What price a shattered life?

The Law Commission recently issued its consultation paper, Damages for Personal Injury: Non-Pecuniary Loss, which promises to be as important for the assessment of personal injury damages as the commission's report on structured settlements.

That report recommends that the multipliers for future pecuniary loss, such as loss of earnings and the cost of care, should be calculated by reference to the return after tax on index-linked government stock.

A Damages Bill was introduced in the House of Lords earlier this year. It does not go as far as the commission proposed but a planned amendment could bridge the gap so that multipliers will be calculated on the basis of a discount rate of about 2.5 to 3 per cent as opposed to the traditional rate of 4.5 per cent. This would raise the usual multiplier of 15 to about 18 for loss of earnings for a man aged 35 and retiring at 65. And for lifetime care for a man aged 35 the mutiplier increases from 18 to about 22 – if annual care costs were £30,000 this would increase the award by £120,000.

The consequences of a review of damages for non-pecuniary loss – general damages for pain, suffering and loss of amenity – could be equally dramatic. The consultation paper raises 10 questions about the assessment of such damages, but the most significant is probably whether they are too high or too low.

In my experience, no injured plaintiff, however generous the lawyers consider the award, ever felt that the compensation was adequate. Does this mean the judges' assessments of the levels of damages are wrong?

An increase of 50 per cent would shock most lawyers. But once we had got over the shock, life would probably continue as before, just as it did after the Court of Appeal decision in Walker v John McLean & Sons (1979). In that case the court decided awards for damages for pain, suffering and loss of amenity in serious cases after 1973 had failed to keep up with awards before that date and it upheld an award of £35,000 for a paraplegic, about 27 per cent higher than the appellants argued was the norm. Updated for inflation, that award in July 1995 would be about £107,000 – the highest Judicial Studies Board (JSB) guideline for the injury in 1995 was £98,000.

However, the Law Commission points out that the third edition of Kemp & Kemp – The Quantum of Damages puts the average award for paraplegia in 1967 at £25,000. Updated to June 1994, that figure would have amounted to a staggering £316,136, over three times the JSB guideline figure.

The commission says that in 1967 the award would not have been divided into pecuniary and non-pecuniary loss. But in 1967 claims for non-pecuniary loss were much less sophisticated, partly because life expectation for a paraplegic would have been much shorter and also because claims for the cost of care and equipment were almost unheard of.

In July 1971 the Court of Appeal confirmed an award of £20,000 for non-pecuniary loss alone in the case of a paraplegic with a more serious condition. In July 1995 this award would be £145,000, a 50 per cent rise on the JSB guidelines.

Similar examples exist for tetraplegics, with a Court of Appeal award equivalent, in June 1994, to £219,742, twice the current level of awards. It has also been suggested that the guideline figure for tetraplegia, given in Housecroft v Burnett (1986) and followed since then allowing for inflation, actually lowered the sum for that type of injury. After reviewing cases of very severe brain injury the Law Commission says its provisional conclusion is that there is some support for the view that, at least in respect of serious injuries, damages have failed to maintain the levels of 25 to 30 years ago.

If plaintiffs correctly assert that their awards are too low, two difficult questions arise: how should the appropriate level of damages be assessed and who should do it? The Law Commission asks if a compensation advisory board should be established with a duty to recommend higher levels of compensation. These would be made after consultation with carers and voluntary organisations which provide advice and support to people who have the appropriate injury.

But that then begs the question of how they can assess the appropriate compensation for the injuries of a tetraplegic, for someone in constant pain, or for someone who cannot walk more than 50 yards. If juries do not assess the damages (and the commission does not recommend this), either a compensation advisory board or some similar body must hear representations and make recommendations.

It would be too cumbersome for an advisory board to consider each class of injury in the way the JSB guidelines have, so it would be a matter of making recommendations for certain classes of injury and then leaving the courts to work out awards in intermediate cases.

However, this is likely to lead to a great deal of undesirable uncertainty until brackets evolve for all classes of injuries and is likely to result in fewer cases being settled and assessments of damages taking longer in the short term.

A better solution would be to increase all awards by a fixed percentage and then to carry on from there with the usual increases for inflation.

What the percentage should be is hard to say, except that on the basis of examples provided by the Law Commission it ought to be at least 50 per cent. This will doubtless spark objections from insurance companies and health authorities. But if these are the proper levels of compensation, why should plaintiffs be denied them?