Dylan Simon v Manuel Paul Helmot (by his next friends and guardians Rosemary Helmot and Kenneth Raymond Jordan)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Clarke,Lord Dyson,Lord Hope,Lord Brown,Lady Hale |
| Judgment Date | 07 March 2012 |
| Neutral Citation | [2012] UKPC 5 |
| Date | 07 March 2012 |
| Docket Number | Appeal No 0064 of 2011 |
| Court | Privy Council |
[2012] UKPC 5
Lord Hope
Lady Hale
Lord Brown
Lord Clarke
Lord Dyson
Appeal No 0064 of 2011
Privy Council
Appellant
Alistair Schaff QC
Bernard Doherty
(Instructed by Alan Taylor & Co)
Respondent
James Dingemans QC
Gordon Dawes
Instructed by Mourant Ozannes)
Heard on 25 January 2012
The respondent in this appeal, Manuel Paul Helmot, sustained very serious injuries in November 1998 when he was struck by a car driven by the appellant while he was riding his bicycle. They were injuries of the kind that are normally classified as injuries of the maximum severity. Liability was admitted as soon as the respondent's claim for damages was notified to the insurers, and contributory negligence was not pursued against him. The issues between the parties related only to the quantum of damages.
As is common in such cases, these issues were complex and difficult. The appellant's insurer agreed to prescription of the respondent's claim being extended indefinitely, no doubt in the hope that it might be possible to achieve agreement as to the amount of the award. This proved not to be possible, so that the extended period was brought to an end in July 2008. Proceedings were issued in the Royal Court on 1 August 2008. Among the issues that the Court had to determine was the amount to be awarded for the losses that the respondent would incur in the future. They included his loss of earnings, but the most significant element was his claim for his future care and case management.
The respondent's injuries included severe brain damage resulting in psychiatric injury and cognitive impairment including severe short term memory loss. He also sustained partial loss of vision and loss of control of his right arm. He will never be able to work again, and he will require specially adapted accommodation and 24-hour care for the rest of his life. He was 28 years old at the time of the accident and 39 at the time of the judgment. His expectation of life has been reduced by 5 years from the normal figure for life expectancy for a man of his years of 45.9 years. Even with that reduction he has many years ahead of him during which the constant care and attention that he needs will require to be paid for.
The case proceeded to trial in October and November 2009 before Deputy Bailiff Collas and three Jurats. On 14 January 2010, after a hearing which lasted for six weeks, the Royal Court awarded the respondent damages in the sum of £9,337,852.27, with interest at the rate of 2% from 1 August 2008 until payment. The respondent had contended that two discount rates should be used for the calculation of his future recurring losses: 0.5% for non-earnings related losses and -1.5% for earnings related losses, including his own loss of earnings. The appellant's contention was that there should be single discount rate of 2.5%. The Royal Court applied a single discount rate of 1%.
On 12 February 2010 the respondent filed a notice of appeal in which he asked that the judgment of the Royal Court should be set aside to the extent that it depended upon a discount rate of 1% and that it should be re-calculated based upon discount rates of -1.5% for earnings related losses and 0.5% for other losses. On 25 February 2010 the appellant filed a cross-appeal in which he contended that the judgment of the Royal Court should be set aside and that a single discount rate of 2.5% should be substituted. On 14 September 2010 the Court of Appeal (Sumption, Jones and Martin JJA) allowed the appeal and dismissed the cross-appeal. In place of the 1% discount rate that had been applied to all future losses by the Royal Court it substituted a discount rate of -1.5% for earnings related losses and 0.5% for other losses. These changes may seem small in percentage terms, but the effect of the Court of Appeal's judgment was to increase the total award of damages by about £4.5m. On 22 July 2011 the Court of Appeal granted leave to appeal to the Board.
As the Court of Appeal said at the outset of its judgment, the issues on this appeal can be understood only in the light of the developing law and practice of the courts in England and Wales: para 4. The English common law has persuasive force in Guernsey in areas not governed by Guernsey statutes or Guernsey customary law, in much the same way as it has in Scotland. In Morton v Paint (1996) 21 GLJ 61, which was a case about occupiers' liability, Southwell JA said that it was common ground that in relation to the law of torts it has been customary for the Guernsey courts to adopt English common law as it has been developed by the English courts. The law relating to the assessment of damages for personal injury is one of the areas in which there has been a large volume of litigation in England. Here too it is a source that may legitimately be referred to in the search for answers to problems that the bailiwick has not previously encountered.
This is not to say that the solutions that have been adopted in English law will be applied in Guernsey without an inquiry as to whether the underlying conditions in the respective jurisdictions are truly comparable. There is no reason why a discount rate calculated in accordance with English common law principles should not be adjusted in order to take account of differences between the two jurisdictions, as the Deputy-Bailiff accepted when delivering the judgment of the Royal Court, para 182. But before that stage is reached it is appropriate to focus on the English approach.
There is however one important difference which has to be noted at the outset. Section 2(1) of the Damages Act 1996 provides that a court awarding damages in an action for personal injury may, with the consent of the parties, make an order under which the damages are wholly or partly to take the form of periodical payments. It gave effect to a recommendation by the Law Commission in its report on Structured Settlements and Interim and Provisional Damages (1994) (Law Com No 224) (Cm 2646). Among its recommendations was that there should be no judicial power to impose a structured settlement on the parties: see paras 3.37–3.53. But a power to do this was introduced by section 100(1) of the Courts Act 2003. In place of the requirement for consent it substituted a new section 2, which provides that the court may order that the damages are wholly or partly to take the form of periodical payments. Power to increase or reduce these payments was conferred by the Damages (Variation of Periodical Payments) Order 2005 (SI 2005/841). The new section 2 applies to England and Wales and Northern Ireland: see section 100(4) of the 2003 Act. It does not apply to Scotland, but in D's Parent and Guardian v Greater Glasgow Health Board [2011] CSOH 99, 2011 SLT 1137, para 52 Lord Stewart suggested that it would be helpful to have the same provision in Scotland too. Section 2 of the 1996 Act, as originally enacted, extended to the whole of the United Kingdom: see section 8(2) of that Act. But like the rest of the statute law of the United Kingdom it has no direct application in Guernsey.
There can be no objection in principle to the parties agreeing to structure the damages in such a way as to enable future costs to be met by a series of periodic payments which are adjusted by reference to an agreed index to take account of inflation. But what Guernsey lacks is the legislative framework which a court needs to make an order to that effect, or at least to order payment in terms of the agreement so that it can be enforced without further recourse to the courts. Experience of the operation of the amended section 2 of the 1996 Act in practice suggests that this is a reform that Guernsey too might usefully adopt for use in cases of this kind. For the time being however it is the way English law dealt with such cases before the 1996 Act was enacted that should be referred to for guidance. It is the closest one can come to the system that currently operates in Guernsey.
Leaving aside the changes introduced by statute, English law requires that an award of damages must take the form of a single lump sum. The award has to take account of all the elements of future loss as well as all the loss for the past. The inevitable delay in the provision of compensation for past losses can be made good by an award of interest at the appropriate rate on those parts of the lump sum that relate to the past. But the payment as part of the lump sum of an amount that is to compensate for losses to be incurred in the future gives rise to a different problem. Account must be taken of the fact that the money is being paid now for losses that will not arise until some date in the future. The adjustment that has to be made to the lump sum to account for this will affect the total amount to be paid by way of damages.
In the majority of cases this is unlikely to have a very large impact on the total award. But in cases where the injury is one of maximum severity the lump sum is already so large that it will make a very great difference to the result. It can make all the difference between the adequacy and the inadequacy of the award to meet the losses which the injured party will sustain in the future. It can make all the difference too to the extent of the defendant's obligation to compensate the plaintiff for his injury. The object of the award of damages for future expenditure is to place the injured party as nearly as possible in the same financial position as he or she would have been in before the accident. They should not be left, at the end of the period during which the loss is to continue, in a better...
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