Compensatory damages mitigation of loss

One of the guiding principles in assessing damages is that claimants should be put back in the position they were prior to the wrongdoing having been committed they should be no better off for the fact of suing than they would have been had the tort never have occurred. The court should not allow the claimants to profit from the fact that they have been injured. This means that a claimant who is seeking to claim compensation will need to mitigate their own loss. They will have to take steps in order to prevent the loss that they have suffered being compounded. By way of example a claimant who unreasonably refused medical treatment would not be able to recover damage for harm which resulted from refusing that treatment.

The claimant can normally only bring one claim based on one set of facts. The court must seek to award a single lump sum to cover all losses associated with a particular tort. The judge therefore has to make an assessment of possible future losses once an award of damages has been made the claimant will not be able to go back to court with a second claim merely because an injury worsens.

A distinction is drawn between special damages and general damages. General damages are losses which are not capable of being calculated precisely and are therefore left to the court to determine. Special damages are those losses which are capable of being calculated precisely at the time of the trial and which are stated in the form of a calculation this covers for example financial losses incurred in the lead up to a trial.

Damages for personal injury

In order to consider how damages for personal injury will be calculated it’s necessary to divide them into two categories. The two categories are pecuniary losses which are capable of mathematical calculation in money terms and non-pecuniary losses which are not capable of being calculated in money terms. The main example of a non-pecuniary loss is pain and suffering caused by an injury.

‘Pain and suffering’ is a head of damage covering past, present and future pain and physical mental anguish including the fear of future surgery etc. It can also cover the claimant’s anguish of knowing their life expectancy has been shortened because of an accident. The court will need to assess the claimant’s pain and suffering to reach a monetary figure for compensation. See for example the case of Wise –v- Cane 1962 1QB638. This establishes a subjective test for awarding a sum for this head of damage. It means that the claimant must be aware of the injuries to be able to claim for pain and suffering. If a claimant was unconscious they would not be able to recover damages for pain and suffering because they would not be aware of it.

Another head of damages in this area is called loss of amenity. This refers to damages which aim to compensate a claimant for loss of the enjoyment of life. Unlike pain and suffering the test for this head of damages is objective see for example West –v- Shepherd 1964 AC326 a claimant will be able to claim for this head whether conscious or not.

There is no easy way to assess non-pecuniary damages. Such a tort could mean different things to different people. The courts have to consider the individual example of each case. When it comes to pecuniary losses the situation is more straightforward. The court can usually make a straightforward calculation based on the figures available to them.

The claimant may be able to recover medical expenses that have been incurred prior to trial. If they occur pre-trial then they will be special damages and calculated by adding them together. If they are incurred post-trial they will be general damages the court will base its assessment on the annual cost of treatment and the number of years the treatment is likely to continue. If the claimant received treatment from the NHS then generally it would be free of charge meaning that they have not incurred any treatment costs to recover from the defendants. The effect of S.2(4) of the Law Reform Personal Injuries Act 1948 is that a claimant cannot be found to have failed to mitigate their loss by paying for private treatment rather than obtaining free treatment under the NHS. So in other words obtaining private healthcare will not be seen as a failure to mitigate one’s losses.

With regards to loss of earnings any loss of earnings incurred pre-trial should be easy to calculate. When it comes to calculating post-trial loss of earnings this becomes more complicated. A claimant may never be able to work again or they may be out of work for some time etc. The court normally applies a formula to calculate future loss of earnings for the claimant. This requires you to note two odd terms: Multiplicand and multiplier.

The first step is for the court to ascertain the claimant’s gross annual loss at the date of the trial. If they would have had an increase in earnings due to a promotion and that increase was likely to happen the court can take that into account in assessing the amount of the claimant’s loss. From the gross salary the court will deduct tax, national insurance and pension contributions deducted at source the resulting figure will be the multiplicand. The court will then need to consider how long the claimant will lose this money. If the claimant is never expected to work again then the period will be based on the claimant’s pre-accident working life expectancy. This period of time will be called the multiplier. If the claimant is expected to return to work at some time in the future then a smaller multiplier can be used. The claimant should not end up in a better position as would have been the case if the accident had not occurred. But on the other hand the claimant should not be under-compensated this would be the case if the interest they receive on their damages does not protect them against the effect of inflation.

The courts use actuarial tables called the Ogden Tables in order to find the correct multiplier. The court can also reduce awards based on possibilities such as the claimant being made redundant or similar. The court refers to possibilities like this as ‘contingencies of life’. Of course, in reality there may be a number of other features to take into account. Awards of damages can often be highly case specific so it is worth reading a few judgements in this area to familiarise yourself with the relevant principles.

There may be a situation where a client’s injury is so serious that it reduces their life expectancy. Consider the case of Pickett –v- British Rail Engineering 1980 AC136. This established that claimants whose life expectancy had been shortened by an incident could recover loss of future earnings for ‘the lost years’. If the method above is applied there is a risk that they will be over-compensated. If the claimant were working normally they would spend part of their earnings on themselves on the balance their earnings left over would be to support their family. So when the loss of earnings figure is calculated for the period after the claimant is expected to die it is necessary to deduct the amount which the claimant would have spent on themselves. That deduction is normally set at 25% for a person married with dependent children and 33% of those with no dependents.

This question becomes even more complicated when a child is involved. It can be difficult for a court to assess the sum of damages awarded to a child when there is no indication as to what they will do for a living. One approach could be to see what the child’s parents earn and assume that the child will reach a similar level or the court could take the national earnings and base the child’s future earnings on those figures. Again, the cases are extremely varied.

A claimant may also claim to recover costs of services. In the case of Schneider –v- Eisovitch 1962 QB430 it was held that a claimant would have to show that the need for services followed from the injury caused by the defendant’s negligence. The claimant was able to recover the costs of the services because the claimant is being compensated for their need for care. This was a need caused by the defendant’s tort.

Another head of pecuniary losses arises where a claimant is injured or suffers a continuing disability but is still able to work. An award of damages can be made for the disadvantage on the job market that the claimant may suffer. The judge would have to be satisfied that there is a real risk of the claimant losing their job as a result of the injury. The judge may then try and put a monetary value on the chance of that happening. This is known as the Smith and Manchester Corporation caseafter the case of Smith –v- Manchester Corporation 1974 17KIR.

Claimants may also recover for any pecuniary expenses that they have incurred due to the incident. A claimant could recover costs of clothing, jewellery, spectacles etc there’s no definitive list. There may be other additional pecuniary damages that a claimant might receive for example additional financial support like insurance payments, ill health pensions etc there is the general principle that the claimant should not be better off as a result of an accident. This could suggest that such payments should be deducted from a claimant’s damages. However there are some payments which as an exception a claimant is allowed to keep in full even though they are an extra benefit which the claimant has received only because of the accident. Typically, the following are not deducted from claimant damages:

Insurance payments, ill health pensions, charitable payments. If these sums were deducted it would discourage people from protecting themselves by taking out insurance.

Damages and personal injury are awarded in one lump sum at the date of the trial. This should cover the past, present and future losses which a claimant might suffer. The defendant may be ordered to pay compensation at a level which protects the claimant if their condition deteriorates although that might never happen. There are limited alternatives that exist to the lump sum award system within two statutory provisions. The first is S.32(a) of the Senior Courts Act 1981 which allows for an award of provisional damages the second is S.2 of the Damages Act 1996 which allows the court to award damages for personal injury as a periodic claim rather than a lump sum.

Damages on death

We now need to consider two separate issues related to the death of a claimant. Firstly, what is the position if the claimant dies before they have received an award of compensation. Secondly, what damages can be recovered where a defendant’s negligence causes the claimant’s death.

A useful precis of approaches to cases in this area can be found here.

The Law Reform (Miscellaneous Provisions) Act 1934 deals with the rules that govern a situation where the claimant dies for a reason unrelated to the defendant’s negligence. The 1934 Act allows any existing cause of action to continue after death. Under S.11 of the Act all causes survive the death of either the claimant or a defendant. A claim by a claimant survives for the benefit of their estate.

The claim for a deceased claimant may cover pain and suffering and loss of amenity naturally these end at the date of their death. They may also claim pecuniary losses for damage to property, medical and other expenses or loss of income up to the date of death. Where the claimant’s death has been caused by the defendant’s tort the claim for loss of income under the 1934 Act must end at the date of death. If the claim is brought by the estate damages awards become part of the estate this means that if the deceased claimant has left a Will the damages ought to be distributed under the terms of that Will. The 1934 Act allows a claimant to launch proceedings even after their death if their personal representatives are able to commence it on their behalf. Alternatively if the claimant dies during proceedings that case can be continued by the claimant’s representative.

We are now going to consider cases under the Fatal Accidents Act 1976. This created a new cause of action allowing dependents to sue for the death of the person on whom they were dependent. A claim under the 1976 Act is usually commenced by the deceased person’s representative. In order to bring a claim under the 1976 Act claimants would have to be able to show that had the deceased survived the deceased would have been able to bring a claim against the defendant themselves. A claim under the 1976 Act can be described as being parasitic on the original claim by the deceased.

There are three possible claims under the 1976 Act. Firstly a claim on behalf of the dependents for the loss of dependency. Secondly a claim for damages for bereavement which is limited to certain persons only. Thirdly a claim for funeral expenses if those expenses are being paid by dependents.

In order to calculate a loss of dependency a person must satisfy two requirements. They must be listed within the class of dependents under the 1976 Act and they must have been actually financially dependent on the deceased. Pecuniary benefit does not simply mean provision of money. They can mean replacing services which were provided by the deceased.

In these cases the multiplicand is based on the deceased’s annual earnings. However the court will also take into account the fact that if the deceased were alive they would have spent part of these earnings on themselves. In order to avoid over-compensating the dependents the deceased’s own living expenses will be deducted from earnings. Again the conventional deduction is 25% for a married person and 33% for a person without children. In the 1976 Act case the multiplier should be based on the period of loss to the dependent in other words the period for which the dependency might have continued clearly the longest possible period of dependency could continue until the deceased would have ceased to work. However if the particular claimant would not be dependent on the deceased for as long a shorter multiplier could be applied to their claim. Once the basic period for the multiplier had been calculated they need to be adjusted in just the same way as a living claimant. So the multiplier of the 1976 Act case would be calculated by taking the period of a dependency that a particular dependent might have on the deceased and then converting that into a multiplier using the Ogden Tables.

The only people who can claim damages for bereavement are the wife, husband or civil partner of a deceased or the parents or mother if illegitimate of a minor who has never married or a civil partner. The amount of bereavement damages is currently £15,120 which is a fixed sum this is not within the court’s discretion. Only one award of £15,120 will be made in respect of the death so where both parents are entitled to the claim the award is split between them. The third claim permitted is a claim for funeral expenses where they have been paid by the dependents. This is straightforwardly calculated in the same way as any other damages.