Robert Dean Harries (A Child by his Mother & Litigation Friend, Sharon Sally Harries) v Dr Alan David Stevenson
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 30 November 2012 |
| Neutral Citation | [2012] EWHC 3447 (QB) |
| Docket Number | Case No: 8SA90324 |
| Court | Queen's Bench Division |
| Date | 30 November 2012 |
[2012] EWHC 3447 (QB)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
SWANSEA DISTRICT REGISTRY
Swansea Civil Justice Centre
Caravella House, Quay West, Quay Parade,
Swansea, SA1 1SP
Mr Justice Morgan
Case No: 8SA90324
Gerwyn Samuel (instructed by Smith Llewelyn Solicitors) for the Claimant
James Watson QC (instructed by MDU Services Ltd) for the Defendant
Hearing date: 12 November 2012
The application
On 11 th September 2012, the Claimant applied for the determination of what was said to be a preliminary point of law in the following terms: "whether the Claimant is entitled to seek an award of damages based on a more appropriate discount rate than that set by the Lord Chancellor, pursuant to section 1(2) of the Damages Act 1996 for those heads of damage that would ordinarily be the subject of a periodical payments order in a case where the Defendant is unable or unwilling to make index linked periodical payments".
The Claimant's application was argued before me on 12 th November 2012. Mr Samuel appeared on behalf of the Claimant. Mr Watson QC appeared on behalf of the Defendant. At the conclusion of the hearing, I announced that I would dismiss the application and that I would give my reasons in a later written judgment. This judgment now contains the reasons for my decision to dismiss the application.
The Claim
I was not provided with the pleadings in the action. However, the nature of the claim is summarised in a witness statement by Ms Mei Li, the Claimant's solicitor and her summary is accepted as accurate for present purposes.
Dean Harries was born on 5 th July 1994. When he was 12 days old he became seriously ill. The Defendant doctor was his general practitioner. The doctor failed to diagnose Dean's condition and Dean suffered catastrophic and irreversible brain damage. On 10 th September 2008, acting through his mother as his litigation friend, Dean issued a Claim Form claiming damages for clinical negligence from the doctor. In his Defence, the doctor admitted negligence but contended that a proper diagnosis would not have affected the final outcome. The claim was settled as to liability and causation on terms that the Defendant would pay 95% of the amount of compensation which would be determined by the court. Judgment in these terms was entered on 16 th February 2010.
The court has given directions for the trial of the quantum claim. In particular directions have been given on 16 th February 2010, 26 th November 2010, 28 th September 2011 and 1 st May 2012. The trial is now due to take place in June 2013, with an estimated length of 10 days.
The parties have served a schedule and a counter schedule of loss and damage. The most recent schedule from the Claimant is dated 5 th July 2012. The schedule identifies the sums claimed for past losses and for future losses. The past losses are said to be £1,783,911. The future losses are said to be either £6,176,564 or £8,405,108. The differences in relation to future losses stem from different figures being used for loss of earnings, the cost of care and management and the cost of accommodation. These differences are attributable to the discount rates which are used in the calculations. In the case of each of these differences, the lower sum claimed is calculated using a discount rate to 2.5%. The higher figures which are claimed use lower discount rates, as follows: loss of earnings – minus 1.5%; care and case management — an amalgam of minus 1.5% and 0%; and accommodation — 0% (in some circumstances).
The most recent counter schedule of loss, served by the Defendant, which was put before me is dated 21 st October 2011. The Defendant's figures for loss are significantly lower than those put forward by the Claimant. As regards the discount rate for loss of earnings, care and case management and accommodation, the Defendant adopts a discount rate of 2.5%.
On 25 th April 2012, there was a directions hearing in relation to the claim. The Claimant raised the question of a possible preliminary issue in relation to the discount rate. The court ordered that any application by the Claimant for the determination of a preliminary issue of the appropriate discount rate must be made by a specified date. It was further directed that if such an application were made, the case should be listed for further directions. The present application was made by the Claimant prior to the specified date and the application was listed for hearing on 12 th November 2012. The parties disagreed as to the nature of that hearing. The Claimant contended that the hearing was for the determination of the preliminary issue identified in his application notice. The Defendant contended that the hearing was the directions hearing referred to in the order of 25 th April 2012 and that the first matter which required attention was whether there should be an order for the determination of a preliminary issue as to the discount rate.
The Claimant's position on the application
The Claimant treated the hearing on 12 th November 2012 as if it were the effective hearing of the preliminary issue identified by the Claimant. The application notice was supported by a witness statement of the Claimant's solicitor. The exhibits to that witness statement included a report from an independent financial adviser (Mr Cropper) and an actuary (Mr Carus). Mr Samuel had prepared a skeleton argument running to 34 pages explaining why the court should hold that this case came within section 1(2) of the Damages Act 1996, so that a discount rate different from the rate prescribed by the Lord Chancellor should be adopted. Mr Samuel submitted that the rate itself should be fixed at a later hearing.
In her witness statement, the Claimant's solicitor stated that the Claimant would prefer to have a periodical payments order (a PPO) in relation to some heads of future loss, rather than an award of a lump sum of damages. This was particularly because the present claim involved a substantial claim for care and case management and life expectancy was uncertain. She then stated that the Defendant doctor was insured by the Medical Defence Union; the claim was not against the NHS litigation authority. The MDU's solicitors had confirmed that a PPO could not be made in this case because the MDU could not provide reasonable security for payments under such an order.
The Claimant's solicitor then referred to the report of Mr Cropper which she summarised as stating that Mr Cropper's advice was that a PPO was in the Claimant's best interests. In fact, Mr Cropper's advice was not expressed in those terms. At pages 3 to 8 of his report, he set out his "overview". He stated on page 3, that it was "inappropriate from a financial advice perspective to have to predetermine the most appropriate form of award prior to knowing what the Claimant's reasonable needs are". On page 4 he said: "I consider that the most appropriate action is for the Court to hand down quantum Judgment and adjourn the matter in order that the most appropriate form of award can be formally considered in light of that Judgment". He made similar statements on pages 6 and 8 of his report. However, he said that he was prepared to give "an initial indication" to allow the Claimant's advisers to consider the options available and to raise queries. Later in his report he considered the risks involved for a Claimant who is awarded a conventional lump sum of damages. These risks included the risk that the Claimant might live longer than the life expectancy assumed for the purpose of calculating the lump sum and the risk that the investment return on the lump sum would not be as good as that which was assumed when calculating the lump sum. Mr Cropper then quoted earlier statements of opinion that the one thing which was certain about a lump sum award in respect of future loss was that it would inevitably either over-compensate or under-compensate a claimant. Mr Cropper then considered the advantages and the disadvantages from a claimant's point of view of a PPO in relation to future losses. The disadvantages of a PPO included the fact that the periodical sums payable would not allow a claimant to incur capital expenditure when that might otherwise be desirable. Further, a PPO could prove to be inflexible. Mr Cropper then stated his "initial opinion", on the basis of certain assumptions, which might have to be reviewed when the final assessment of the Claimant's needs had been carried out, in favour of a PPO for care and case management and for loss of earnings and in favour of a lump sum award for accommodation and certain other elements of the claim.
It is also relevant to refer to Mr Cropper's consideration as to whether, given the circumstances of the present case, there would be reasonable security as to the receipt by the Claimants of the sums ordered to be paid under any PPO. Mr Cropper pointed out that the MDU was not protected by ministerial guarantee under section 6 of, or the schedule to, the Damages Act 1996 and were not a government or health service body. He also stated that at the date of his report (16 th May 2012) it was not possible to purchase an annuity that was protected by a scheme under section 213 of the Financial Services and Markets Act 2000. He added: "[h]owever, this position may have changed prior to trial in this case". He then pointed out that even if such an annuity were available, no annuity could be purchased on an ASHE 6115 linked basis, as earnings were a precluded link under the FSA rules.
In her witness statement, the Claimant's solicitor next referred to the report of the actuary, Mr Carus. She summarised his evidence as stating that the...
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...be the subject of evidence and argument in some, perhaps many, cases which did not possess exceptional features (Harries v Stevenson [2012] EWHC 3447 (QB), Morgan J at para 54). [26] The Lord Ordinary's construction did not lead to the conclusion that Parliament had intended that the prescr......
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LHS (by his Litigation Friends and Deputies, JBO and SJB) v First-Tier Tribunal (Criminal Injuries Compensation) Criminal Injuries Compensation Authority (Interested Party)
...submitted that I was not precluded by authority, namely Warriner v Warriner [2002] 1 WLR 1703 and Harries (a Child) v Stevenson [2012] EWHC 3447 (QB), from holding that the Defendant should have applied a different discount rate under section 1(2) of the Damages Act 1996. The Case for the I......
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LHS (by his Litigation Friends and Deputies, JBO and SJB) v The First-Tier Tribunal (Criminal Injuries Compensation Chamber)
...form of a lump sum payment, e.g. if there is doubt that obligations under a PPO will not be met in future: see Harries v Stevenson [2012] EWHC 3447 (QB). Over the years since 2001, the continued appropriateness of using the discount rate in the 2001 Order has come increasingly into question......