bits of law

TORT | Negligence

Damages:
Assessment
Study Note | Degree

1 MAY 2013

Introduction
There are various categories of damages that may be sought as a remedy in tortious claims. A successful claimant
in a Negligence personal injury action is likely to be awarded damages. Special damages may be calculated
precisely (actual loss) and general damages require the court's assessment. There are two types of damages:
pecuniary and non-pecuniary and these are further divided into heads of damage. The overriding principle of
compensation is to restore the claimant to the position they would have been in if the negligence had not occurred.

Pecuniary expenses
Pecuniary losses capable of being calculated in money terms and can relate to losses suffered pre-trial or post-trial.

Pre-trial loss of earnings

These are special damages. Calculating pre-trial loss of earnings is relatively easy as a precise figure should be
available. If a claimant usually worked overtime or regularly received other benefits such as a company car then this
should also be figured into the calculation.

BRITISH TRANSPORT COMMISSION V GOURLEY [1956] AC 185

The figure used for pre-trial loss of earning is net earnings (after tax and national insurance
deductions).

DEWS V NATIONAL COAL BOARD [1987] 2 ALL ER 545

Pension deductions, normally made at source, can be deducted from the gross earnings to determine
figure for pre-trial loss of earnings.

Post-trial loss of earnings

These general damages as they are unable to be precisely calculated and in practice are far more complicated to
assess. Courts will have to consider whether a claimant is unable to work again due to his injuries or if his earning
potential may have been reduced due to a loss of capacity. The court will make an assessment at trial and award

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one lump sum to the claimant. Therefore the courts have developed a formula to aid in their assessment of future
loss of earnings.
Multiplicand
The multiplicand is the court's assessment of the claimant's net annual loss. This is determined by the gross annual
loss up to the trial, which is modified by any potential increase, for example if promotion was likely. Then from the
gross annual figure, the court will deduct tax, national insurance and pension contributions. This figure will be the net
annual loss (multiplicand).

Multiplier
The multiplier is the period of the future loss. If a claimant is unable to work after the accident, the number will be
based on the pre-accident working life expectancy (retirement age). The multiplier is produced by taking this figure
and converting it using Ogden tables (actuarial tables based on risk factors). The multiplier is taken from the 2.5%
column. The conversion is used to try to avoid a claimant being overcompensated because if he received the lump
sum it could be invested and would attract high interest. In reality a claimant would not have had this potential to
make money from the investment prior to the accident.

Calculation
multiplicand X multiplier = future loss of earnings

Lost years
If a claimant's life expectancy has been shortened by the accident then future loss of earnings are adjusted.

PICKETT V BRITISH RAIL ENGINEERING LTD [1980] AC 136

FACTS:
The plaintiff, a 51 year old, inhaled asbestos at work due to the defendant's negligence. This caused
mesothelioma and the evidence at trial gave the plaintiff's life expectancy as one year.

ISSUE:
How should future loss of earnings be calculated?

HELD:
The Court of Appeal found that future loss of earnings should be assessed on the basis of one year
(multiplier). However, the House of Lords found that this was an unjust outcome as prior to the
inhalation of asbestos the plaintiff would have been expected to work until the age of 65 (a further 14
years).

Lord Wilberforce: '.. in an action for damages account must be taken, of the interest of the
victim. Future earnings are of value to him in order that he may satisfy legitimate desires... the
amount to be recovered in respect of earnings in the 'lost' years should be after deduction of an
estimated sum to represent the victim's probable living expenses during those years...'.

Therefore, if a claimant's life expectancy has been shortened by the negligence then loss of earnings can be
recovered for lost years. These will be subject to a deduction representing an amount that the claimant would have
spent on himself. This deduction is usually 25% for a claimant who is married with dependent children and 33% for a
claimant with no dependants. However, this deduction may be altered on the facts.

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Calculation
Therefore, the multiplier and multiplicand are assessed in the same way as post-trial loss of earnings. A two- stage
calculation is then made:

multiplicand X multiplier (proportion for years claimant will survive)

+
multiplicand (reduced by amount claimant would have spent on himself) X multiplier (remaining proportion:
lost years)
= future loss of earnings

Other considerations in loss of earnings calculations

In addition to tax, national insurance and pension contributions which are deducted from the net annual loss, further
deductions may be made from the loss of earnings claim: Sums paid to the claimant by their employer, under a legal
obligation, for example statutory sick pay. Tax rebates or tax holidays received due to the claimant not receiving his
full salary. Redundancy payments received by the claimant. If the claimant has spent time in hospital deductions
should be made for daily living expenses he has saved (under the Administration of Justice Act 1982 S5).

There are also sums which the claimant may have received which do not need to be deducted: Ex-gratia payments
made by his employer (if the employer is not the tortfeasor), State retirement pension or insurance monies received.

Loss of earnings of children

Assessing a figure for loss of earnings of a child claimant is very difficult. In some cases the courts have taken the
approach of looking at the claimant's family circumstances in order to determine future loss of earnings.

CONNOLLY V CAMDEN & ISLINGTON AREA HEALTH AUTHORITY [1981] 3 ALL ER 250

FACTS:
The plaintiff was injured at the age of five and would never be able to earn a living.

ISSUE:
How should loss of earnings be calculated?

HELD:
The court used the parent's earnings as an indicator of the plaintiff's earning capacity.

CASSEL V RIVERSIDE HEALTH AUTHORITY [1992] PIQR Q168

FACTS:
The plaintiff, an eight year old, was injured at birth and would be able to not work in his lifetime.

ISSUE:
How should loss of earnings be calculated?

HELD:
The Court of Appeal used a multiplicand over double the national average wage, based on the
pliantiff's family history (high academic achievers and successful professionals).

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 Rose LJ: '.. [the plaintiff is likely to possess] legal, artistic and entrepreneurial genes...'.

Using family circumstances can be seen as an unfair approach and the courts have developed an alternative method
of calculating potential earnings.

CROKE V WISEMAN [1982] 1 WLR 71

The court used the national average wage to calculate the child's loss of future earnings.

Medical expenses
A claimant may claim for any medical expenses, including cost of adaptations or aids and travel expenses. Pre-trial
medical expenses, will be available to the court and therefore can be easily totalled and awarded as special
damages. General damages will be awarded for the post-trial medical expenses. These will be calculated by
multiplying the annual cost of treatment (multiplicand) by the number of years the treatment will be required
(multiplier).

POH CHOO V CAMDEN & ISLINGTON AREA HEALTH AUTHORITY [1979] 2 ALL ER 910
Under the Law Reform (Personal Injuries) Act 1948, a plaintiff has the right to choose private
healthcare and claim the cost in damages, even when the NHS provides equivalent treatment.

LAW REFORM (PERSONAL INJURIES) ACT 1948

S2(4): In an action for damages for personal injuries... there shall be disregarded, in determining the
reasonableness of any expenses, the possibility of avoiding those expenses or part of them by taking
advantage of facilities available under the National Health Service Act 1977...

Third party losses

A third party have been required to provide services for the claimant, due his incapacitation, for example as a carer
or more generally household chores. The claimant is able to recover the value for these services.

SCHNEIDER V EISOVITCH [1960] 2 QB 431

FACTS:
The plaintiff was hospitalised after an accident in which her husband was killed. Two of the victim's
family members travelled to France to assist the plaintiff and she claimed for their expenses as part of
her damages.

ISSUE:
Could the family member's expenses be recovered?

HELD:
The expenses could be recovered. The expenses were reasonably necessary as a result of the
accident and were also for reasonable amounts.

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However, if the services are provided by the defendant then the cost cannot be recovered.

HUNT V SEVERS [1994] 2 ALL ER 385

FACTS:
The plaintiff was cared for by her husband, the defendant.

ISSUE:
Could the plaintiff claim for the value of the voluntary services?

HELD:
The House of Lords found that awards made for the voluntary care were for the purpose of
compensating the voluntary carer. It is contrary to public policy to allow a plaintiff to recover money for
services rendered by the defendant.

The decision in Hunt v Severs [1994] has been criticised as there is no obligation on the plaintiff to pay the money
to the third party, unless they had a contract to do so. A third party would have no cause of action against the
defendant themselves.

The court will have to determine an appropriate amount payable for third parties, whether it is a professional carer or
relative that provides the assistance.

DONNELLY V JOYCE [1973] 3 ALL ER 475

FACTS:
The plaintiff was 6 years old at the time he sustained his injuries in a traffic accident caused by the
defendant's negligence. He required care from his mother and a number of medicial aids.

ISSUE:
How should the plaintiff's loss be valued?

HELD:
The plaintiff's loss is the need for the items and these should be valued at the proper and reasonable
cost of supplying those needs.

Megaw LJ: '.. The loss is the plaintiff's loss. The question from what source the plaintiff's needs
have been met, the question who has paid the money or given the services, the question
whether or not the plaintiff is or is not under a legal or moral liability to repay, are...all
irrelevant. The plaintiff's loss... is not the expenditure of money... to pay for the nursing
attention. His loss is the existence of the need for... those nursing services... [the plaintiff] is
entitled to recover damages in respect of the fair and reasonable cost of the special attention,
necessitated by the defendant's wrongdoing...'.

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 HOUSECROFT V BURNETT [1986] 1 ALL ER 332

FACTS:
The plaintiff suffered severe injuries in a car accident, caused by the defendant's negligence. The
plaintiff's mother gave up her paid employment in order to provide substantial care for her daughter.

ISSUE:
How should damages for the care provided be calculated?

HELD:
There are two extremes for valuing the services of a third party in these circumstances: awarding the
full commercial cost for supplying the services or awarding nothing. The value of the services of a third
party who gives up paid employment to attend to the plaintiff would be either the value of the loss of
earnings to a maximum of the value of the commercial rate for providing the services.

O'Connor LJ: '.. in cases where the relative has given up gainful employment to look after the
plaintiff, I would regard it as natural that the plaintiff would not wish the relative to be the loser
and the court would award sufficient to enable the plaintiff to achieve that result. The ceiling
would be the commercial rate...'.

Loss of earning capacity

Claimants who are able to continue working but have suffered a continuing disability may have difficulties if they
need to seek new employment.

SMITH V MANCHESTER CORPORATION (1974) 17 KIR 1

If the court is satisfied the claimant is at risk of losing their job, they may award damages for loss of
earning capacity.

This head of damage cannot be awarded if loss of future earnings is awarded. If a claimant is not working by the time
of trial or is already in a lower paid employment he will be compensated under the loss of earnings head of damage.

Other pecuniary expenses

Any reasonable loss suffered due to the defendant's wrongdoing may be compensated. Therefore, a claimant may
include pecuniary expenses such as clothing, damaged at the time of the incident.

Non-pecuniary expenses
Non-pecuniary losses cannot be mathematically calculated in money terms. Clearly in personal injury claims it is not
possible to restore the claimant to his position prior to the incident. Therefore, the aim of damages for non-pecuniary
losses is to compensate the claimant.

Pain and suffering

The pain and suffering head of damage covers past, present and future: pain and physical and mental anguish. This
may include fear of future treatment or anguish caused by knowing that your life expectancy has been shortened.

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 WISE V KAYE [1962] 1 QB 639

FACTS:
The plaintiff was permanently unconscious and unaware of her surroundings.

ISSUE:
Could damages be awarded for pain and suffering?

HELD:
A plaintiff may only claim for pain and suffering if they are aware of their injuries (subjective test).
Therefore, no claim can be brought for a period the plaintiff has been unconscious.

Loss of amenity
This is a broad head of damage to aiming to compensate the claimant for loss of enjoyment of life. The areas that
may be compensated include loss of senses, reduced marriage prospects and inability to pursue interests or
hobbies. The amount is calculated on the basis of the degree of deprivation. Therefore, a court will take into account
the claimant's lifestyle prior to the incident and a larger award is likely to be made to those who were previously very
active.

WEST V SHEPHARD [1964] AC 326

The test for loss of amenity is an objective one. Therefore, an unconscious plaintiff may recover for
loss of amenity.

Quantification
There is no quantum for assessing non-pecuniary damages and therefore, the courts will make an award based on
the facts and considering relevant case law.

Interest on damages
The courts have always exercised a discretionary power to award interest on damages and there is now some
statutory guidance on the matter.

SENIOR COURTS ACT 1981

35A Power of High Court to award interest on debts and damages

35A(1): Subject to rules of court, in proceedings (whenever instituted) before the High Court for the
recovery of a debt or damages there may be included in any sum for which judgment is given simple
interest, at such rate as the court thinks fit or as rules of court may provide, on all or any part of the
debt or damages in respect of which judgment is given, or payment is made before judgment, for all or
any part of the period between the date when the cause of action arose and -
35A(1)(a): in the case of any sum paid before judgment, the date of the payment; and
35A(1)(b): in the case of the sum for which judgment is given, the date of the judgment.

35A(2) : In relation to a judgment given for damages for personal injuries or death which exceed £200
subsection (1) shall have effect -

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 35A(2)(a): with the substitution of 'shall be included' for 'may be included'; and
35A(2)(b): with the addition of 'unless the court is satisfied that there are special reasons to the
contrary' after 'given', where first occurring.

Therefore, under the SCA 1981 S35A, interest must be awarded on damages recovered for personal injury claims
over £200 unless there are special reasons to the contrary.

Case law provides principles for determining the rates of interest for different heads of damage.

JEFFORD V GEE [1970] 2 QB 130

FACTS:
The plaintiff suffered several minor injuries and a badly broken leg in a road traffic accident. The
plaintiff's leg injury required numerous operations and he did not regain proper use of his leg.

ISSUE:
How should interest be calculated?

HELD:
The court explained the principle underlying interest payments and set out guidelines for interest
awards.

'.. Interest should not be awarded as compensation for the damage done. It should only be
awarded to a plaintiff for being kept out of money which ought to have been paid to him...'

'.. special damages should be dealt with on broad lines... In all ordinary cases we should have
thought it would be fair to award interest on the total sum of special damages from the date of
the accident until the date of trial at half the rate allowed on the other damages...'

'.. [for non pecuniary losses] he should be awarded interest on the compensation payable. But
such interest should not run from the date of the accident: for the simple reason that these
misfortunes do not occur at that moment, but are spread indefinitely into the future: and they
cannot possibly be quantified at that moment, but must of necessity be quantified later....
interest on this item (pain and suffering and loss of amenities) should run from the date of
service of the writ to the date of trial. This should stimulate the plaintiff's advisers to issue and
serve the writ without delay - which is much to be desired. Delay only too often amounts to a
denial of justice...'

COOKSON V KNOWLES [1979] AC 556

Interest on special damages should be awarded at half the investment rate for money paid into court,
from the date of the accident to the date of trial.

WRIGHT V BRITISH RAILWAYS BOARD [1983] 2 AC 773

Interest on non-pecuniary loss should be awarded at 2%.

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Therefore, interest on special damages should be awarded at half the short-term investment rate, from the date of
the accident to the date of trial. Interest on damages for pain and suffering and loss of amenity should form date of
service of proceedings to date of trial at the rate of 2%.

Provisional damages
Damages in personal injury claims are awarded in a lump sum at the date of trial to cover the claimant's past,
present and future losses. This may result in the claimant being under or over compensated. Therefore, the courts
may award provisional damages in some cases.

SENIOR COURTS ACT 1981

As amended by S6(1) of the Administration of Justice Act 1982.

S32A Orders for provisional damages for personal injuries

S32A(1) This section applies to an action for damages for personal injuries in which there is proved or
admitted to be a chance that at some definite or indefinite time in the future the injured person will, as a
result of the act or omission which gave rise to the cause of action, develop some serious disease or
suffer some serious deterioration in his physical or mental condition.

S32A(2): .. any action for damages to which this section applies in which a judgment is given in the
High Court, provision may be made by rules of court for enabling the court, in such circumstances as
may be prescribed, to award the injured person -
S32A(2)(a) damages assessed on the assumption that the injured person will not develop the disease
or suffer the deterioration in his condition; and
S32A(2)(b) further damages at a future date if he develops the disease or suffers the deterioration.

Therefore, an order for provisional damages may be made if there is a chance the claimant's condition may seriously
deteriorate or a serious disease may develop as a result of the original tort (S32A(1) SCA 1981). Provisional
damages may be awarded if the judge awards the damages at trial as if the disease or deterioration will not occur
(S32A(2)(a) SCA 1981) and the claimant returns to court for further award of damages because the specified
deterioration or disease occurs (S32A(2)(b) SCA 1981).

HURDITCH V SHEFFIELD HEALTH AUTHORITY [1989] 2 ALL ER 869

A court can set a time limit within which the claimant must return to court for further award of damages,
if the specified deterioration occurs.

WILLSON V MINISTRY OF DEFENCE [1991] 1 ALL ER 638

Provisional damages can only be awarded if there is a clear and severable risk, a continuing
deterioration is insufficient.

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 JOHNSTON V NEI; GRIEVES V FT EVERARD [2007] UKHL 39

FACTS:
The claimants had been exposed to asbestos due to the defendants' negligence. The claimants
developed pleural plaques due to this exposure. Pleural plaques have no symptoms and do not cause
other asbestos related diseases. However, pleural plaques may indicate presence of fibres in the
lungs, which may independently cause life threatening diseases. Therefore, the claimants suffered
severe anxiety and depression.

ISSUE:
Could provisional damages be awarded?

HELD:
The House of Lords ruled that provisional damages could not be awarded where the claimant had
failed to establish a cause of action.

Lord Hoffman: '.. Proof of damage is an essential element in a claim in negligence and in my
opinion the symptomless plaques are not compensatable damage. Neither do the risk of future
illness or anxiety about the possibility of that risk materialising amount to damage for the
purpose of creating a cause of action, although the law allows both to be taken into account in
computing the loss suffered by someone who has actually suffered some compensatable
physical injury and therefore has a cause of action. In the absence of such compensatable
injury, however, there is no cause of action under which damages may be claimed and
therefore no computation of loss in which the risk and anxiety may be taken into account...'.

Periodical payments
Periodical payments provide a more flexible way of paying damages, where payments are made at regular fixed
intervals based on the claimant's current circumstances. Periodical payments avoids difficulties of a claimant
investing the lump sum badly and losing the money and makes the court's assessment easier as the future costs do
not need to be so accurately predicted. However, periodical payments carry huge administrative costs and leave
defendants and insurers uncertain about their liability.

This article can be found online at www.bitsoflaw.org/tort/negligence/study-note/degree/remedies-damages-assessment-non-pecuniary-

payment where links to further resources are available.

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