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Hardwick v Hudson & Anor [1999] EWCA Civ 1428 (18 May 1999)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/1999/1428.html
Cite as:
[1999] EWCA Civ 1428,
[1999] WLR 1770,
[1999] 1 WLR 1770,
[1999] PIQR Q202
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JISCBAILII_CASES_TORT
IN THE SUPREME COURT OF JUDICATURE CCRTF 1998/0651/2
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MANSFIELD COUNTY COURT
(HIS HONOUR JUDGE MACHIN )
Royal Courts of Justice
Strand
London WC2
Tuesday, 18 May 1999
B e f o r e:
LORD JUSTICE BROOKE
MR JUSTICE COLMAN
- - - - - -
HARDWICK
CLAIMANT/APPELLANT
- v -
HUDSON & ANR
DEFENDANT/RESPONDENT
- - - - - -
(Transcript of the handed down judgment of
Smith Bernal Reporting Limited, 180 Fleet Street,
London EC4A 2HD
Tel: 0171 421 4040
Official Shorthand Writers to the Court)
- - - - - -
MR W PHILLIPS (Instructed by Tracy Barlow, Messrs Furniss
& Co, Worksop) appeared on behalf of the Appellant
MR J MATTHEWS (Instructed by Messrs Actons, Nottingham)
appeared on behalf of the Respondent
- - - - - -
J U D G M E N T
(As approved by the Court )
- - - - - -
©Crown Copyright
Tuesday, 18 May 1999
J U D G M E N T
Lord Justice Brooke:
This is an appeal by the plaintiff and a cross-appeal by the
defendant from a judgment of Judge Machin at the Mansfield County Court on 28th
April 1998 when he directed that judgment should be entered for the plaintiff
for the sum of £54,093.30 inclusive of interest in this personal injuries action
arising out of a road traffic accident on 7th August 1990. Liability was
admitted, and the judge was concerned only with quantum.
The judge found that the plaintiff had suffered a whiplash
injury to his neck, a soft tissue injury to his lower back and bruising to both
ankles. He suffered no bony injury. He suffered persistent pain and stiffness in
his neck which radiated down both arms, with altered sensation in his right arm
and hand, His shoulders remained stiff and painful, and he had a plastic shell
fitted to his back. He had developed stiffness and aching in all his joints. A
full recovery was unlikely, and as a result of his accident his activity in his
profession as a motor mechanic was effectively brought to a halt.
In addition to the agreed medical reports, the judge received
oral evidence from the plaintiff and his wife. The plaintiff was born in July
1940, so that he was 50 when the accident happened and nearly 58 at the date of
the trial.
The judge made an award of £19,500 by way of general damages for
pain, suffering and loss of amenity, which is the subject of the defendants’
cross-appeal. He said that nobody doubted that the plaintiff’s injury was of a
highly debilitating nature. It had very seriously interfered with his carrying
out of his employment and, more importantly, with the amenity of his life. The
plaintiff had graphically described his reaction to his condition by saying that
it was as if he had reached a cross roads in his life. The judge found that he
was a man who had quite clearly greatly enjoyed his various amenities in life
and that his enjoyment of those amenities had been seriously diminished both for
the present and for the future.
After hearing the plaintiff and his wife, the judge said that he
particularly had in mind the plaintiff’s gardening abilities. He said he had no
doubt that but for the accident the plaintiff would have expected to spend the
greater part of his leisure time both in the garden and in the house. His wife
had said “Our home is our life” and the judge found that it was a very
substantial part of their lives that they were able consistently and
persistently to improve and enjoy their home by engaging in physical activity
around the garden and the house in a way which was no longer open to the
plaintiff. He now had to employ a gardener to do a very great deal of the work
he used to do in the garden.
It was for these reasons that the judge held that the plaintiff
was entitled to recover a substantial figure by way of general damages under the
head of pain and suffering which he assessed at £19,500.
So far as the balance of the plaintiff’s claim is concerned, the
judge appears to have assessed the non-interest element of it in the sum of
£21,634 made up as follows:
£
Cost of employing a mechanic 9,298
Cost of employing a gardener: past 5,535
future 5 x £780 3.900
Cost of replacing DIY services: past 4,930
future: 5 x £500 2,500
Miscellaneous items 471
£26,634
Most of these sums were based on agreed figures. The following
items are in issue on the plaintiff’s appeal:
(i) The sum awarded for the cost of employing a mechanic;
(ii) The failure to include a sum in respect of his wife’s
unpaid services to the business until 31st October 1993;
(iii) The multiplier of 5 for future losses.
At the time of his accident the plaintiff was running a garage
business in equal partnership with Mr Hannington. Mr Hannington was mainly
involved in buying and selling cars, and the plaintiff was responsible for the
MOT tests and repair side of the business. The judge faced a difficulty in
assessing the proper compensation to the plaintiff for his losses in relation to
his business income, because the business did increasingly well after the
accident. For the year ending 30th April 1991 his half share of the profit was
£26,546, and for the year ending 31st October 1994 the profit of the business
(which he now shared with his wife) had increased to nearly £96,007.
The plaintiff was away from the business completely between 7th
August and 15th October 1990, and between 8th March and 7th October 1991. When
he went back to work in October 1991 he reduced his hours of work to an average
of 51.5 hours per week, and was involved much more in administration and in the
running of the garage. The judge found that he would probably have given up
working as a mechanic in any event by the end of July 1996, and that he was not
entitled to recover for future loss of earnings as a mechanic thereafter. There
is no appeal against this part of his decision.
In assessing the plaintiff’s claim for loss in relation to his
capacity to earn income from his business as a motor mechanic, the judge decided
to adopt the approach of the defendant’s accountant. He had adopted the
plaintiff’s accountant’s figures for half the net cost of a skilled replacement
mechanic at £9,161 up to 31st October 1993, and half the net cost of an
unskilled replacement mechanic at £4,452 between 1st November 1993 and 31st July
1996, making a total of £13,613, but had then deducted £4,316, being half the
net cost of an adult male administrative clerk during the whole of the period
when the plaintiff was at work between the date of his accident and 7th July
1996. The resulting total was £9,298. The claim was broken up in this way
because the plaintiff accepted that in the later period he would have performed
less of the work of a car mechanic following Mr Hannington’s retirement, since
administrative duties would have taken up more of his time, and he would have
been likely to have taken on an unskilled mechanic to assist him.
The defendant’s accountant said that although the business had
in fact received a benefit from the employment of the replacement mechanic,
there was insufficient information available to measure the extent by which
sales had increased as a result of this appointment. He had therefore suggested
an alternative approach, which the judge considered to be reasonable, of looking
at the way the business would have performed if the plaintiff had not had his
accident. In order for sales to increase as they did, he considered it
reasonable to assume that the plaintiff would have needed to devote all his time
to mechanical and MOT work, as the replacement mechanic did, and if he had done
this, it would have been necessary to employ an administrative clerk to carry
out the administrative duties that the plaintiff performed himself before the
accident. Since the business did not have to employ such a clerk in the events
that happened (since the plaintiff did the work himself) this represented a
saving to the business of the net cost of an administrative clerk for eight
hours per week which had to be set off against the net cost of the replacement
mechanic. Half the net cost is adopted in each case for the purpose of valuing
the plaintiff’s claim, representing the expense and saving respectively to the
plaintiff as a 50% owner of the business (see Kent v British Railways Board
(1995) 4 PIQR Q42).
Before the accident the plaintiff’s wife undertook book-keeping
duties for the business one or two days each week. She also had a part-time job
as an executive officer for the local health authority. She had given up this
job on 1st April 1990, four months before her husband’s accident, in order to
have more free time. After her husband’s accident she worked about 20 hours
extra each week to help him cover the managerial duties. The plaintiff made a
claim in this respect for the period between 7th August 1990 and 31st October
1993 when she became a full-time partner in the business.
The judge refused to compensate the plaintiff for what he
described as a claim for gratuitous cover made on behalf of his wife. He took
the view that any loss that may have been sustained in this respect was a pure
economic loss sustained by a third party and was not recoverable, just as the
loss sustained by the plaintiff’s business partner was not recoverable.
As to the multiplier, it appears to have been common ground at
the trial that the appropriate multiplier for future losses between the ages of
58 and 65 was 5. The judge adopted this figure of 5, without explaining his
reasons. Mr Matthews has told us that this did not represent a sudden cut-off at
the age of 65, but was consistent with his argument to the judge that if the
plaintiff had not been injured, he would have been likely over time to have used
the services of outside contractors to an increasing extent. This would have
been consistent with his advancing age, and with the improvement in his
financial state as his business prospered. The plaintiff had been holding out
for a multiplier of 7.
There are therefore four issues for the court to decide on this
appeal, two of them relating to the plaintiff’s claim for loss of income from
his business, and two of them relating to the effect of his injuries more
generally on his amenities and enjoyment of life. I will consider the “business”
issues first.
As I have said, this claim was a difficult one to assess because
far from making a loss, the plaintiff’s two-man business made increasing profits
in the years which followed his accident. Before the accident he was running the
repairs and MOT side with the help of two full-time skilled mechanics while his
partner Mr Hannington ran the car purchase and sales side, and his wife kept the
books on a part-time basis. The plaintiff also spent about a day each week on
administrative duties. Following the accident, the business employed an
additional skilled mechanic, while the plaintiff worked about 51.5 hours each
week in an administrative capacity when he was capable of returning to work, and
his wife spent 20 extra hours each week in what were called managerial duties.
The effect of these changes can be seen in the following items taken from the
partnership’s profit and loss account:
Year to 30 April 1990 1991 1992 1993
£ £ £ £
Sales 638,811 698.750 724,945 971,949
Gross Profit 111,528 127,267 151,269 213,450
Expenses 56,532 74,174 87,173 124,081
Net Profit 54,996 53,093 64,096 89,369
I have explained the basis on which the defendant’s accountant
set about valuing the plaintiff’s claim in relation to his incapacity to do work
as a car mechanic any longer. Mr Phillips challenges it on two grounds. The
first was that the cost of an administrative clerk should have been valued in
accordance with the average weekly earnings of a female general clerk rather
than a male numerical clerk (in the 1995 New Earnings Survey the difference is
between £220 a week and £291 a week). The other was that credit should not have
been given for this hypothetical saving after 31st October 1993, since the
evidence showed that even if the accident had not occurred the plaintiff would
have done more administrative work himself after that date. Although the
business did in fact continue to employ an extra full-time skilled mechanic
after 1st November 1993, the value of the plaintiff’s claim during this later
period was assessed on the basis of the extra cost of an unskilled mechanic,
thus allowing for the fact that the plaintiff would have been spending much more
of his time now on administrative duties.
It appears to me that there is force in the second of these
contentions, and the “administrative clerk credit” should be limited to the
period up to 31st October 1993. I see no reason why the rate for a male clerk
should not be used up to this time, as a rough equivalent for the services in
fact rendered by the plaintiff himself, now freed from workshop duties. In these
circumstances it is agreed that £11,546 should be substituted for £9,208 in
relation to this item of the claim.
The issue relating to Mrs Hardwick’s gratuitous services raises
an issue of law for which there appears to be no direct authority. From the time
of her husband’s accident she worked full-time in the garage to cover for her
husband’s managerial duties. This was particularly valuable when her husband was
unable to work at all, and after his return she continued to work significantly
longer hours than she did prior to his accident. From the time she left her job
with the health authority she was remunerated by the partnership at a rate
slightly lower than the rate at which national insurance became payable. Her
claim was valued on the basis of 20 additional hours a week at the rate
appropriate to managers in the New Earnings Survey. If she had not done this
work, it was said that the partnership would have had to employ a part-time
manager (in respect of whom an employers’ national insurance contribution would
have been payable) at the following cost:
£
7.8.90 - 31.3.91 5,433
Year to 31.3.92 8,868
Year to 31.3.93 9,636
1.4.93 - 31.10.93 5,978
£29,915 50% = £14,957
No claim in this respect was made for the period after 31st
October 1993 when Mrs Hardwick replaced Mr Hannington as her husband’s business
partner.
In my judgment, the judge was correct to make no award in
relation to Mrs Hardwick’s contribution to the business. She would of course
have been entitled to charge the business a realistic sum for her increased
services over and above what it was already paying her. It was, however, decided
not to take this course. If it had been taken, the profits of the business,
shared between her husband and Mr Hannington, would have been to that extent
reduced, and they would have been reduced still further by the employers’
national insurance contribution the business would have had to pay. In other
words, her husband benefited financially from the way they and Mr Hannington
decided to arrange their affairs.
It is also quite impossible to assess the extent to which the
business (and hence her husband’s half of the profits) prospered as a result of
her increased services. In due course she became a half-owner of the business on
1st November 1993, when a loan was raised to pay Mr Hannington his capital
share, and I can see no reason for holding that the judge was wrong in those
circumstances when he decided that the defendant tortfeasor should not have to
pay any extra sum to compensate Mrs Hardwick for the extra work she did for this
increasingly successful business between the time of her husband’s accident and
the time when she became the owner of a half share of it.
The situation is quite different, in my judgment, from a
situation in which a tortfeasor is liable to pay for the services rendered
voluntarily for a family member or other voluntary carer in nursing or providing
other essential personal services for his injured victim (see
Hunt v Severs
[1994] 2 AC 350, 363;
Cunningham v Harrison [1973] QB 942, 952). The
object of an award of damages is to put a claimant back, so far as money can do
it, into the position in which he would have been if he had not suffered the
relevant injury, and he would not have had to receive these services if he had
not been injured. An award may be made for this kind of personal help even if it
extends to the claimant’s place of work: for example, a blind man may need to
pay for extra help if he is to be able to resume his working career.
Mrs Hardwick’s role in providing increased services to her
husband’s business falls into a different category. As the judge recognised, the
defendant owed no recognisable direct duty of care to her, as there was not the
necessary proximity between them (see
Best v Samuel Fox & Co Ltd
[1952] AC 716, 731) Her husband could therefore only recover payment for her
services if there was evidence of an express or an implied contract by the
business of which he was a partner (or by her husband personally) to remunerate
her for the work she did. Of that there is no sign, and if there had been, the
business profits, from which her husband benefited, would have had to be to that
extent reduced and account taken of the extent to which her increased services
added value to the business. The judge was, in my judgment, correct not to enter
into an assessment in respect of which there was so little reliable evidence
available. The assessment of damages for loss of income is, after all, in the
nature of a jury award (see
Monarch Steamship Co Ltd v Karlshamns
Oljefabriker (A/B) [1949] AC 196, 232), and on this evidence the judge,
looking at the whole of the evidence in the round, was in my judgment amply
justified in making no addition to the award in this respect.
I should add that I have read in draft the judgment of Colman J
on this aspect of the case, and I agree with what he says in his judgment.
I turn now to the “non-business” issues. So far as the
multiplier is concerned, we are at the great disadvantage that the judge gave no
reasons for choosing a multiplier of five in relation to the cost of replacing
Mr Hardwick’s DIY services, and gave the same multiplier of five in relation to
the cost of gardening assistance, again without giving reasons, only when
reminded by counsel to include it. He also failed to make any clear findings
which might help us to identify his reasons. Our difficulties were compounded
because the plaintiff’s advisers had not bespoken for this appeal a transcript
of the evidence given at the trial by their client and his wife. We were shown
copies of their witness statements, but it is clear from the judgment that the
effect of those statements was to some extent weakened by cross-examination.
In my judgment it would be wrong in these circumstances for this
court to interfere with the multiplier of five which was adopted by the judge in
relation to the cost of replacing the DIY services. We were shown the bills on
which Mr Hardwick relied, and they represented the sort of active work a judge
might have been justified in finding that Mr Hardwick would probably have been
increasingly content to leave to others as he approached the age of 65. We were
told that Mr Matthews had made a submission to the judge, which the judge
appears to have accepted, that if Mr Hardwick had not been injured, he would
have been likely over time to have used the service of outside contractors to an
increasing extent, consistent with his advancing age and the improvement in his
financial state. Examples of the sort of work included under this heading were:
(i) Supply and fit 2 radiators to roof space over garage, run
new heating flow and return pipes to suit;
(ii) Check roof, repoint ridge tiles and valley and replace roof
tiles as required;
(iii) Excavate 55 metres of old concrete. Reinstate with new and
finish as per customer request;
(iv) Remove tiles from patio. Relay with new. Build new steps on
south side of bungalow.
In other words, this was active work which an older man may well
have been content to leave to others, and the judge was entitled so to find.
The adoption of the same multiplier for work in the garden
however, seems to me to be more problematic. The plaintiff was only holding out
for a multiplier of seven, which was comparatively modest for a man of 58. In
view of the great emphasis the judge placed on the loss of his enjoyment of
gardening, it seems to me that something has gone wrong here and that even
though we have not seen a transcript of the evidence, this court is entitled to
interfere to this limited extent, and to substitute a multiplier of seven for
the multiplier of five which was used by the judge.
As to the award of general damages for pain, suffering and loss
of amenity, the judge was conscious that he was adopting a figure which was
substantially higher than the bracket for moderate neck injuries suggested by
the very experienced contributors of the Judicial Studies Board’s guidelines. In
the 4th Edition Section 6(A)(b)(i), which is concerned with moderate neck
injuries, reads:
"Cases involving whiplash or wrenching-type injury and disc
lesion of the more severe type resulting in cervical spondylosis, serious
limitation of movement, permanent or recurring pain, stiffness or discomfort and
the possible need for further surgery or increased vulnerability to further
trauma ... £6,500 to £12,000."
Mr Matthews showed us examples of awards to be found in that
bracket in the cases of Stevenson v Townsend (Kemp & Kemp, vol 2,
E2-043); and Day v Anderson (Kemp & Kemp, vol 2, E2-027).
Mr Phillips, on the other hand, sought to justify the judge’s
approach by showing us the following cases in Kemp & Kemp Volume 2:
Spearman, E2-008; Clark, E2-009; Waxman E3-013; Vincent
E3-015; and Hawthorne, E3-019. He said that this was not only
a case involving neck injury: the injury to the lower back added to the
permanent discomfort from which his client suffered.
Here, too, we are confronted with the problem that we do not
have a transcript of the plaintiff’s evidence, and the judge did not summarise
its effect very fully in his judgment. This difficulty is compounded by the fact
that with a single exception dating from August 1996, all the “agreed” medical
reports which were before the judge (one in 1991, one in 1992, three in 1993 and
two in 1994) had a rather dated air about them for a trial taking place in April
1998. There were certainly none of the psychiatric difficulties in Mr Hardwick’s
case that were evident in some of the higher awards Mr Phillips showed us, and
the judge made no great play of the effect that pain played in Mr Hardwick’s
daily life by the time of the trial, although clearly to some extent it was an
unhappy feature of his life.
Here we are concerned with the defendant’s cross-appeal, so that
the burden was on their advisers to show us the transcript of what the plaintiff
and his wife told the judge, in the absence of any very full summary of it in
the judgment. The judge was of course entitled to go above the JSB guideline
figure if he considered that the impact on the amenities of this particular
plaintiff warranted it, and he also had to take into account the added feature
of the injury to the lower back. He was engaged in making an award which
included compensation for loss of amenity for a 50 year old man with a standard
life expectation of 76, and the witness statements of the plaintiff and his wife
give a hint of the great extent to which his life has become degraded by the
effect of the accident. It appears to me, however, that the judge’s award is
substantially in excess of the most generous award he would have been properly
entitled to make under this head, and that it should be reduced by £4,000 to a
figure of £15,500.
It follows that the award should be adjusted so that its
non-interest elements read:
£
General Damages for pain, suffering etc 15,500
Cost of employing a mechanic 11,546
Cost of employing a gardener: past 5,535
: future 5,460
Cost of replacing DIY service: past 4.930
: future 2,500
Miscellaneous items 471
£45,942
It will be seen that this is very close to the equivalent total
of £46,134 awarded by the judge. In the light of this judgment, which the
parties have had the opportunity of seeing in draft, they have agreed that the
amount of the judgment, inclusive of interest, should be altered to £55,214.10.
They have also agreed that they should each bear their own costs of the appeal
and consequent thereon since 28th April 1998. I would order accordingly. To the
extent set out in this judgment, both the appeal and the cross-appeal are to be
allowed.
Mr Justice Colman
I agree with the orders proposed by my Lord for the reasons
which he has given but I wish to add a few words about the claim in relation to
the additional clerical services provided without charge to the business by Mrs
Hardwick.
This claim was attractively advanced by Mr Phillips by way of
analogy with claims for recovery of damages equivalent to reasonable
remuneration for a wife, husband, relation or friend who has without charge
provided caring services to the victim of an accident: see
Hunt v. Severs
[1994] 2 AC 350. In such cases the law extends the scope of compensation to
the provision of gratuitous caring services no doubt because, had those services
been contractually provided by an outside nursing or other organisation the
reasonable cost incurred would have been recoverable as damages, assuming the
services to have been reasonably necessary for the physical well-being of the
claimant, and because the services are likely to have been provided due to ties
of relationship or friendship between the victim and the carer in circumstances
in which, because of the environment of love and affection, the entering into of
a formal contract would not normally be contemplated. The consideration that
personal physical care can often be most effectively and economically provided
by a family member or close friend is also a strong reason for encouraging the
saving of losses by this means.
It is therefore very appropriately the policy of the law to
reflect these considerations by enabling a victim to recover damages by way of
recompense for the voluntary carer, provided always that they are held by the
claimant on trust for that person.
Where, however, the voluntary services are provided in a
commercial, as distinct from a domestic environment, different considerations
normally apply. A person who, like Mrs Hardwick, provides, without payment,
services to supplement or replace the work being done by the victim may be
providing services which the business would otherwise have had to pay somebody
else to provide. Because of their nature, those services are such as would
normally be provided under a contract of employment, even if provided by a
member of the victim’s family or a close friend. If therefore such services are
provided to the victim’s business without a contract, the income of the business
will presumably have been prevented from falling and the victim will have
suffered no loss because the wage costs will not have been incurred. The saved
loss will in that case normally be irrecoverable in law because it is
attributable to the voluntary intervention of the relative or friend in
circumstances in which a contractual arrangement could normally be expected. The
defendant may in effect be receiving a windfall reduction in the damages, but
the claimant has created that consequence by achieving a saving in loss without
incurring any duty in law to pay for the saving. In the absence of any such duty
the circumstances are so different from the domestic environment that they will
normally not give rise to policy considerations similar to those which apply in
that case.
In the present case, even if it were in principle appropriate to
extend damages to cover Mrs Hardwick’s services, it would not be correct to
infer, as submitted on behalf of Mr Hardwick, that the relevant loss was
necessarily to be measured simply by reference only to the amount of reasonable
remuneration for such services. The turnover, as well as the net profits,
continued to rise steadily during the relevant period following Mr Hardwick’s
accident. Further, the manning of the business was re-organised so as to enable
Mr Hardwick to do much more management work. It is not obvious that the business
as a whole did not benefit in terms of profitability from the additional
management services provided by Mrs Hardwick. In that event, the net loss would
have been smaller than the cost of her notional wages together with the
business’s National Insurance contributions.
For these reasons I reach the same conclusion as the learned
judge, on this part of the claim. It is to be rejected as wrong in law and not
established on the evidence as a matter of fact.
ORDER: Appeal and cross appeal allowed; total revised judgment
sum £55,214.10; defendant to pay the claimant £1,120.80, with interest thereon
from the date of first judgment; no order as to costs in respect of the costs of
the appeal; all other ancillary orders made at trial, including as to costs, to
stand.