LHS (by his Litigation Friends and Deputies, JBO and SJB) v First-Tier Tribunal (Criminal Injuries Compensation) Criminal Injuries Compensation Authority (Interested Party)

JurisdictionEngland & Wales
JudgeMr Justice Jay
Judgment Date21 April 2015
Neutral Citation[2015] EWHC 1077 (Admin)
Date21 April 2015
CourtQueen's Bench Division (Administrative Court)
Docket NumberCase No: CO/466/2013

[2015] EWHC 1077 (Admin)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Jay

Case No: CO/466/2013

Between:
LHS (by his Litigation Friends and Deputies, JBO and SJB)
Claimant
and
First-Tier Tribunal (Criminal Injuries Compensation)
Defendant

and

Criminal Injuries Compensation Authority
Interested Party

Grahame Aldous QC and Laura Begley (instructed by Withy King) for the Claimant

James Eadie QC and Adam Farrer (instructed by Treasury Solicitor) for the Interested Party

Hearing date: 27 th March 2015

Mr Justice Jay

Introduction

1

At the outset of the hearing I made an order anonymising the parties as follows: the Claimant will be referred to as "LHS", and his litigation friends and deputies as "JOX" and "SBX".

2

The Claimant was born on 18 th March 1989. He suffered life changing injuries on or about 11 th July 1992 as a result of the gross negligence, amounting to criminal conduct, of his mother in leaving him unsupervised in the presence of an accessible bottle of methadone. In consequence, the Claimant has suffered a severe brain injury which has rendered him significantly disabled in terms of his physical, neurological and neuropsychiatric condition.

3

On 26 th March 1993 an application was made to the Criminal Injuries Compensation Authority ("the CICA") on the Claimant's behalf for compensation for criminal injury. He was held to be eligible on 30 th January 1997. As is not unusual in these cases, there was considerable delay whilst the Claimant's condition was ascertained and assessed, and a barrage of expert evidence was prepared and collated. In March 2012 there was a hearing before the Defendant. Shortly before the hearing date, the parties agreed the quantum of the claim subject only to the appropriate discount rate for future losses. On 20 th March 2012 the Defendant reviewed the agreed figures and conducted what was, in effect, an approval hearing akin to the familiar procedure in the Queen's Bench Division. The Defendant made an interim award of £4,498,335.58, which was net of state benefits and other deductions. The award was "interim" in the sense that it had been agreed that future loss could be provisionally calculated on the basis of a discount rate of 2.5%, with the issue of the appropriateness of that rate to be left for subsequent adjudication.

4

The adjourned hearing took place on 26 th September 2012. The Claimant was represented, as he is before me, by Grahame Aldous QC and Laura Begley; the CICA equally by James Eadie QC and Adam Farrer. In the intervening period, the Claimant, but not the CICA, had obtained expert evidence as to what the discount rate should be "unconstrained by statute" (see paragraph 9(1) of the Defendant's second decision dated 3 rd October 2012). It was agreed before the Defendant that on this hypothesis the rate should be 0% in respect of price-related losses, and minus 1.5% in respect of earnings-related losses. Applying those rates would yield a figure of £16,030,183. Viewing the matter in a different way, the expert evidence was to the effect that the application of a discount rate of 2.5% would mean that the funds would become exhausted before the Claimant reached his 48 th birthday, about half way through his remaining life expectancy. The operating premise for this last conclusion was that real rates of return would not change substantially over the next 20 plus years, in line with the assumptions in Wells v Wells.

5

The Defendant received detailed written and oral submissions in relation to the appropriate discount rate. I will not rehearse those at this stage because the submissions advanced before me are, broadly speaking, the same. Having said that, it is convenient to set out the Defendant's path to its conclusion that the appropriate applicable discount rate was 2.5%.

6

At paragraph 8 of its determination, the Defendant identified the three issues which it considered arose for its decision in relation to future losses:-

"(1) What is the correct interpretation of the phrase 'compensation will be assessed in accordance with common law damages' in paragraph 12 of the Criminal Injuries Compensation Scheme 1990 ('The Scheme');

(2) Is the Panel bound or entitled to take into account the discount rate determined by the Lord Chancellor under section 1(1) of the Damages Act 1996;

(3) Is it appropriate for the Panel to take a different discount rate under section 1(2) of the Damages Act 1996?"

7

I set out the key paragraphs of the Defendant's decision in full:

"58. We accept, and it was common ground, that we must approach the issues with a reasonable and literate understanding of how the award should be comprised, dealing flexibly with matters on which the Scheme is not specific and having regard to the whole object of the Scheme.

59. It is also common ground that the Damages Act does not directly apply to awards made under the 1990 CICA Scheme.

60. We decide that this leads us to an approach based on the common law quantification of damages, as if made by a court. The Scheme does not provide that an award must be identical to that which a judge would make: there are specific differences from common law quantification and there is no specific requirement for an award to be made by CICA identical (after the application of those specific changes to the circumstances of the applicant) to that which would have been made by the court.

61. We accept that full compensation is a fundamental principle of the common law and acknowledge that the interim award in this case may well (depending on the economic circumstances and market rates of return over the rest of the Applicant's life) result in under-compensation, if invested in ILGS, as assumed in Wells. It is possible that the award contended for by the Applicant would, for the same reasons, produce over-compensation. It was to avoid this uncertainty and the expense of constant re-evaluation of economic data that the Lord Chancellor determined the discount rate in 2001 after the specific power so to do was given to him by Parliament, albeit 5 years earlier.

62. In our judgment the correct interpretation of the phrase "compensation will be assessed in accordance with common law damages" in paragraph 12 of the Scheme is that the Panel should seek to follow the general principles of compensation used by courts to quantify pecuniary and non-pecuniary damages so as to provide broad equivalence to rather than identify with quantification of damages recoverable in court claims for personal injuries. In particular we do not accept that our decision on the calculation of future losses should be based solely on the decisions in Wells and Helmot."

8

Given the Defendant's approach to the first issue, it was inevitable that it should conclude that it was both necessary and appropriate that it should apply the discount rate determined by the Lord Chancellor under the Damages Act 1996, namely 2.5%. In its view, this achieved predictability and consistency as between applicants to the Scheme, and claimants in civil proceedings. Subsequently the Defendant explained why there was no coherent basis for taking a different discount rate under section 1(2) of the 1996 Act.

9

It is this decision which the Claimant challenges in these Judicial Review proceedings, permission having been granted by Collins J. In granting permission, Collins J said this:

"I am strongly of the view that the approach of the First-tier Tribunal was correct in law for the reasons set out in the Acknowledgment of Service. However, the point is of importance for many cases and I cannot say that the contrary is unarguable. I do, however, suggest the Claimant's advisers very carefully reconsider the position since I do not believe that success can in any way be guaranteed."

10

No doubt the Claimant faces the obvious forensic and presentational difficulty that, if Mr Aldous' submissions are correct, he would be entitled to an award in the form of a lump sum payment vastly in excess of his hypothetical comparable in a common law claim involving a tortfeasor. (It should be noted that, because in ordinary civil litigation a periodical payments order would be made in a case of this nature, Mr Aldous does not accept that the value, as opposed to the amount, of the two awards differs – at this stage I am just referring to the headline figures). This difficulty, however, cannot preclude the outcome that the Claimant seeks, if principle and authority so require.

11

Before summarising the parties' rival contentions in this Court, it is necessary to set out the relevant CICA scheme, to refer to the relevant statutory framework governing claims for future losses in ordinary civil litigation, and to mention what might be described as some of the landmarks of the common law in this territory.

The Criminal Injuries Compensation Scheme 1990

12

A scheme for compensating victims of crimes of violence was announced in both Houses of Parliament in 1964, and in its original form came into force on 1 st August 1964. Given that the Claimant's application was received by the CICA in 1993, the 1990 Scheme applies to this case.

13

Paragraph 12 of the 1990 Scheme provides:-

" Basis of Compensation

Subject to the other provisions of this Scheme, compensation will be assessed on the basis of common law damages and will normally take the form of a lump sum payment, although the board may make alternative arrangements in accordance with paragraph 9 above. More than one payment may be made where an Applicant's eligibility for compensation has been established...

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