Lim Poh Choo v Camden & Islington Area Health Authority [1979] UKHL 1 (21 June 1979)

LIM POH CHOO (SUING BY HER MOTHER AND NEXT FRIEND)
(ORIGINAL RESPONDENT AND CROSS-APPELLANT)

CAMDEN AND ISLINGTON AREA HEALTH AUTHORITY

(TEACHING)
(ORIGINAL APPELLANTS AND CROSS-RESPONDENTS)

Lord Diplock
Viscount Dilhorne
Lord Simon of Glaisdale
Lord Scarman

Lord Diplock

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:

1. 1. 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:
  2. 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:

1. 1. 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.
  2. 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,
  3. 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: –

1. 1. comparable cases,
  2. the effect of high awards upon the level of insurance premiums or,
    if, as here, the taxpayer foots the bill, upon the taxpayer, and
  3. the availability of care for the victim under the National Health
    Service,
  4. 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: —

1. 1. 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);
  2. 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.

(C) Loss of earnings, and duplication (overlap”).

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:

1. 1. travelling expenses, Penang to London: and
  2. 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,

(c) to be calculated from 4th September 1978 to date of judgment in
this House at the rate of £6,400 p.a.,

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 : –

1. 1. the likely cost of the care of Dr. Lim in a suitable private institution,
    where fees will have to be paid, and
  2. 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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