The Courts: Procedure and damages for negligence cases

Damages

Lesson Objectives• I will be able to state the meaning of the term

‘compensatory damages’

• I will be able to distinguish between general and special damages

• I will be able to distinguish between pecuniary and non-pecuniary damages

• I will be able to distinguish between lump sum and structured settlements

The purpose of damages

• Damages in a negligence case are compensatory – the purpose is to put the claimant in the position he would have been had the negligent event not occurred

• This means that the claimant will have his actual losses repaid and will also get a further sum of money to compensate for future losses

• It is relatively easy to compensate the victim of a car crash for a damaged car, but much harder to compensate for personal injuries and the effect of the accident on life in the future

• The purpose of damages is to do tis as fairly as possible – the law is not concerned with punishing the defendant, only with compensating the victim of the defendant’s negligent event

• As the claimant is not expected to profit from the award of damages, the claimant must follow the general principle of mitigation of loss

• This means minimising the loss by taking reasonable action to do so – An example of this might be replacing a car that has been written off as soon as possible rather than hiring a car for many weeks as part of the claim against the defendant

• This is often reflected in guidelines given by employers to their staff following losses that might result in an insurance claim as insurance companies operate the principle of mitigation of loss (example from book)

• In practice, the claimant does not have to be too careful about ensuring mitigation of loss; the key criterion is that the action taken by the claimant is reasonable

• Thus, in a case involving an unwanted pregnancy resulting from a negligently performed sterilisation, it was not reasonable to expect the claimant to undergo an abortion

• Since damages are compensatory, the claimant can only receive damages once even if there are several people who contributed to the accident as in the case of Barker v Corus (2006)

• Similarly, the amount actually received can be reduced where the court considers the claimant is partly responsible for his losses

• This is known as contributory negligence and the reduction is in proportion to the claimant's own proportion of blame

• Where the event has resulted in personal injuries, it is usual to get a preliminary idea of the amount (quantum) of damages likely to be awarded

• This helps negotiation and often avoids the need to start proceedings – whilst this is time consuming, it can often result in an earlier settlement of the claim or at least an interim payment to help the claimant with immediate expenses

• When calculating the quantum of damages, there are two types of damages: special and general

• The distinction between them arises as the idea is that special damages reflect losses that are particular to the claimant in the event that has occurred, and general damages are those that are presumed to follow from the negligence

• A distinction is also made between pecuniary and non-pecuniary losses

• Pecuniary = financial losses – e.g. loss of earnings• Non-pecuniary – non-financial losses – e.g. pain and suffering

Special damages

• These are compensation for the financial losses incurred up to the date of the trial – these losses must follow from the negligent event and the losses that are particular to the claimant rather than those that can be foreseen to affect any claimant (the things included can all be given an exact figure)

• This includes medical expenses such as prescription fees and hospital charges

• Also included is loss of earnings up to the date of trial. This is straightforward where the claimant is salaried and has sick pay arrangements that do not cover full pay for the actual duration of time off work

• Deductions are made for benefits actually received; if that were not the case, the C would make a profit as a result of the negligence

• Where the C has had irregular overtime or works for varying hours each week, the calculation is less clear and would have to take into account the history of earnings and the likelihood of missed overtime and work (usual calculation is to take average earnings of previous 26 weeks)

• Damage to goods such as repairing a car or replacing ruined clothes are easy to calculate as special damages, as there is evidence of the cost from receipts

• A car that is written off would attract damages of the market value before the accident – this principle is applied to all such losses that occur as a result of the negligent act

General damages: the principle

• General damages are designed to cover anything that does not have a readily quantifiable figure that can be put on it. There are three major areas that need to be explored:

– Pain, suffering and loss of amenity– Future medical care and personal assistance – Loss of future earnings

Pain, suffering and loss of amenity

• These are very difficult to calculate – the damages awarded under this heading include the physical and mental suffering of the claimant, the injury itself and the reduction in the quality of life of the claimant, known as the loss of amenity

• The Judicial Studies Board lays down guidelines with respect to the size of the award for different injuries

• This enables there to be a general consistency in approach, but provides some range to allow for different levels of severity

• Having the range of figures available also helps claimants and defendants to settle the claim without the need to go to court

• Some examples of typical awards of damages for physical injuries are:– Infertility in a woman who already has children:

£10,000-£20,000– Moderate knee injury: £8,000-£14,750– Total loss of sight in one eye: £27,000-£30,000

The court takes into account many factors when making the overall calculation, as every claimant’s injuries are different, even if there are similar outward appearances such as loss of a limb.

The factors taken into account include:

• Time spent in hospital and the number and type of treatments• Whether the injury is temporary or permanent, and if

temporary, the length of time it will effect (or has effected) the claimant

• Loss of expectation of life: how much shorter the claimant’s life is likely to be

• Loss of quality of life: how much worse his life is as a result of the accident

• Inability to have children and loss of marriage prospects• Cosmetic injury and the effect that has on the claimant• Psychological and emotional damage, such as depression• Whether there is continuing pain and discomfort and a greater

likelihood of serious disease later: in this case there can be an award of provisional damages, with further damages later with the onset of the disease

• Loss of amenity is the effect of the injury on everyday life activities and on the claimant’s enjoyment of life

• This, therefore, covers things such as not being able to do housework and being unable to perform personal care activities such as shaving, as well as being unable to follow a sport or recreation, such as cycling or driving

Future medical care and personal assisitance

• Personal assistance follows on from the concept of loss of amenity and the inability to look after oneself fully

• The problem for the courts is when a member of the victim’s family become the carer and has to lose earnings as a result

• In many such cases there is a claim for compensation in respect of the care provided to the claimant by family members or friends free of charge

• This type of care happens naturally and so the claimant can be awarded damages for the care and domestic assistance – this money is then used for the carer

• Even with relatively small cases, an award of damages can be made for care, particularly where the victim is a child – Giambrone v JMC Holidays (2002)

Loss of future earnings

• This is very difficult to predict and depends on the evidence that can be provided and the arguments that can be made to reduce the claim

• There are many firms offering forensic and investigative services who become expert witnesses in such cases

• Problems (example from book)

• The answer is not clear and relies on likely outcomes based on the evidence and not fanciful outcomes: after all not every teenage guitar player will become a rock star – this is one reason why most claims are settled by negotiation without going to court

• There is a formula used to help:

Claimant’s net annual loss (the

multiplicand)

X Number of earning years

left, less deduction for use of capital

= Damages for future loss of

earnings

• This formula works on the principle that the income from the capital sum of damages invested will produce the lost earnings and that the capital will also be used up during the expected working life used in the calculation

• This is on the basis that the damages awarded are compensation and that the claimant will not make a profit

• However, these calculations are not accurate and some claimants benefit and others do not (example from book)

Method of payment of damages

• Traditionally all damages were paid as a lump sum – this meant the C received his payment and did with it as he wished

• A lump sum could be invested and the interest earned would give the C much more than he would have had if he had not been injured

• This is the reason for the reduction in the multiplier for calculating an award for loss of future earnings and all other payments that are to represent money for the claimant’s future needs

• Lump sum payments are, however, entirely appropriate for loss of or damage to goods, but periodical payments, such as monthly payments, are more appropriate where the claimant is going to need a regular income during his life

• Damages for personal injuries paid in this way are known as a structured settlement and are dealt with by the Damages Act 1996

• A structured settlement is usually paid by the D’s insurer. Once a lump sum has been agreed, some of that sum takes the form or periodic payments ‘structured’ to meet the claimant’s individual needs

• The lump sum, or part of it, is effectively spent on getting these payments made through an annuity provided by a financial institution

• Thus the payments can be guaranteed to increase with inflation and to continue for the rest of the claimant’s life

• There can be tax advantages to this are damages are tax free

• The main advantages of a structured settlement are greater certainty and security compared to the traditional lump sum and the fact that the C does not have to manage his lump sum or pay someone to do that

• The structured settlement is therefore an excellent solution where the victim is a child or is o severely injured that management of a large sum of money would be an unnecessary burden

• Structured settlements, based on an annuity, also solve the problem of a C living for a very short or a very long time and being over- or under-compensated by the lump sum system