Birkett v Hayes
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE EVELEIGH,LORD JUSTICE WATKINS |
| Judgment Date | 18 March 1982 |
| Judgment citation (vLex) | [1982] EWCA Civ J0318-1 |
| Docket Number | 82/0092 |
| Court | Court of Appeal (Civil Division) |
| Date | 18 March 1982 |
and
[1982] EWCA Civ J0318-1
The Master of the Rolls
(Lord Denning)
Lord Justice Eveleigh
and
Lord Justice Watkins
82/0092
1976 B. No. 109
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR. JUSTICE MICHAEL DAVIES)
Royal Courts of Justice.
MR. MARK POTTER, Q.C. and MR MICHAEL BAKER (instructed by Messrs. Mowll & Mowll) appeared on behalf of the Respondent.
MR.PIERS ASWORTH, Q.C. and MR.PETER RIPMAN (instructed by Messrs. Hextall Erskine & Co.) appeared on behalf of the Appellant.
It was a tragic accident. It happened on the 23rd February, 1975. Mrs. Birkett was in the passenger seat. Her husband was driving. She was not wearing her seat belt. There was a collision with another car. She was thrown forward and upward. She received a devastating head injury. Her brain suffered a grave and profound shock. She has ever since been in hospitals or in homes. It has left her with a "behaviour disorder". Whereas before the accident she was exceptionally able, intelligent and attractive, now she behaves so strangely that she needs constant attention. She tires out everyone who tries to look after her.
On the 10th May, 1976 Mrs. Birkett by her next friend issued a writ claiming damages for negligence. The action did not come on for trial for 4 1/2 years. The judge was Mr. Justice Michael Davies. He gave judgment on the 19th January, 1981. He assessed the total damages as £299,663, but he reduced them by 25 per cent because she was not wearing her seat belt, thus giving judgment for £224,747. No question has arisen on that award except as to one item. That is as to the damages for pain and suffering and loss of amenities. The judge said of it:
"The plaintiff's life has been virtually ruined; and she knows it. Apart from her disability, including the loss of the enjoyment of her work and most of the pleasurable activities of life, she has lost her happy marriage—and I repeat, she knows it. At my invitation counsel suggested what the bracket should be. Mr. Potter submits £25,000 to £30,000; Mr. Ashworth submits £20,000 to £30,000. In my judgment this is clearly a case for an award at the top of the bracket, and I award the sum of £30,000".
In addition, the judge awarded interest on that sum of £30,000. He awarded it from the date of the service of the writ (10th May, 1976) to the date of trial (19th January, 1981). That is, for 4 2/3 years. He took the rate of interest allowed by the court on short-term investment account -that may be 9 per cent or 10 per cent or even more. It came to over £16,000. That is, in all, £30,000 plus £16,000. Reduced, of course, by 25 per cent to £12,000, as she was not wearing a seat belt.
The question in this case is as to that award of interest of £16,000. In Jefford v. Gee (1970) 2 Queen's Bench 130 we gave a guideline as to the interest on the item for pain and suffering and loss of amenities. We said that it should be awarded from the date of the service of the writ until the date of trial. This is what I said, speaking for the court:
"In the words of Lord Herschell (1893) A.C.429, 437), interest should be awarded 'from the time of action brought at all events.' From that time onwards it can properly be said that the plaintiff has been out of the whole sum and the defendant has had the benefit of it. Speaking generally, therefore, we think that 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".
Looking back at it now, I feel that guideline was an error. It treats the item (for pain, suffering and loss of amenities) as accruing due at the date of service of the writ: whereas it does not. It is more like the item for cost of future care or for loss of future earnings in which interest only runs from the date of trial. But still the guideline has stood since 1971, and, as I will show, it is now too late to alter it.
Meanwhile, however, we made an attempt to alter it. It was in Cookson v. Knowles (1977) 1 Queen's Bench 913.
In the succeeding years we met with racing inflation. So in Cookson v. Knowles (1977) 1 Queen's Bench 913 in one single judgment we altered the guideline. I said at page 921:
"The plaintiff thus stands to gain by the delay in bringing the case to trial. He ought not to gain still more by having interest from the date of service of the writ. We would alter the guideline, therefore, by suggesting that no interest should be awarded on the lump sum awarded at the trial for pain and suffering and loss of amenities".
That judgment was given on the 29th July, 1977. Our view was given immense support by the Report of the Royal Commission (Command 7054) eight months later, in March 1978. The reasoning is so compelling that I venture to set it out in full:
"Nevertheless, we agree with the Law Commission's conclusion, and with the rule in Cookson v. Knowles, that no interest should be awarded on non-pecuniary damages. As we have pointed out elsewhere, in present economic conditions an investor may well be unable to do more than maintain the real value of his investment, once tax and inflation are taken into account, if indeed he can manage to do this. To award no interest on non-pecuniary damages may, therefore, be at least as favourable as the award of interest at a market rate on damages for past pecuniary loss. A more important justification, however, lies in the conventional nature of non-pecuniary damages.
"We do not think that it would be appropriate to subject essentially arbitrary figures to detailed financial calculations. If an attempt were to be made, allowance would have to be made for inflation in selecting the appropriate interest rate. It would also, strictly speaking, be necessary to apply interest at the half rate only to that part of the damages relating to non-pecuniary loss before trial, assessed on the scale current at the date of injury. This would all be highly artificial.
"We recommend that the rule in Cookson v. Knowles that no interest should be awarded on damages for non-pecuniary loss should stand; and that it should be applied in Scotland and Northern Ireland". (Chapter 16, paras. 747 and 748).
Cookson v. Knowles was taken to the House of Lords and is reported in (1979) Appeal Cases 556, but no view was expressed on this point, see page 573F-G by Lord Diplock:
"(…The question of damages for non-economic loss which bulks large in personal injury actions, however, does not arise in the instant case. It has not been argued before your Lordships and I refrain from expressing any view about it)".
In Pickett v. British Rail (1980) Appeal Cases 136 the House of Lords did consider the point. They overruled Cookson v. Knowles. In doing so they made no mention of the Report of the Royal Commission or the reasoning in it. In deference to the decision of the House in Pickett, Mr. Ashworth felt bound to concede that we were bound to give some interest on the award of damages for pain and suffering and loss of amenities. But he contended that we were free to determine what should be the rate of interest. He pointed to one or two indications that this might be varied according to the circumstances of the case. In Cookson v. Knowles (1979) Appeal Cases at page 579 E-F, Lord Scarman said it might depend on "currently prevailing financial conditions". And the Royal Commission said that "allowance would have to be made for inflation in selecting the appropriate interest rate". I turn, therefore, to consider the relevant considerations on this point.
THE METHOD OF ASSESSMENT
The important thing to notice is that the judge assessed the figure of £30,000 (for pain and suffering and loss of amenities) on the value of money at the date of the trial on the 19th January, 1981—and on the lady's condition at that date. Everyone accepted that this was the right way of doing it. The figure for pain, suffering and loss of amenities is always assessed at the date of the trial. The judge then has before him the full story up to that date, and the outlook for the future. This lady's condition may have deteriorated more than expected, or it may have improved. The judge has to award compensation for the past, and also for the future pain, suffering and loss of amenities. The future that lies ahead, beyond the date of trial, is often of more consequence than the past. The judge awards a lump sum at the date of trial to cover all.
APART FROM INFLATION
If the currency had remained stable from 1976 to 1981, and the lady's condition had remained unchanged, neither improved nor deteriorated, I should have thought that the award in 1976 would have been—not £30,000—but only £20,000, or thereabouts. I can see no reason why that £20,000 should be any different from a contract debt. Suppose that this lady was owed a debt of £20,000 due in May 1976, but judgment only given in January 1981. The plaintiff would get interest only on £20,000 for those 4 2/3 years. The interest would have been about £8,000. She would only have got £28,000 at the trial. She would not get £30,000.
THE EFFECT OF INFLATION
But the currency did not remain stable from 1976 to 1981. There was racing inflation. So that the lady in 1981 received £30,000. I can see no possible...
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