Lim Poh Choo v Camden & Islington Area Health Authority [1979] UKHL 1

House of Lords

Between

Lim Poh ChooAppellant

Camden & Islington Area Health AuthorityRespondent

Before

Lord Diplock Viscount Dilhorne

Lord Simon of Glaisdale

Lord Scarman

LORD DIPLOCK VISCOUNT DILHORNE

My Lords,

I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Scarman. I agree with it, and there is nothing that I can usefully add.

Viscount Dilhorne

My Lords,

I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Scarman. I agree with it and there is nothing that I can usefully add.

Lord Simon of Glaisdale

My Lords,

I have had the privilege of reading in draft the speech about to be delivered by my noble and learned friend, Lord Scarman. I agree with it and with the order which he proposes.

Lord Scarman

My Lords,

On February 28th 1973 Dr. Lim Poh Choo, a senior psychiatric registrar employed in the National Health Service, was admitted to a National Health Service hospital for a minor operation, which was carried out the next morning. When, following upon the operation, she was in the recovery room, she suffered a cardiac arrest. It was the result of the negligence of some person for whom the area health authority is vicariously responsible. The consequences for Dr. Lim have been disastrous. Before March 1st 1973 Dr. Lim, who was then thirty-six years old, had a career ahead of her in her chosen speciality of psychiatric medicine. She was described by one, who knew her and her work, as a " remarkably intelligent doctor ". She is now the wreck of a human being, suffering from extensive and irremediable brain damage, which has left her only intermittently, and then barely, sentient and totally dependent upon others.

On September 19th 1974 Dr. Lim, suing by her mother as next friend, issued her writ against the Camden and Islington Area Health Authority, who in due course delivered a defence denying negligence. However, in November 1977, shortly before trial, the defendants admitted liability. The one issue at trial was, therefore, the question of damages. But its complexities are such that it has occupied the trial judge for the best part of five days, the Court of Appeal six days, and your Lordships' House five days.

It cannot be said that any of the time judicially spent on these protracted proceedings has been unnecessary. The question, therefore, arises whether the state of the law which gives rise to such complexities is sound.

Lord Denning M.R. in the Court of Appeal declared that a radical reappraisal of the law is needed. I agree. But I part company with him on ways and means. The Master of the Rolls believes it can be done by the judges, whereas I would suggest to your Lordships that such a reappraisal calls for social, financial, economic, and administrative decisions which only the legislature can take. The perplexities of the present case, following upon the publication of the report of the Royal Commission on Civil Liability and Compensation for Personal Injury (Cmnd. 7054, March 1978, " the Pearson report"), emphasise the need for reform of the law.

The course of the litigation illustrates, with devastating clarity, the insuperable problems implicit in a system of compensation for personal injuries which (unless the parties agree otherwise) can yield only a lump sum assessed by the court at the time of judgment. Sooner or later—and too often later rather than sooner—if the parties do not settle, a court (once liability is admitted or proved) has to make an award of damages. The award, which covers past, present, and future injury and loss, must, under our law, be of a lump sum assessed at the conclusion of the legal process. The award is final; it is not susceptible to review as the future unfolds, substituting fact for estimate. Knowledge of the future being denied to mankind, so much of the award as is to be attributed to future loss and suffering—in many cases the major part of the award—will almost surely be wrong. There is really only one certainty: - the future will prove the award to be either too high or too low.

Lord Denning appeared, however, to think—or at least to hope—that there exists machinery in the rules of the Supreme Court which may be adapted to enable an award of damages in a case such as this to be "regarded as an interim award" (p.912E). It is an attractive, ingenious suggestion—but, in my judgment, unsound. For so radical a reform can be made neither by judges nor by modification of rules of court. It raises issues of social, economic and financial policy not amenable to judicial reform, which will almost certainly prove to be controversial and can be resolved by the legislature only after full consideration of factors which cannot be brought into clear focus, or be weighed and assessed, in the course of the forensic process. The judge—however wise, creative, and imaginative he may be —is " cabin'd, cribb'd, confin'd, bound in " not, as was Macbeth, to his " saucy doubts and fears" but by the evidence and arguments of the litigants. It is this limitation, inherent in the forensic process, which sets bounds to the scope of judicial law reform.

The present litigation reveals another confusing factor in the law. The trial judge, giving judgment on the 7th December 1977, assessed damages upon the basis of the facts as they were at that date. When the case reached the Court of Appeal in June 1978 Dr. Lim's mother, who had been caring for her in Penang, had suffered a deterioration in her health, which made it very probable that in the near future Dr. Lim would have to be transferred to a nursing home in England. The Court of Appeal, therefore, granted leave to admit fresh evidence, and on July 7th 1978 gave judgment on the new basis. When the case reached your Lordships' House in March 1979, the transfer had taken place and an entirely new assessment of the cost of future care was needed, if justice was to be done. The House, in its turn, allowed fresh evidence to be called so that the cost of future care could be assessed upon the new factual basis which had developed since trial and after the hearing in the Court of Appeal. The device of granting the parties leave to adduce fresh evidence at the appellate stages of litigation can, as in the present case, mitigate the injustices of a lump sum system by enabling the appellate courts to bring the award into line with what has happened since trial. But it is an unsatisfactory makeshift, and of dubious value in any case where the new facts are themselves in issue.

A further disturbing feature in this branch of the law is that Dr. Lim's case is not a rare exception. Our courts have frequently to face the task of assessing the damages to be awarded to a plaintiff who by an accidental injury has been converted from an active, healthy and intelligent member of society to a barely sentient human wreck. In the past, it was unlikely

that the victim would long survive her catastrophic injury. But the miracle of modern medicine is such that in many cases—and Dr. Lim's is such a case—the expectation of life remains substantially as it was before the accident—granted a high and costly level of continuing care and medical treatment.

Amidst these confusions and perplexities it falls to your Lordships' House to do what it can to provide trial judges with guidance which will enable them to reach reasonable and consistent awards until such time as Parliament intervenes by legislation to reform the law. Perfect justice is not attainable: nor would it be wise in the search for the nearest approximation to justice to abandon principles already judicially determined, whatever one's " saucy doubts and fears ". If your Lordships can lay down, by decision in this case, an intelligible and moderate way of assessing damages for catastrophic, but not fatal, personal injuries under the law as it now is, there will have been achieved all that the judicial process can offer towards the improvement of this area of the law.

My Lords,

I will first set out the details of the judge's award (which was upheld by the majority of the Court of Appeal). Secondly, I will attempt to deal with the questions of principle which arise for your Lordships' consideration. Finally, I will consider the detailed application of the law to the facts of this particular case and state my conclusions.

The Judge's Award. [1978] 3WLR 895 at p.904.

The judge awarded Dr. Lim a total sum of £254,765. He apportioned it as follows:

(1)Pain, suffering, loss of amenities

£20,000

Interest from date of writ,

£5,930

£25,930

Out of pocket expenses including £680, cost of stay at Tang Tock Seng Hospital and Singapore nursing home

£3,596

(3) Cost of care to date of judgment:

40 months at £200 per month,

£8,000

(4) Interest on (2) and (3) from date of accident (1/3/73) to judgment

£2,482

£14,078

(5) Loss of earnings to date of judgment

£14,213

(6) Interest on (5) from date of accident to judgment

£3,044

£17,257

(7) Cost of future care: -

Malaysia, 7 x £2,600 p.a. discounted to:

£17,500

England, 11 X £8,000 p.a.

£88,000

£105,500

(8) Loss of future earnings:

14 X £6,000 . . .

£84,000

Loss of pension,

£8,000

£92,000

On appeal to the Court of Appeal, the defendants attacked the award in many respects. Those that remain for consideration by your Lordships' House may be classified and summarised as follows:

against the total of the damages awarded. It was submitted that, regardless of the view taken as to the correctness or otherwise of the separate items in the award, the total sum (£254,765) is excessive, being out of line with comparable current awards and contrary to public policy. " Damages are getting out of control" was the vivid condemnation of the total of the award by Mr. Davies, Q.C., counsel for the appellants:

against the award of £20,000 for pain and suffering and loss of amenities. The appellants' first submission, which they reserved for this House, was that in the case of an unconscious, or barely sentient, plaintiff the award must be small—a conventional sum

in recognition of an unfelt catastrophe. Secondly, they submitted that the award was excessive in the circumstances; that it failed to take sufficiently into account that there was no evidence that the plaintiff was suffering any pain, and that she was so intellectually impaired as not to be able to appreciate what had happened to her:

(C) against the award for loss of earnings on the following grounds: —

that, in cases where the plaintiff has been rendered incapable of earning a living, there is no right to such damages. In such cases the entitlement is to an amount of damages which will ensure that the plaintiff shall not want for anything that money can buy to assure her of the treatment and comfort she needs—i.e. the full cost of care.

that, if damages for loss of earnings are recoverable, they should be limited to what the plaintiff would have saved, or expended upon the maintenance of his or her dependants,

that, upon whatever basis such damages are recoverable (if they be recoverable at all) there must be no duplication or overlap between the separate sums awarded for loss of earnings, loss of amenities, and cost of care.

(D) against the award for cost of future care, that the calculation must be on the basis that resort is to be had to capital as well as income, and

(E) that in calculating future loss no account may be taken of prospective inflation.

The plaintiff cross-appealed in the Court of Appeal and in this House, alleging that £20,000 was an insufficient award for pain, suffering, and loss of amenities at date of judgment (December 1977).

The Court of Appeal, having admitted evidence as to the cost of English nursing homes to which the plaintiff might be admitted in the near future, dismissed the appeal, Lord Denning, M.R. dissenting. They dealt as follows with the issues summarised above.

All three judges refused to vary the sum awarded for pain and suffering and loss of amenities, though Lawton and Browne L.JJ. thought that in the light of the medical evidence as to Dr. Lim's mental condition it might have been too low.

Lord Denning, in the course of a powerful dissent, held that the total of the damages awarded was excessive. He called for a radical reappraisal of the law, and declared his view of the acceptable principle in cases such as this. He said, at p.908E,

" Fair compensation must mean that she is to be kept in as much " comfort and tended with as much care as compassion for her so " rightfully demands: and that she should not want for anything that " money can buy. But I see no justification in law or in morals in " awarding to her large sums of money in addition to those needed to " keep her in comfort."

Invoking the doctrine of duplication (or overlap), he felt able to eliminate the item of loss of earnings and reduced his assessment of damages to £136,596 with appropriate interest. This sum was the aggregate of cost of care and out-of-pockets to date of trial, cost of future care (allowing for the possibility of early return to England), and the judge's figure of £20,000 for pain and suffering and loss of amenities.

The majority of the court held that they were bound by authority to hold that damages are recoverable for loss of earnings. Lawton L.J. did not deal with the " duplication" point, contenting himself with the

comment (p.915F) that the sums awarded for loss of future earnings and pension rights must be added to the other heads of damage. Browne L.J., in rejecting the defendants' submission that nothing should be awarded for loss of future earnings, said (p.923D) of the duplication argument

"... that the most which can and should be done is to see that as " far as possible there is no overlapping between the sums awarded " for loss of future earnings and the cost of future care in respect of " the ' domestic element' (food, rent, electricity, etc.) ".

Both Lords Justices thought that the trial judge was right to provide some protection against inflation in the multipliers selected for calculating the cost of future care and the loss of future earnings. Each of them believed the present case to be one of those exceptional cases, to which Lord Fraser of Tullybelton referred in Cookson v. Knowles [1978] 2 W.L.R.978 at pp. 990-991, in which it is appropriate to allow for future inflation by increasing the multiplier.

In your Lordships' House Mr. Davies, Q.C., for the appellants, has taken the same points—but with this difference: he hopes that he is no longer embarrassed by those authorities which are against him. The respondent, by her cross-appeal, has sought leave to adduce fresh evidence of the significant change of circumstances since the hearing in the Court of Appeal (i.e. the return of Dr. Lim to England on the 4th September 1978) and of the cost of care in England, and also renews her appeal against the amount of damages awarded for pain, suffering, and loss of amenities. The House allowed the fresh evidence, the consequence of which is that the House has itself to assess upon a basis not available to the courts below the damages to be awarded for future care.

The Questions of Principle

It will be convenient to take these questions in the order in which I have listed the appellants' main submissions.

(A) The total of damages (£254,765).

The submission that the total of the award was excessive was one of the broadest generality. Whether or not he can establish duplication or overlap or any other error in calculating the separate items of the award, Mr. Davies submitted that an award of damages, being a " jury question ", must be fair to both sides, and that in a case such as the present a judge should bear in mind: -

comparable cases,

the effect of high awards upon the level of insurance premiums or, if, as here, the taxpayer foots the bill, upon the taxpayer, and

the availability of care for the victim under the National Health Service,

public policy.

Such generalities as that damages must be treated as a jury question and kept in line with public policy I do not find helpful. Their very breadth merely contributes to uncertainty and inconsistency in an area of the law, the history, if not the present practice of which is notorious for both vices. Invoking the memory of the days when juries assessed damages for personal injuries does no more than remind us that the modern practice of reasoned awards by judges is a substantial advance upon the inscrutable awards of juries. Of course, awards must be fair. But this means no more than that they must be a proper compensation for the injury suffered and the loss sustained. Nor in this case do I find helpful a comparison of one total award with another. In so far as an award consists of " conventional" items, e.g. for pain and suffering, comparability with other awards is certainly of value in keeping the law consistent. But pecuniary loss depends on circumstances: and, where (as in the present case) such loss predominates, comparison with total awards in other cases does not help, and may be misleading.

The two specific matters Mr. Davies mentioned—the burden upon the public (through premiums or taxes) and the availability of N.H.S. care—prove on examination to be for the legislator, not the judge. As to the first, the principle of the law is that compensation should as nearly as possible put the party who has suffered in the same position as he would have been in if he had not sustained the wrong: (Lord Blackburn, Livingstone v. Rawyards Coal Co. (1880) 5 A.C.25 at p.39). There is no room here for considering the consequences of a high award upon the wrongdoer or those who finance him. And, if there were room for any such consideration, upon what principle, or by what criterion, is the judge to determine the extent to which he is to diminish upon this ground the compensation payable?

The second matter, though introduced by Mr. Davies as part of his general submissions on the total award, is really one, as he recognised, which falls to be considered in assessing the cost of future care. It is convenient, however, to deal with it at this stage. Section 2(4) of the Law Reform (Personal Injuries) Act 1948 provides that in an action for damages for personal injuries there shall be disregarded, in determining the reasonableness of any expenses, the possibility of avoiding those expenses or part of them by taking advantage of facilities available in the National Health Service. In Harris v. Brights Asphalt Contractors Ltd. [1953] 1 Q.B.617 at p.635 Slade J. said of the subsection: -

" I think all [it] means is that, when an injured plaintiff in fact " incurs expenses which are reasonable, that expenditure is not to be " impeached on the ground that, if he had taken advantage of the " facilities available under the National Health Service Act 1946, those " reasonable expenses might have been avoided. I do not understand " section 2(4) to enact that a plaintiff shall be deemed to be entitled " to recover expenses which in fact he will never incur."

In Cunningham v. Harrison [1973] 1 Q.B.942 the Court of Appeal expressed the same view, Lawton L.J. (at p.957) saying that a defendant can, notwithstanding the statute, submit that the plaintiff will probably not incur such expenses because he will be unable lo obtain outside the National Health Service the domestic and nursing help which he requires.

I agree with Slade J. and the Court of Appeal. It has not been suggested that expenses so far incurred in the care and treatment of Dr. Lim have been unreasonable. They are, therefore, protected by the subsection. But it is open to serious question whether for the rest of her life it will continue to be possible to obtain for Dr. Lim, outside the National Health Service, the domestic and nursing help she will require. However, Lord Denning and Lawton L.J., both of whom were parties to the decision in Cunningham v. Harrison, have proceeded in the instant case upon the basis, which the trial judge must also have accepted, that it will be possible and that the expense of doing so is reasonable. In the absence of any evidence to the contrary, I am not prepared to take a different view—though I recognise the force of the case developed in the Pearson report for legislation repealing the subsection: see Cmnd.7054-1, paragraphs 340-342.

The attack, therefore, on the total of damages awarded as being excessive, merely by reason of its size, fails. If the appellants are to succeed, they must show that one or more of the component items of the award are wrong.

(B) The award for pain and suffering and loss of amenities.

Mr. Davies recognised, at the outset of his argument, that, if Wise v. Kaye [1962] 1 Q.B.638 and H. West & Sons Ltd. v. Shephard [1964] A.C.326 were correctly decided, his first submission (that the sum awarded should be comparable with the small conventional awards in fatal cases for loss of expectation of life) must fail.

My Lords,

I think it would be wrong now to reverse by judicial decision the two rules which were laid down by the majority of the House in West v. Shephard, supra, namely: —

that the fact of unconsciousness does not eliminate the actuality of the deprivation of the ordinary experiences and amenities of life (see the formulation used by Lord Morris of Borth-y-Gest at p.349);

that, if damages are awarded upon a correct basis, it is of no concern to the court to consider any question as to the use that will thereafter be made of the money awarded.

The effect of the two cases (Wise v. Kaye being specifically approved in West v. Shephard) is two-fold. First, they draw a clear distinction between damages for pain and suffering and damages for loss of amenities. The former depend upon the plaintiff's personal awareness of pain, her capacity for suffering. But the latter are awarded for the fact of deprivation—a substantial loss, whether the plaintiff is aware of it or not. Secondly, they establish that the award in Benham v. Gambling [1941] A.C.157 (assessment in fatal cases of damages for loss of expectation of life) is not to be compared with, and has no application to, damages to be awarded to a living plaintiff for loss of amenities.

I do not under-rate the formidable logic and good sense of the minority opinions expressed in Wise v. Kaye and West v. Shephard. The quality of the minority opinions was, however, matched by the equally formidable logic and good sense of the majority opinions. The question upon which opinions differed was, in truth, as old and as obstinate as the philosopher's stone itself. A decision having been taken by this House in 1963 (the year West v. Shephard was decided), its reversal would cause widespread injustice, unless it were to be part and parcel of a comprehensive reform of the law. For since 1962 settlements have proceeded upon the basis that the rule adopted in Wise v. Kaye was correct: and judges have had to assess damages on the same basis in contested cases. We are in the area of " conventional" awards for non-pecuniary loss, where comparability matters. Justice requires that such awards continue to be consistent with the general level accepted by the judges. If the law is to be changed by the reversal of West v. Shephard, it should be done not judicially but legislatively within the context of a comprehensive enactment dealing with all aspects of damages for personal injury.

I now come to Mr. Davies' second submission that, even if West v. Shephard be good law, the sum of £20,000 for Dr. Lim's pain, suffering, and loss of amenities was excessive. The answer to this submission is to be found in one stark but factually correct observation of Bristow J. He said, at p.903D

"Dr. Lim's loss of the amenities of her good and useful life is total." Accordingly, I think Mr. Davies' attack upon this head of the award fails.

I turn now to consider the respondent's submission that this award was too low. Mr. French, Q.C., for the respondent took two points: first, that the judge underestimated Dr. Lim's awareness of her condition and her loss: secondly, that, bearing in mind the depreciation in the value of money since Wise v. Kaye and West v. Shephard, an award of £20,000 was out of line with the sums awarded in those, and other, cases. Both Lawton L.J. and Browne L.J. were impressed by the first point. There are passages in the evidence which suggest that Dr. Lim's awareness of her condition is greater and more sustained than the trial judge found. He relied on the conclusions formed by Dr. MacQuaide, a very distinguished doctor, who on six occasions in 1976 examined Dr. Lim in Penang. Dr. MacQuaide found her emotional state to be blank, and that she was completely lacking in volition and spontaneity. He added that her powers of reasoning were impossible to test. I am not prepared to hold that the judge was wrong in his conclusion that " she is so intellectually impaired that she does not " appreciate what has happened to her "

The second point also fails, in my judgment. An award for pain, suffering and loss of amenities is conventional in the sense that there is no pecuniary guideline which can point the way to a correct assessment. It is, therefore, dependent only in the most general way upon the movement in money values. Like awards for loss of expectation of life, there will be a tendency

in times of inflation for awards to increase, if only to prevent the conventional becoming the contemptible. The difference between a " Benham v. " Gambling award " and a " West v. Shephard award " is that, while both are conventional, the second has been held by the House of Lords to be compensation for a substantial loss. As long, therefore as the sum awarded is a substantial sum in the context of current money values, the requirement of the law is met. A sum of £20,000 is, even today, a substantial sum. The judge cannot, therefore, be shown to have erred in principle, and his award must stand.

In making his assessment, the judge assumed his award would bear interest from the date of service of writ. Were it not to bear interest, he would (p.904C) have increased it by the amount of interest it would have carried so that it reflected the situation as it was at trial. Since trial, this House has laid down in Pickett v. British Rail Engineering Ltd. [1978] 3 W.L.R.955 that awards for pain, suffering and loss of amenities should bear interest from date of service of writ. The judge's original figure of £20,000 represents therefore his assessment, in current money values at date of trial, of the plaintiff's loss as at date of service of writ, to which, following Picket's case, one must add the appropriate interest.

For these reasons I think the judge's award of £20,000 and interest for pain, suffering and loss of amenities should be upheld.

The appellants' submission is brief and simple. In paragraph 8 of their case it was put in three short sentences: —

" The Plaintiff ought not to have been awarded damages for loss of " earnings as well as for loss of amenities and cost of care. The sum " awarded for cost of care exceeded her estimated loss of earnings and " covered all her needs. The additional award of damages for loss of " earnings was duplicatory."

As developed in argument, the submission was a two-fold one. First, it was submitted that in catastrophic cases " loss of earnings " does not reflect a real loss. Secondly, if damages are recoverable for loss of earnings, duplication with other heads of damage is to be avoided. The law must, therefore, ensure that no more is recovered for loss of earnings than what the plaintiff, if not injured, would have saved, or reserved for the support of his, or her, dependants. Since there was no evidence to suggest that Dr. Lim would have accumulated any surplus income after meeting her working and living expenses, the trial judge's award for loss of earnings was wholly wrong.

The first submission is contrary to an established line of authority which, beginning with Phillips v. L. & S.W. Railway Co. (1879) 5 C.P.D.280, has recently received the seal of this House's approval in Pickett v. British Rail Engineering Ltd. supra. It is also contrary to the principle of the common law that a genuine deprivation (be it pecuniary or non-pecuniary in character) is a proper subject of compensation. This principle was recognised both in Phillips' case, where the loss was pecuniary, and in West v. Shephard, where the loss was non-pecuniary: in Phillips' case, see Brett L.J. at p.292 and, in West v. Shephard, Lord Morris of Borth-y-Gest at p.349.

The second submission is more formidable. Undoubtedly, the courts must be vigilant to avoid not only duplication of damages but the award of a surplus exceeding a true compensation for the plaintiff's deprivation or loss.

The separate items, which together constitute a total award of damages, are inter-related. They are the parts of a whole, which must be fair and reasonable. "At the end", as Lord Denning, MR. said in Taylor v. Bristol Omnibus Co. Ltd. [1975] 1 W.L.R. 1054 at p.1057, "the judges " should look at the total figure in the round, so as to be able to cure " any overlapping or other source of error". In most cases the risk of

overlap is not great: nor, where it occurs, is it substantial. Living expenses continue, or progressively increase, for most plaintiffs after injury as they would have done, if there had been no injury. But where, as in Pickett's case, the plaintiff claims damages for the earnings of his " lost years ", or, as in the present case, the claim is in respect of a lifetime's earnings lost because, though she will live, she cannot earn her living, a real risk arises that the plaintiff may recover, not merely compensation for loss, which is the entitlement given by law, but a surplus greater than could have been achieved if there had been no death or incapacity. Two deductions, therefore, fall to be made from the damages to be awarded. First, as the cases have always recognised, the expenses of earning the income which has been lost. Mr. French for the respondent conceded this much. Secondly, the plaintiff's living expenses. This is necessarily a hypothetical figure in the case of a " lost year's" claim, since the plaintiff does not survive to earn the money: and, since there is no cost of care claim (the plaintiff being assumed to be dead), it falls to be deducted from the loss of earnings award. But where, as in the present case, the expectancy of life is not shortened but incapacity exists, there will be a cost of care claim as well as a loss of earnings claim. How should living expenses be assessed and deducted in such a case? One approach, analogous to the method necessarily adopted in " lost years " cases, would be to attempt an assess- ment of how much the plaintiff would have spent and upon what—always a most speculative exercise. How, for instance, could anyone tell how Dr. Lim would have ordered her standard of living, had she been able to pursue her career? Another approach is, however, available in case of a living plaintiff. In Shearman v. Folland [1950] 2 K.B.43 the Court of Appeal deducted what Asquith L.J. described as the " domestic element" from the cost of care. Inevitably, a surviving plaintiff has to meet her living expenses. This approach, being on the basis of a future actuality (subject to the uncertainties of life), is far less hypothetical than the former (which, ' faute de mieux', has to be adopted in " lost years " cases). It is a simpler, more realistic, calculation and accords more closely with the general principle of the law that the courts in assessing compensation for loss are not concerned either with how the plaintiff would have used the moneys lost or how she (or he) will use the compensation received.

In the present case, my Lords, it is perfectly possible to estimate the domestic element in Dr. Lim's cost of care. The estimated figure must, therefore, be deducted in the assessment of her damages for the cost of her care. In the result, Dr. Lim will recover in respect of her future loss a capital sum which, after all proper discounts, will represent her loss of earnings, net after allowing for working expenses, and her cost of care, net after deducting the domestic element. A capital sum so assessed will compensate for a genuine loss and for a genuine item of additional expenditure, both of which arise from the injury she has sustained. It will not contain any element of duplication or go beyond compensation into surplus.

A further argument was addressed to your Lordships in the context of duplication. It was urged that there was an overlap between the sum awarded for loss of amenities and that for loss of future earnings. The amenities which Dr. Lim has lost, it was submitted, would have had to be provided out of her earnings. If, therefore, she is to be compensated for the former, she should suffer a deduction from her loss of earnings claim. Reliance was placed on the judgment of Diplock L.J. in Fletcher v. Autocar and Transporters Ltd. [1968] 2 Q.B.322 (particularly, p.342).

The question whether there can be any overlap between damages for non-pecuniary loss and for pecuniary loss does not arise for decision upon the facts of this case. As the majority of the Court of Appeal said, the amount of damages awarded to Dr. Lim for loss of amenities was a modest sum. It was not assessed by reference to any expensive pleasures or pursuits such as Diplock L.J. postulated in Fletcher's case, supra. There was, indeed, no evidence to suggest that Dr. Lim had, or was likely to develop, any such tastes or pursuits. There is, therefore, no duplication of damages between the two items in this case.

Upon the point of principle whether damages for non-pecuniary loss can properly be reduced to avoid an overlap with damages for pecuniary loss I express no final opinion. I confess, however, that I doubt the possibility of overlap: and I note that the Pearson Commission (7054-1 para.759) considers it wrong in principle to reduce the one by reason of the size of the other.

(D) Cost of future care

Both parties were agreed that damages under this head are recoverable. The major dispute at trial was whether they should be calculated upon the basis of Dr. Lim being cared for in Malaysia or England. This dispute had yielded to the pressure of events by the time the appeal reached this House. One question of principle, (other than duplication, with which I have already dealt, and the effect of future inflation, with which I deal later) was, however, discussed before your Lordships. Mr. Davies contended that the Court of Appeal, when considering the fairness of the award, had erred in its approach, overlooking the rule that damages for cost of care must be assessed upon the basis that capital as well as income is to be used in meeting the cost. I doubt whether the criticism is a fair one; but the point underlying it is sound. Such an approach would, of course, be incorrect in principle. It would go beyond compensation for loss: for it would yield at the expected end of the plaintiff's life a surplus, which, if uninjured, she would not have had—namely the untouched capital. The true principle, as Mr. French conceded, is that the estimate of damages under this head must proceed upon the basis that resort will be had to capital as well as income to meet the expenditure: in other words, the cost of care having been assessed, must be met by an award calculated on an annuity basis.

Mr. Davies invited the House to infer a departure from this principle, because of the size of the multiplier selected by the judge and upheld by the Court of Appeal. His multiplier of 18 years was. indeed, very high—too high, I would have thought, in the circumstances. However, it matters not, since for reasons to which I have already briefly referred the award for cost of future care has to be reviewed and revised by the House in the light of the fresh evidence adduced during the hearing of the appeal. I shall attempt this review when I come to the detail of the award.

(E) Effect of future inflation

The trial judge said he made allowance for future inflation in the multiplier for cost of future care and in the multiplier for loss of future earnings. The Court of Appeal, in holding that he had made no mistake in principle, relied upon a recent decision of this House, Cookson v. Knowles [1978] 2 W.L.R.978. In that case Lord Diplock made the comment that future inflation '' is taken care of in a rough and ready way" because the conventional multipliers applied by the judges assume a rate of interest of four or five per cent, whereas actual rates of interest are much higher. Lord Fraser of Tullybelton added the comment that in " exceptional " cases, where the [assumed] annuity is large enough to attract income tax " at a high rate ... it might be appropriate to increase the multiplier, or " to allow for future inflation in some other way " (p.990-991). My Lords, I do not read these passages in the speeches in that case of my noble and learned friends as modifying the law in any way. The law appears to me to be now settled that only in exceptional cases, where justice can be shown to require it, will the risk of future inflation be brought into account in the assessment of damages for future loss. Of the several cases to this effect I would cite as of particular importance Taylor v. O'Connor [1971] A.C.I 15 and Young v. Percival [1975] 1 W.L.R. 17. It is perhaps incorrect to call this rule a rule of law. It is better described as a sensible rule of practice, a matter of common sense. Lump sum compensation cannot be a perfect compensation for the future. An attempt to build into it a protection against future inflation is seeking after a perfection which is beyond the inherent limitations of the system. While there is wisdom in Lord Reid's comment (Taylor v. O'Connor at p. 130) that it would be

unrealistic to refuse to take inflation into account at all, the better course in the great majority of cases is to disregard it. And this for several reasons. First, it is pure speculation whether inflation will continue at present, or higher, rates, or even disappear. The only sure comment one may make upon any financial prediction is that it is as likely to be falsified as to be borne out by the event. Secondly, as Lord Pearson said in Taylor v. O'Connor, supra, at p.143, inflation is best left to be dealt with by investment policy. It is not unrealistic in modern social conditions, nor is it unjust, to assume that the recipient of a large capital sum by way of damages will take advice as to its investment and use. Thirdly, it is inherent in a system of compensation by way of a lump sum immediately payable, and, I would think, just, that the sum be calculated at current money values, leaving the recipient in the same position as others, who have to rely on capital for their support to face the future.

The correct approach should be, therefore, in the first place to assess damages without regard to the risk of future inflation. If it can be demonstrated that, upon the particular facts of a case, such an assessment would not result in a fair compensation (bearing in mind the investment opportunity that a lump sum award offers), some increase is permissible. But the victims of tort who receive a lump sum award are entitled to no better protection against inflation than others who have to rely on capital for then" future support. To attempt such protection would be to put them into a privileged position at the expense of the tortfeasor, and so to impose upon him an excessive burden, which might go far beyond compensation for loss.

The Details of the Award (numbered as by the judge).

(1) Pain, suffering, loss of amenities, £20,000.

For the reasons I have already given I would uphold this item of the award with interest from date of service of writ. It was agreed that interest should be at nine per cent p.a. up to 1st February 1977 (the date on which interest rates for money in court were increased) and thereafter at ten per cent until judgment in this House.

(2) Out-of-pocket expenses (Malaysia and Singapore), to date of trial.

Agreed at ... £3,596. Interest is also agreed at four and a half per cent p.a. from 1st March 1973 to date of judgment in this House.

(3) & (4) Cost of care to date of judgment (in this House) and interest thereon.

The judge's figure is necessarily out of date. The history of Dr. Lim's care is as follows. On the 2nd February 1974 she was flown to her mother's home in Penang, Malaysia, where she still was at the date of trial. A major issue at trial was whether she would remain in Malaysia or return to England, where her married sister and family live. The judge made his award upon the basis that Dr. Lim's mother, who was seventy-one at the date of the trial, could be expected to care for her in Malaysia for about seven years, after which time Dr. Lim would come to England to be cared for in an institution within range of her sister. When the case reached the Court of Appeal in June 1978, it was already known to the family that the mother's health had deteriorated to the extent that she could not expect to be able to look after her daughter for very long. In fact, as the House now knows, Dr. Lim came to England on the 4th September 1978 (two months after judgment in the Court of Appeal). Accommodation has now been found for her in a private nursing-home not far from where her sister lives.

The position, therefore, is that damages have to be awarded in respect of: —

(a) cost of care in Malaysia from 2nd February 1974 to 4th September 1978, a period of fifty-five months:

travelling expenses, Penang to London: and

cost of care in England from 4th September 1978 to date of judgment in this House.

The judge assessed the cost of care in Malaysia at £200 per month. He, specifically and correctly, excluded "the domestic element" from his calculation. Mr. French was, however, able to demonstrate—and I did not understand Mr. Davies to challenge the accuracy of his figures—that the judge erred in his calculation of $850 a month for this period, and that the true monthly figure should have been $1,286, which at the prevailing rate of exchange is about £300 per month. The sum, therefore, for care in Malaysia is £16,500 (55 x 300) with interest at four and a half per cent p.a. from date of accident (1st March 1973).

The travelling expenses are not in dispute. The sum is £1,923. Interest should run at ten per cent from the 4th September 1978.

For reasons which I shall develop when dealing with cost of future care, which we now know will be in England, the cost of care from Dr. Lim's arrival here until date of judgment in this House is to be calculated at the rale of £6.400 p.a. (£533.33 per month). Interest will run at four and a half per cent p.a. from date of accident, 1st March 1973.

Cost of care to date of judgment in this House is, therefore :-(a) £16,500.

(b) £1.923,

to each of which stuns must be added interest at the appropriate rate for the appropriate period

(5) & (6) loss f Earnings to date of judgment at trial with interest thereon.

I have answered the question of principle in favour of the respondent. The judge estimated Dr. Lim's net loss for this period to average out at £3,158 p.a. The figure has not really been challenged as a figure. The judge did not err in law, and the figure appears reasonable. I would, therefore, agree with the Court of Appeal in upholding this item of the award, the result of which is: -

amount of loss £14,213

to which must be added interest at four and a half per cent p.a for the period from date of accident (1st March 1973) to date of judgment at trial £3,044

(7) Cost of future care.

Events require the House to revise the judge's award. The period for assessing this item of damages now starts from date of judgment in this House: and there is no Malaysian element to be considered, Dr. Lim having returned to England on 4th September 1978.

Two question arise for your Lordships' decision : -

the likely cost of the care of Dr. Lim in a suitable private institution, where fees will have to be paid, and

the number of years purchase.

The House allowed evidence to be called. It is unnecessary to burden the House with a review of the details. It is sufficient to state a conclusion on what is a question of fact. After allowing for the domestic element, I understand the House to be agreed that an appropriate multiplicand is £6,400 p.a. The judge accepted as the multiplier eighteen years purchase from date of his judgment (seven years in Malaysia plus eleven thereafter in England). Mr. Davies submitted that the multiplier ought to have been substantially less, i.e. based upon a shorter span of years. When the judge dealt with the multiplier for the period of care in England, he said (p.902C): —

" Her expectation of life, according to the tables, will be in the order " of a further 37 years. In this case I must make a substantial discount " because of the accelerated payment, some reduction for the contingency " that she will not reach the average age, some reduction to allow for " the purely domestic element, and some increase for prospective " inflation. Balancing these elements as best I can, I find the appropriate " multiplier for the period of future care in England to be 11."

It is unusual to allow for the " domestic element" in determining the multiplier. In most cases—and the present is no exception—it is better to make the appropriate deduction in calculating the multiplicand—as I under- stand your Lordships are doing in this case. It is not possible to discover how much weight the judge gave to the prospect of inflation. One significant omission from his list of " elements" of discount is the necessity of calculating the award upon the basis that the capital, as well as the income arising, is to be available for meeting the cost of care.

In the present case I attach major importance to the following elements of discount:—the accelerated payment, the contingency that Dr. Lim may not live out her full expectation of life, and the availability of capital as well as income to meet the cost of care. Upon the basis of the very helpful evidence of the accountant, Mr. Eccleshall (evidence which was, however, not always directed to the real issues in the case) I accept Mr. Davies' submission. A fair multiplier would, in my judgment, be twelve years purchase from date of judgment in this House. The figure for this item is, therefore £6,400 x 12 = £76,800.

(8) Loss of future earnings and pension.

I would not disturb the judge's award. The question of principle being answered in favour of the respondent, I see no reason for modifying the judge's estimate upon the facts that the multiplicand should be £6,000 p.a. He reached his multiplier of fourteen years purchase upon the basis that even after her accident Dr. Lim was expected to survive for the duration of a normal working life: and he included " a small increase to build in some " anti-inflation protection " (p.903A). With the recent decision of this House in Pickett's case now available, it becomes necessary to fix the multiplier not, as the judge did, by reference to post-accident expectation of life but to the pre-accident expectation. However, it makes little difference in this case because Dr. Lim's expectation of life after her injury is substantially as it was before her injury. Nevertheless the Pickett approach is more favourable to the respondent, because the contingency of an earlier death is plainly more likely after than it was before her injury. Accordingly, even if the judge erred (as I think he did) in allowing for anti-inflation protection, he reached a multiplier which accords with Dr. Lim's pre-accident expectation of working life.

When the judge turned to the loss of pension rights, he made a very substantial discount. Should Dr. Lim live her life-table span of twelve years after retirement, she would receive £49,866 pension. The judge awarded her £8,000. Mr. Davies does not quarrel with that figure, and Mr. French for the respondent has not cross-appealed against it. It is reasonable and must be upheld.

Conclusion.

Upon the questions of principle argued before the House I find that the appellants have substantially failed in the appeal, but have succeeded on the cross-appeal. Nevertheless, for the reasons I have given and because of the changed circumstances of Dr. Lim and her family, the award is dimini- shed, though to no very great extent. Excluding interest, which should be calculated and, if possible, agreed by the parties when the House makes its decision, the award should, I propose, be as follows: -

Pain, Suffering, Loss of Amenities

£20,000

Out of Pocket Expenses

£3,596

Cost of care up to date of judgment in this House

(a) Malaysia

£16,500

(b) Travelling

£1,923

(c) (calculated from 4th September 1978 to an arbitrary date, 4th May 1979, it will require to be revised upwards to the actual date of judgment in the House)

£4,466.64

Loss of Earnings to date of judgment at trial

£14,213

Cost of future care

£76,800

Loss of future earnings (including pension rights)

£92,000

total

£229,298.64

to which the appropriate interest will have to be added.

My Lords,

I would propose that, subject to the necessary variations to the amount of the award, the appeal be dismissed with costs and the cross- appeal dismissed with no order as to costs.

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