. The judge’s summing up had been defective. It had wrongly focussed on whether there was an overarching obligation on labourers to show up for work in the first place. Notwithstanding, the conviction was still safe given the evidence at trial. It had shown that P would pick the workers up, provide them with transport and bring them lunch. Accordingly, there was an obvious inference that each worker had expected to work during that day and did not consider himself free to leave. The workers did qualify as "employees" for the purposes of s.53.
(ii) Compensation order
Not only had the judge been entitled to make the compensation order that he did, but he had been right to make it. This was for several reasons, namely: there was a clear causal link between P’s conviction and V’s injury; there was sufficient evidence of the gravity of V’s injury (reports from a consultant neurologist and an occupational therapist); V lacked an effective and convenient alternative route for obtaining compensation; P had the means to satisfy the order; the policy of s.130 of the 2000 Act was to give priority to compensation orders over fines; and it was just and proper to make the order in all the circumstances. Moreover, it had been quite proper for the judge to have regard to the JSB Guidelines, in particular the £58,000 - £96,000 bracket for head injuries.
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