Paul Kitson looks forward to realistic damages for PI cases.

Paul Kitson is a partner at Russell Jones & Walker.

Last December, Kelvin Page was awarded £997,000 for a severe head injury. Page, a steelworker, was speared by a red hot steel bar, which penetrated his brain.

He will never work again. He was 24 at the time of the accident and 28 at the date of trial. His normal retirement age would have been 62.

The trial judge, Mr Justice Dyson, awarded loss of earnings on the basis of a multiplier of 19 and for future care, a multiplier of 24, the highest awarded in a personal injury action.

This follows Wells v Wells and Thomas v Brighton Health Authority, in which trial judges were persuaded to calculate the multiplier by using an interest rate of 3 per cent per annum rather than the usual 4.5 per cent per annum.

About 25 years ago, Lord Diplock, in Mallot v McMonogle and Cookson v Knowles, said that in terms of stable currency, multipliers should be calculated using an interest rate of 4 to 5 per cent. There has been a reluctance on part of the judiciary to depart from this approach.

The Law Commission recognised that a plaintiff investing a lump sum in order to give a rate of return of 4 to 5 per cent would have to take a risk. Since 1981 with the issue of index-linked government stocks, a plaintiff has been able to invest a lump sum and generate an income without having to speculate to match his future losses by other investments. The net rate of return is 3 per cent per annum. It was on this basis that the judges in Wells, Thomas and Page were prepared to assess the multiplier on a rate of return of 3 per cent per annum.

We estimate Page received an additional £265,000 by virtue of the adoption of a multiplier based on the 3 per cent rather than the traditional interest rate.

All three cases are being appealed. The actions have been consolidated and will be listed before the Court of Appeal on 17 June. If the Court of Appeal upholds the judgements in these cases, future plaintiffs can look forward to realistic awards of damages for losses.