Pritchard v Cobden Ltd and Another (No. 1)

JurisdictionEngland & Wales
JudgeLORD JUSTICE O'CONNOR,SIR ROGER ORMROD
Judgment Date30 July 1986
Judgment citation (vLex)[1986] EWCA Civ J0730-9
Docket Number86/0738
CourtCourt of Appeal (Civil Division)
Date30 July 1986

[1986] EWCA Civ J0730-9

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

SALISBURY DISTRICT REGISTRY

Royal Courts of Justice

Before:

Lord Justice O'connor

Lord Justice Croom-Johnson

Sir Roger Ormrod

86/0738

Vivian John Pritchard (By His Next Friend Philip James Pritchard)
and
J H Cobden Limited

MR PIERS ASHWORTH, Q.C., and MR B. J. BROWNE, instructed by Messrs Sharpe Pritchard & Co., London Agents for C.A. Norris, Esq. (Ringwood), appeared for the Appellant (Defendant).

MR W. R. H. CROWTHER, Q.C., and MISS R. M. POSTER, instructed by Messrs Trethowans (Salisbury), appeared for the Respondent (Plaintiff).

LORD JUSTICE O'CONNOR
1

This judgment has been prepared jointly by Lord Justice Croom-Johnson and myself and is to be read as our judgment.

2

On 28th June 1976 the plaintiff sustained serious injuries when his motor car was in collision with the defendants1 vehicle. At that time the plaintiff was not quite 30 years of age and was married with a 6 1/2 year old daughter. He was employed by the Ministry of Defence as a professional technical officer. As a result of his injuries including brain damage the plaintiff is unemployable.

3

The case did not come on for trial until September 1985. By that time much had happened. In January 1977 Mrs Pritchard gave birth to twins and the plaintiff returned home from hospital. Unfortunately, despite a move of house in 1983, the marriage did not survive, Mrs Pritchard petitioned for divorce and the decree nisi was pronounced in December 1984. The plaintiff amended his statement of claim alleging that his marriage had broken down as a result of the injuries he had sustained and claiming as a head of damage any extra expense that he might incur as a result of the divorce. In order to accommodate this unusual claim the wife's claim for financial relief in the matrimonial proceedings was ordered to be tried by the same judge who heard the personal injury case. The trial took on a most unusual form: in addition to the plaintiff and the defendants the wife was represented and the quantification of the plaintiff's claim against the defendants and the wife's claim for financial provision were all heard together over a period of five days. In his judgment the learned judge first of all dealt with all the usual heads of damage in the plaintiff's claim and arrived at a figure of £381,126. He then dealt with the matrimonial proceedings and imposed a "clean break" solution. He ordered that the wife should receive £50,000, that her interest in the matrimonial home when it came to be sold after the twins attained majority should be increased from one-half to two-thirds and he ordered periodic payments in favour of the children totalling £50 per week. The plaintiff was to move out of the matrimonial home into another house which had been bought for him out of an interim payment made by the defendants. The judge now turned back to the claim against the defendants and decided that as a result of the divorce and as a result of the orders that he had just made the plaintiff had suffered damage which he assessed in the sum of £53,000, added to this the sum which he had already assessed and held that the defendants were liable in the sum of £434,126.

4

By their appeal the defendants challenge the learned judge's assessment of damage under some of the customary heads and the whole of his assessment flowing from the divorce. We propose to deal with the customary heads of damage first.

5

Loss of earnings

6

The net loss of earnings to the date of trial was agreed in the sum of £46,478. This was an accurate figure calculated by accountants taking the year by year earnings that the plaintiff would have earned in his post and applying the appropriate tax deductions for his financial situation.

7

The parties agreed that for future loss the judge should use as a multiplicand the net figure of £9,000 per annum. The learned judge took a multiplier of 14 and produced an award of £126,000, so that the total award for loss of earnings past and future came to £172,000. Mr Ashworth on behalf of the defendants has submitted that the long delay in bringing the case to trial has led to an award which is much greater than it would have been had the case come to trial say three, or even four, years after the accident. He submitted that this was a good ground for this court to re-examine the present practice for assessing damage for loss of earnings past and future in the case of a living plaintiff. The present practice is not in dispute and although invited to depart from it the learned judge refused to do so. Loss of earnings between the date of the accident, when the cause of action accrued, and the date of trial have always been claimed as special damage. Since the decision of the House of Lords in Gourley in 1956 it is the loss of wages net of income tax that has to be ascertained. This has always been done as a straight calculation and no-one has suggested that, when the total figure has been ascertained as best the court can in an individual case, any deduction should be made for the mere chance that during that period the plaintiff might not have earned his wages because, for example, he might have fallen ill or lost his job and been unable to get one as remunerative as the one that he held.

8

Until 1970 the element of future loss of earnings was hidden in a single award for general damages which included the award for pain, suffering and loss of amenity and it was only the introduction of interest that required the judges to separate the award for future loss in the award for general damages. The judges were familiar with the practice of finding a multiplicand and applying a multiplier in order to assess the loss of dependency in Fatal Accidents Act cases. It so happened that at that precise time the House of Lords in two cases laid down exactly how the exercise should be performed in Fatal Accidents Act cases: Mallet v McMonagle (1970) A.C. 166 and Taylor v O'Connor (1971) A.C. 115.

9

The fall in the value of money coupled with the real increase in earnings has meant that the award for loss of earnings has come to play a very large part in the awards for damages for personal injuries. As far as interest is concerned the rule is that interest is awarded on the award for past loss of earnings but not on that for future loss of earnings. There was some dispute as to how this should be done in Fatal Accidents Act cases and that dispute was finally settled in Cookson v Khowles (1979) A.C. 556. The House of Lords held (as the Court of Appeal had done) that the award should be split into two parts. The number of years' purchase of the annual dependency, that is the multiplier, should be calculated as heretofor from the date of death but, instead of a simple multiplicand for the whole period, a multiplicand or multiplicands appropriate for the period between death and trial should be used in order to ascertain a sum upon which interest would be payable and the balance of the multiplier applied to a single multiplicand for future loss upon which no interest is payable. In the vast majority of Fatal Accidents Act cases the amount of the dependency of the dependents is directly linked to the notional earnings that the deceased would have earned but for his death. Seeking support from the speeches in Mallet and in Cookson, Mr Ashworth has submitted that in principle there should be no difference between the calculation of the value of the dependency in Fatal Accidents Act cases and the valuation of the loss of earnings element in a personal injury case.

10

In Mallet v McMbnagle the deceased was 25 at the date of his death, the net dependency of his widow and children was £520 per annum, and there was evidence that he would have got a job that would have produced a little more money, say £100 per annum. A jury in Northern Ireland assessed the Fatal Accidents Act damages in the sum of £21,500, that is about 40 years' purchase. Not surprisingly the Court of Appeal in Northern Ireland set aside the award on the ground that it was wholly excessive and ordered a new trial. The plaintiffs came to the House of lords and, in trying to show that the jury's award was not wholly excessive, it was submitted that inflation should be taken into account in assessing the notional earnings of the deceased and indeed a rate of 3 1/2% compound was put forward. Lord Diplock was the only one of their Lordships who dealt with this topic in his speech. He rejected the argument on inflation, saying at page 176:

11

"In my view, the only practicable course for courts to adopt in assessing damages awarded under the Fatal Accidents Acts is to leave out of account the risk of further inflation, on the one hand, and the high interest rates which reflect the fear of it and capital appreciation of property and equities which are the consequence of it, on the other hand. In estimating the amount of the annual dependency in the future, had the deceased not been killed, money should be treated as retaining its value at the date of the judgment, and in calculating the present value of annual payments which would have been received in future years, interest rates appropriate to times of stable currency such as 4 per cent. to 5 per cent. should be adopted."

12

Lord Diplock then went on to consider the problem of assessing a multiplier and said, again at page 176: "The starting point in any estimate of the number of years that a dependency would have endured is the number of years between the date of the deceased's death and that at which he would have reached normal retiring age. That falls to be reduced to take account of the chance, not only that he might...

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