LORD JUSTICE DILLON: I will ask Lord Justice Croom-Johnson to give the first judgment.
LORD JUSTICE CROOM-JOHNSON: On 18th June 1979 Kate Elizabeth Hall, then aged three years and two months, was with her mother Glynis Ann Hall on the pavement in Brierley, Barnsley, when a van driven by the defendant mounted the pavement, injured Kate, and killed her mother who was aged 28. Kate's father and mother were not married, but were living together. He seems to have been the support of the little family. Since the accident he has assumed no responsibility towards his child, and he has fallen completely out of the picture.
After the accident Kate was detained in hospital overnight and was discharged the following day. Her mother's sister, Mrs Daphne Spittle, lives with her husband and their own two young children, one older and one younger than Kate. She took Kate into her family, and Kate has lived with them ever since. Mrs Spittle has been a loving substitute mother, and Kate now calls her "Mum".
The first and second plaintiffs are the administrators of the estate of Glynis Hall. They brought proceedings under the Fatal Accidents Acts, the sole beneficiary being Kate Hall. Those proceedings are the subject of this appeal. Proceedings were also brought on behalf of the estate under Law Reform (Miscellaneous Previsions) Act 1934 for the funeral expenses of f.181 and for the loss of the mother's expectation of life (which last does not seem to have received an award). There is no appeal in respect of that claim. Thirdly, Kate sued for damages for her personal injuries, and there is an appeeal against that award. In addition, there was an assessment of interest payable on the damages awarded under the Fatal Accidents Acts: that is also the subject of appeal. The writ was issued on 21st May 1982. The trial did not take place until December 1986, seven and a half years after the death, by which time Kate was ten and a half years old.
It will be convenient to deal with the three appeals in the order in which they were argued.
THE PERSONAL INJURIES OF KATE HALL
There was an injury to her left index finger, resulting in some loss of pulp at the end, but not exposing the bone. It healed in two weeks. According to an agreed medical report dated 2nd October 1980, the pulp is foreshortened slightly, and the nail is short. There was still some remaining tenderness. The surgeon reported that "there is minimal tissue loss and manual dexterity in the future should not be impaired. The alteration in the shape of the nail and the finger end will constitute a minor cosmetic deformity when she reaches her teens." He forecast that the injury would return to total comfort. The trial judge inspected the finger, and recorded his observation that the end joint of the finger is short by about one-third of its natural length as compared with the right index finger, and about half of the length of the nail missing. He concluded that between the surgeon's examination and his own inspection the finger had returned to total comfort.
Besides the finger, there were other trivial physical injuries. There was a small laceration in the left parietal region with a large haematoma underneath it, and abrasions in the left temporal and frontal regions of the head. There were further abrasions over the face and both legs. After healing there remained no obvious residual damage.
The major injury from the accident was emotional. Her aunt gave evidence about Kate's immediate reaction to the death of her mother. She would not eat or drink. She would wake screaming and crying, and had difficulty in going back to sleep. She lost her bladder and bowel control for a year. For the first year and a half after the accident she was extremely difficult to raise and her behaviour was disturbed. At five years of age she went to school. Her scholastic ability was in the high average range, but she would not mix with other children. Mrs Spittle cared for her very competently, patiently and intelligently, and by 1984 Kate's behavioural and sleep problems had settled.
Kate's progress was traced in two agreed psychological reports dated 28th September 1982 and 20th May 1986. Her intelligence is high, but she would not in the early days mix with other children at school and was therefore socially isolated. By the time of the second report, when she was ten years old, the report was:
"Kate's behavioural and sleep problems have been settled for the last two years although she is still unable to deal with small problems on her own. She is a steady, sensible, loving and helpful child whom the Spittles enjoy very much. However, for her age, she does still need an extra bit of security and confidence boosting from time to time. Kate can still feel insecure when subjected to any kind of change or stressful situation but the Spittles are able to handle these occasions by providing her with extra support."
The conclusion was that Kate was happy and well-adjusted, making friends and mixing well both at home and at school, but would still need extra support and careful handling when in situations of stress or change. The learned judge awarded £8,000 general damages, divided as to £3,000 for the purely physical, and £5,000 for the psychological, effects. The defence submits this was too high.
The finger injury was slight indeed, even allowing for the age and sex of the plaintiff, and in my view the sum awarded was excessive. We have been referred, by way of a cross-check, to four cases in Kemp on the Quantum of Damages, all of which were since 1979 and in three of which the injuries can be said to be more serious than Kate's. Even after updating the awards to allow for the decline in the value of money, in none of those cases was the award as much as half the sum awarded to her. In the case which on its facts was most near to Kate's, the updated award was approximately one-quarter of hers, and the Court of Appeal declined to increase it. The sum awarded for the finger injury was appealably high. I would reduce it to £l,500.
The emotional or psychological damage was not of a kind which fits readily into a bracket of damages. No comparable case was referred to us. The sum awarded was high. The description of Kate's behaviour given by Mrs Spittle was necessarily in the early period after the accident. Thereafter there was improvement which by the time of trial had left very little indeed by way of residual effects. As the judge said, the kind and sympathetic mothering by Mrs Spittle was largely responsible for the improvement, and Kate was fortunate to have so good an aunt who, by her kindness and sympathy, has produced a good result. Although I have said the award seems high, it is a sum which I am Rot sufficiently confident is appealably high. Such damages must otherwise be left to the trial judge to assess, and I would not reduce this part of the award.
THE FATAL ACCIDENTS ACTS
The particulars in the statement of claim were:
"Prior to her death the deceased was aged 28 years and used to look after the Third Plaintiff. She intended when the Third Plaintiff began to attend school to obtain employment and would by her wages therefrom have maintained the Third Plaintiff."
No evidence was led to prove the second sentence of those particulars and no assessment was made on that basis. No actual financial loss was alleged. The case was advanced on the possibly more remunerative ground that Kate had lost the services provided to her by her mother and that those services should be evaluated and quantified as a capital sum. If they had been replaced, such as by hiring someone to perform them, the reasonable cost of hire might be claimed, but that has not happened. Where orphans are claimants under the Fatal Accidents Acts, what happens to them may vary, and the valuation of their loss must depend on the facts of the case. First, there must be a loss which is capable of being evaluated in money terms. Hay v. Hughes [1975] QB 790, was a case where both parents were killed in a motor accident, and the case was brought on behalf of two small children aged four and a half and two and a half, alleging loss of dependency in the usual financial way from the death of their father, and also the loss of the services of their mother. At page 810 Buckley L.J. said:
"Mr. and Mrs. Hay's children doubtless suffered greviously in a variety of ways in consequence of their parents' death ... They have lost the benefits and happiness it was to be expected they would derive as they grew up from the companionship of their father and mother. They have lost parental love. They have lost the joys of a happy home. These losses cannot be assessed in monetary terms and so cannot support a claim for damages."
After dealing with the loss of the financial support from the father, he continued:
"Although damages cannot be recovered for the loss of their mother's love, they can be recovered for the loss of those services capable of being valued in terms of money which she would have rendered to them as their mother had she survived. About these matters there is no dispute in this action, but there is dispute about how the losses capable of evaluation should be valued."
Section 2 of the Fatal Accidents Act 1846 provides that:
"..... the jury may give such damages as they may think proportioned to the injury resulting from such death to the parties respectively for whom and for whose benefit such action shall be brought."
In Hay v. Hughes the two orphans had been taken in by their grandmother to live with her. Their claim arising from their mother's death was that they had been dependent upon her for services capable of being valued in terms of money. Nobody had been engaged at a commercial wage to perform the services which had hitherto been performed by her, but it was held that the value of those services should be arrived at by using what the cost of hiring a nanny would have been - that the children had suffered the loss of their mother's services was not seriously disputed. The real issue was whether the services rendered to them by being taken in by their grandmother should equally be valued and regarded as a deductible benefit to the children resulting from the death of their mother. The Court of Appeal held that they did not "result from the death" and so should not be taken into account.
It was held that the fact that no nanny had actually been engaged did not matter. If one had been hired, her reasonable wages would have been recoverable as a loss to the dependent chil dren, whether they or somebody else had been the paymasters, applying Donnelly v. Joyce [1974] QB 454. In Donnelly's case it was held that in a personal injury action medical or other expenses are recoverable by the injured plaintiff even if the expense has actually been incurred by somebody else. By analogy, the same principle applies to Fatal Accidents Acts cases. In the one case, the loss is the injured plaintiff's loss: in the other, the loss is that of the dependants.
Accordingly, in Hay's case the wages payable to a notional nanny were taken as the measure of the services which would have been provided by the dead mother.
As was emphasised in Hay v. Hughes, the whole assessment is a jury matter. Now that such actions are no longer tried by juries, the judge who tries them has to direct himself as he would a jury and then put himself in the position of the jury to decide the facts. There are principles laid down which must be applied, but very often the reasoning of the judge is directed to the facts of the individual case. Sometimes with a similar set of facts a pattern emerges; sometimes not.
In cases where an orphan has been taken in by a close relative there has been a general, though not universal, reluctance to say either that the orphan has suffered no loss or has acquired a benefit. The logical reason for not saying "no loss" is that no services can really replace the services of a mother (I repeat that the loss is one of actual services, not of love).
In the present case, no point was taken that Kate had suffered no loss at all. I cannot help thinking that if it had been, it would have been open to the jury to find that on the facts she was, if anything, better off with Mrs Spittle than with Mrs Hall. She left the insecurity of a way of life (whatever it was) in which her natural father took so little interest in her that he abandoned her as soon as her mother was killed. She acquired instead a stable home and family relationship with her uncle and aunt and cousins. The trial judge spoke in glowing terms of the care devoted by Mrs Spittle to Kate. But the point was not taken, nor was the matter fully investigated in the evidence, as would have been necessary. And, in view of the decision in Hay v. Hughes, the question of "benefit resulting from the death" was not argued either.
The whole question in this appeal is how properly to evaluate the loss of Mrs Hall's services. Where a very young child is orphaned, and no substitute is provided, there is a practice of valuing the lost services of the mother by having regard to the cost of hiring a nanny. It is not a measure which is satisfactory in every case, but is one which is usually adopted, presumably because the legal profession or the litigants have so far been unable to think of anything better. It was used in Hay v. Hughes. But in that case Ormrod L.J. made a suggestion that it would be worth looking at the costs of providing a foster home as an alternative measure on which to calculate the damages. Later, in Daly v. General Steam Navigation Co. Ltd. [1980] 3 A.E.R. 696, Ormrod L.J. said:
"..... in trying to assess whac is a fair compensation in an internal family situation, it is not necessarily at all reliable to have regard to market values of housekeepers or other comparable people. It introduces a wildly artificial concept if one resorts to that and talks about compensating the husband in this case at a rate of a daily woman at so many hours a week. It simply does not represent reality at all."
Accordingly, in the present case the defendant, taking the hint from Ormrod L.J., did provide evidence of what the cost of providing a foster home for Kate would be. The plaintiff relied on the cost of a nanny, which, needless to say, was a good deal more. The artificiality of the exercise is emphasised if one appreciates that, had there been no Mrs Spittle to come to the rescue when Kate's mother was killed, Kate would probably have had to be fostered, but there was never any chance that her father would have engaged a nanny at commercial rates to look after her while he was at work.
Since there was no claim for direct financial loss, nor any claim for loss of dependency on Kate's father, this case presents in an acute form the question of how to assess damages for the loss of a mother's services.
The judge adopted the "nanny" formula. Figures were provided of the wage which a commercially-hired nanny could have expected to receive "net in-hand" each week. By "net in-hand" was meant the sum actually receivable by the nanny after she had paid her tax and national insurance contribution. Owing to the time which the case took to come on for trial this meant taking an annual figure for each year from the death down to the trial, beginning at a weekly net rate of £50 in 1979 and rising by f.5 per week each year to ^85 per week in 1986. The total figure for those seven and a half years in round terms was £27,000. The judge did not accede to a submission made on behalf of the plaintiffs that the 'net in-hand" figure was too low, and the cost of the nanny should in effect be doubled by charging her gross wages and insurance contribution and something for her food. In this he must have been right, because there never was going to be a nanny, and such items of expenditure will never have been incurred by anybody at all.
The judge then (as he said) stood back and looked at the figure of £27,000 in the round, regarding it as a jury question. He added to it because he was satisfied "that Mrs Spittle had gone way beyond that which could have been reasonably expected of a commercially hired nanny". He did not say so, but it may be presumed that he was applying the method used in Regan v. Williamson [1976] 1 W.L.R. 305 where a nanny was engaged but Watkins J. raised the weekly "loss" partly on the basis that the mother would have put in longer hours and given better service than the commercial nanny. In the instant case the judge was equating the services given by Mrs Spittle with those of the lost mother. After "standing back" the judge raised the £27,000 to £30,000.
The judge then considered what the multiplier should be. He found that on the evidence it was more likely than not that Kate would proceed to tertiary education of some sort, "be it Sixth Form College, Polytechnic or University". If she did, it would mean her dependence would continue until she was 22 years old. On that basis, he adopted a multiplier of 11, of which, applying the principles of Cookson v. Knowles [1979] AC 556, seven and a half years had already elapsed by the time of trial. That left three and a half years to come.
At the time of trial the yearly net wage of a commercial nanny had reached £4,520. The learned judge then applied the remaining three and a half years of the multiplier, not to £4,520, but to £5,000, which he called "the current approximate annual rate of compensation", so that for the remaining three and a half years he awarded a further £17,500. Therefore the total award under the Fatal Accidents Acts was £47,000. By way of illustration only, it may be said that, if this case had come on for trial two and a half years after the death (which was the interval in Cookson v. Knowles), the multiplicand for the remaining number of years would have been about £3,400. The resulting damages would then have been substantially less. This illustrates the distortion which is introduced into the calculation of damages where a case takes a long time to come on for trial.
The defendant has urged that the multiplier of 11 was too large, and that it should have been 9 or (at least) 10. I have considered this. The whole question of multipliers in this case is unusual, because its length is normally based upon the prospective length of the joint lives of the deceased and the dependant. Had she lived, Mrs Hall might well have rendered services to her daughter as long as she lived. In 15 years' time Kate, having married and being in childbirth, or being ill, might have had the benefit of the services of her mother, but such matters are far too speculative to be considered when deciding on the multiplier.
From a realistic point of view, the maximum period to be covered by the award is until Kate will be 22 years old, which is 18½ years from the death.
In my view the multiplier, although on the high side, is not too long. It is true that these damages are not replacing money which Kate was once receiving but will now receive no more, as happens in the usual type of Fatal Accidents Act case or in a claim by a living plaintiff for loss of future earnings. In such cases they form, in theory, a gradually dwindling fund which, as the years go on, is both reduced by current expenditure and added to by the interest on the remaining capital. The fund of damages is not expected to be preserved intact. It is expected to be used up gradually over the relevant period, so as to be exhausted by the end of the period. See Taylor v. O'Connor [1971] A.C. 115, at page 143 per Lord Pearson. Reference has also been made to the possibility adverted to by O'Connor L.J. in Housecroft v. Burnett [1986] 1 A.E.R. 332, at 342 that an injured plaintiff who is being looked after by a relative or friend may give presents from her damages to recompense that person. That could be done by Miss Housecroft, who is a patient, subject to the approval of the Court of Protection. In the present case Kate's damages are also subject to court control, and the chances are that when she becomes 18 she will have at her disposal a sizeable sum of capital. I find these considerations uncertain, and I am not persuaded that the multiplier of 11 was too long, particularly when the defendant's suggested reduction is so small. I would leave it at 11. Nevertheless, the function of both multiplier and multiplicand in these cases does require consideration.
Before this court the defendant submitted that the Fatal Accidents Acts damages were too large. He repeated the argument that the cost of fostering is a better guide than the wages of a nanny. Agreed documents show the sums Payable by the Barnsley Social Services Department to foster Parents in respect of children of various ages. They include Weekly maintenance, pocket money and clothing. They are intended to cover the out-of-pocket expenses incurred by the foster parents, but they do not include any payments made to the foster parents as a financial reward for acting as such, or for the equivalent of maternal "service", expended by them on the children. The trial judge did not find that they gave any guidance which would help him to put a money value on the services provided by Kate's mother. He said the cost of fostering was not, therefore, comparing like with like. I find myself in agreement with the trial judge about this. There may be in existence other, relevant, figures relating to foster parents. All I can say is that none were put before this judge.
The defendants also cited to this court awards in other cases, up-dated where suitable. They were unquestionably lower than the award in this case, although the circumstances were different in each case. In Hay v. Hughes the wages of the notional resident housekeeper, (who did not exist) were £15 a week and with other expenses were assessed at H,000 a year. That was in 1970. Updated for inflation that would now be f.28,530 on a multiplier of 9. Regan v. Williamson was not a case of a notional housekeeper. One had been employed to look after the widower and four children, of whom the youngest was aged three and a quarter. Watkins J. deducted the cost of the dead mother's keep and expenses, and added to the basic sum a further figure because there was a possibility that the mother might have gone out to work again and because she was otherwise available all day, whereas the housekeeper was not. The figure awarded, if it is updated, would be £31,606.
In dealing with the multiplier, I said that it would be necessary to return to that question and that of the multiplicand. It is the question again of comparing like with like. With a little girl aged three and a half a mother's service is full-time. She must be fed, bathed, dressed, kept occupied and not left alone where she may get into trouble. For a time, the wage of a full-time nanny is a fair standard to take, if there are no other circumstances to alter the picture. In Hay v. Hughes (at page 808) Lord Edmund-Davies quoted from the speech of Lord du Parcq in Monarch Steamship Co. Ltd. v. Karlshamns Oljefabriken (A/B) 1949 AC 196 at page 232:
"..... in the end what has to be decided is a question of fact, and therefore a question proper for a jury. Circumstances are so infinitely various that, however carefully general rules are framed, they must be construed with some liberality, and not too rigidly applied. It was necessary to lay down principles lest juries should be persuaded to do injustice by imposing an undue, or perhaps an inadequate, liability on a defendant. The court must be careful, however, to see that the principles laid down are never so narrowly interpreted as to prevent a jury, or judge of fact, from doing justice between the parties. So to use them would be to misuse them."
Lord Edmund-Davies said (at page 810):
"..... although some arithmetical calculations are necessarily involved in the assessment of the loss in such cases as the present, much of the calculation must be in the realm of hypothesis. As Pearce L.J. said in Daniels v. Jones [1961] 1 W.L.R. 1103, 1110, arithmetic is a good servant but a bad master. The loss suffered by the dependants must be assessed as best they can in the light of the particular facts. But, having done his arithmetic, there comes a stage when the judge has to stand back and look at the result. When he does, he should bear in mind the wise words of Willmer L.J. who said in Daniels v. Jones, at p. 1113:
'In what is essentially a jury question the overall picture is what matters. It is the wood that has to be looked at, and not the individual trees.'"
Lord Edmund-Davies rejected a defence submission that as a matter of law the loss of a mother's services could not be compensated in damages, and he also held that on the facts of that case the grandmother's services were not a benefit "resulting from the death". The actual cost of the nanny's services was not attacked by the defence.
Buckley L.J. (at page 813), in dealing with the submission that no loss had been suffered, said:
"..... it would surely be necessary at least to compare and take into account the comparative qualities of the services and benefits afforded in these respects by the parents in their lifetime and by the grandmother since the parents' death."
For reasons which I propose to give, when one looks into the future at the prospective value of a mother's services to a child then still at the tender age of three and a half, one cannot value them at a constant figure for the whole of the child's dependency. Still less can one value them by taking services, such as those of a nanny, which for a time are closely analogous but cease to be so as time goes on, and simply go through an arithmetical exercise in which the multiplicand (the nanny's wages) are automatically increased year by year to keep step with actual or anticipated inflation. There are cases where the dependency may be expected to vary, and where the remedy is an adjustment in the multiplicand. In my view, in the absence of firm figures met by using figures of money actually spent and going to be spent, this is one such case.
What, then, should have been the direction given to the jury trying the facts of the present case? They would be told that they should award such sum as they might think was proportioned to the injury to Kate resulting from her mother's death. They should be told that the services which had been given and which would have been given to Kate by Mrs Hall had a monetary value and they could proceed upon the basis that by the time Kate reached the age of 22 there would be no further deprivation by the loss of her mother's services, and they could take whatever number of years, short of 18%, which they thought represented the value at the time of death of the lost services up to that age. They should be told that the fact that nobody was being paid or would be paid as a substitute mother made no difference, and that Mrs Spittle's services, given free, were not to be set against any sum which they assessed. As to how they should value Mrs Hall's services, they were not to use as a measure the evidence of the cost of fostering services. They should be told that they were to use what other evidence (the cost of a nanny) as they thought best, and that if they thought that did not properly reflect the true value of the services of Mrs Hall they should stand back and use their common sense.
What they ought also to be reminded of is that as children get older they may also get more independent of their parents and less in need of being looked after. In the early years the services rendered by a mother to her small child may be valued by the cost of a hired nanny. The requirements are to some degree comparable. As the child grows older, and reaches school age, the valuation by commercial standards becomes less and less appropriate, and to use them is again not comparing like with like. Once the child has begun school, at least by the age of six, the extent of the services decreases in amount. She needs, for a time, tc be taken to and from school. Later on, she may go there by herself. Not only is the yardstick of a nanny's wage less appropriate, but the services rendered by the mother change in nature.
The learned judge did not give himself any such direction, and in my view it was required. In Hay v. Hughes [1975] Q.B. at page 796 counsel for the defendants tentatively advanced this matter, but it was not persisted in and formed no part of the decision of the court in that case.
I do not believe that a jury directed on those lines would have finished up with a total of £47,000. A juryman would be very likely to ask himself "why would a girl of 11 need a nanny at a cost of £4,520 a year?", and "why should such a figure form the basis of valuing the service of the mother of a girl of that age?" I do not believe that a jury would have assessed the services of a mother to a daughter between the ages of 10 and 13 to be valued at £5,000 a year, let alone when she will be receiving Higher Education.
I think it probable that a jury which had taken these matters into consideration would have come to the conclusion that the total damages could not exceed £25,000 for the whole of the multiplier period. It must be remembered that the figures up to trial, be it £27,000 or £30,000, are not true "special damage" in the Cookson v. Knowles sense. They are the product of arithmetical calculation based on figures which have been projected up to the date of trial without taking into consideration a matter which was material.
I would accordingly set aside the award of £47,000 in the instant case, and substitute for it the sum of £25,000.
It is necessary, in order to calculate interest in accordance with Cookson v. Knowles, to divide that sum. Where the action has come on so long after the death that most of the multiplier has already been used up, any such apportionment must be artificial. I would apportion it as to £22,000 down to trial and £3,000 thereafter. In substituting those figures for the figures assessed by the trial judge, I have taken into account the special qualitative factor dealt with by Watkins J. in Regan v. Williamson, and approved, at least by implication, in this court in Abrams v. Cook (unreported), dated on 18th November 1987.
INTEREST
The third matter upon which the defendant has appealed is against the award of interest. The judge heard special submissions and gave a further judgment on this on 17th December 1986.
This discretion to award interest given by section 3 of the Law Reform (Miscellaneous Provisions) Act 1934 was made mandatory by section 22 of the Administration of Justice Act 1969 - "unless the court is satisfied that there are special reasons why no interest should be given in respect of those damages." Section 3(1B) of the amended section 3 reads:
"Any order under this section may provide for interest to be calculated at different rates in respect of different parts of the period for which interest is given, whether that period is the whcle or part of the period mentioned in subsection (1) of this section".
In Jefford v. Gee [1970] 2 QB 130, which first established the guidelines on which interest should be awarded in personal injury actions, it was explicitly stated by Lord Denning M.R. that interest should not be awarded as compensation for the damage done, but should only be awarded to a plaintiff for being kept out of money which ought to have been paid to him. Where the case takes a long time to come on for trial because there has been unjustifiable delay by the plaintiff, he has been kept out of his money by his own default for part of the period. It is a "special reason" for not giving some of the interest. Birkett v. Hayes [1982] 2 A.E.R. 710 made that addition to the guidelines.
The principal point in Birkett v. Hayes was in establishing a new guideline as to the rate at which interest should be awarded on damages for pain and suffering and loss of amenity - in other words, for non-economic loss. This was because there had been a conflict of judicial opinion about that, and it was necessary to establish a new rate. The Court of Appeal decided that the rate should be 2%. At the end of his judgment, in a passage with which both the other members of the court agreed, Watkins L.J. dealt with the question of delay by the plaintiff in prosecuting his case. After stating that the amended section 3 gives the court a discretion to decide what part of an award of damages shall carry interest, the rate of that interest and the period for which it should be given, he said:
"Usually this period will run from the date of the writ to the date of trial, but the court may in its discretion abridge this period when it thinks it is just so to do. Far too often there is unjustifiable delay in bringing .an action to trial. It is, in my view, wrong that interest should run during a time which can properly be called unjustifiable delay after the date of the writ. During that time the plaintiff will have been kept out of the sum awarded to him by his own fault. The fact that the defendants have had the use of the sum during that time is no good reason for excusing that fault and allowing interest to run during that time."
Lord Denning M.R. thereupon added a short passage to his judgment, saying:
"It means that there can be an addition to the guideline. The interest, even at 2%, should not necessarily be awarded for the whole period ... The period may be reduced considerably: and only awarded for a lesser time according to the circumstances of the case."
Birkett v. Hayes was not a case itself concerned with delay. The statements were, however, made in the context of a case which was solely dealing with the rate of interest on non-economic loss. Lord Denning M.R. was echoing what he had already said in Jefford v. Gee [1970] 2 QB 130, at page 151, where he had briefly summarised all the guidelines then being laid down. There, at the end of his conclusions, he added:
"Exceptional cases
In exceptional cases, such as when one party or the other has been guilty of gross delay, the court may depart from the above suggestions by diminishing or increasing the award of interest, or altering the periods for which it is allowed."
Lord Denning was applying that general observation to all the guidelines listed.
Birkett v. Hayes, on the 2% point, was approved in Wright v. British Railways Board [1983] 2 A.C. 773. In both cases it was pointed out that rates of interest at present contain a large inflationary element as well as an investment element representing the return on the capital. This was analysed in detail, particularly by Lord Diplock, in order to arrive at the 2% figure. His speech was dealt with by the trial judge in the present case, in which the plaintiff was asking him to go above 2% in awarding interest on Kate's damages for non-economic loss. The judge declined to go above the guideline figure.
The judge held that there had been unjustifiable delay of something over three years, but he was unable to adjudicate on which the three years were. This had some relevance, because the plaintiff had been represented in turn by two firms of solicitors, who (or their insurers) would presumably have in the end to make good to the plaintiff any deficiency in her interest. He eventually ordered that he would deduct two years' interest from that which, had there been no relevant delay, he would have been obliged to order under the Act. So far as the interest on the damages for personal injury was concerned, this meant a deduction of four percent on the total interest which would otherwise have been awarded. There is no dispute that such a deduction was proper and in accordance with the guidelines.
The judge did not deduct the full amount of the interest payable according to the guideline for the Fatal Accidents Acts damages, which would have been half the short-term investment rates averaged over the seven and a half years. Presumably because of the difficulty in identifying which were the two years which had to be deducted, the parties had grossed up the whole sum recoverable for such interest to 48.25% of the relevant damages. The judge then deducted only half of 4% of that figure, that is 2% rounding down the award to 46%. The reason why he did so was that "justice requires that abatement should be only in respect of the investment rate element in the interest receivable on the Fatal Accidents Acts damages", because "if the inflation element is [also] taken out of the rate of interest, it must follow that the plaintiff will be penalised by an award that falls short of not only the current money equivalent but also of the investment rate appropriate to the award".
The defendant, in his appeal, submits that in doing what he did the judge was departing from the guidelines originally laid down in Jefford v. Gee and later referred to again in Birkett v.Hayes. Since the rates of the short term investment account come out at 12%, he submits that a deduction of half that rate for two years would have been 12%.
The plaintiffs's reply to that submission is that the judge was exercising his discretion, and his finding should stand unless he misdirected himself.
Cases in which plaintiffs are penalised for delay by forfeiting some of this interest occur from time to time, but reports of them are rare. One such was Pritchard v. J.H. Cobden Ltd. [1987] 1 A.E.R. 300, a case where the plaintiff was still living but economic loss was large. It took nine and a half years to come to court. The trial judge disallowed all interest for two years on the straight Jefford v. Gee rules as amended. The defendants appealed, saying that two years was not enough, but the Court of Appeal dismissed the appeal. The present point was not argued, and I do not regard that case as much help, save to the extent that nobody ever thought of it.
The trial judge undoubtedly has a discretion under the amended section 3, and although the principles of assessment according to Jefford v. Gee may occasionally be departed from in occasional cases, they should normally be adhered to. Dexter v. Courtaulds Ltd. [1984] 1 W.L.R. 372 was a case where the plaintiff wanted to depart from the Jefford v. Gee guideline relating to special damage. Lawton L.J. said (at page 375) that the court clearly intended to lay down general principles for application in personal injury cases. He said that they should be departed from only in unusual circumstances. In Cookson v. Knowles [1979] AC 556, Lord Diplock made the leading speech. He asserted the right of the trial judge to exercise his discretion by departing from guidelines laid down by an appellate court, in special circumstances. On page 572-3 he summarised the way in which thereafter damages under the Fatal Accidents Acts and the interest on those damages should be assessed and awarded in normal cases. He said the interest on the pre-trial loss should be awarded at half the short term interest rates current during that period. In other words, the interest is to be awarded in the same way as on special damage under Jefford v. Gee. Lord Fraser of Tullybelton (at page 578) said that guidelines are required in order that the judicial discretion may be exercised with reasonable consistency.
Lord Diplock returned to the same subject in Wright v. British Railways Board [1983] 2 A.C. at page 784, and said:
"..... it is an important function of the Court of Appeal to lay down guidelines both as to the quantum of damages appropriate to compensate for various types of commonly occurring injuries and as to the rates of 'interest' from time to time appropriate to be given in respect of non-economic loss and of the various kinds of economic loss."
He went on to say:
"The purpose of such guidelines is that they should be simple and easy to apply though broad enough to permit allowances to be made for special features of individual cases which make the deprivation caused to the particular plaintiff by the non-economic loss greater or less than in the general run of cases involving injuries of the same kind."
In my opinion that reasoning applies equally to economic loss.
I can detect no special circumstances in the present case which would justify a departure from the guidelines as laid down in Cookson v. Knowles. The "special reason" which entitles the judge, in the exercise of his discretion to depart from them must be a reason special to the individual case. The "special reason" here is not that the interest on the damages is partly composed of an inflation element and partly of an investment-value element. That applies to every case. The special reason is that the plaintiff's advisers let two years go by through unjustifiable delay. The submission by the plaintiff's counsel that this decision was in the judge's discretion raises two possibilities. One is that it would be equally in the discretion of every other judge. They might not exercise their discretions in the same way, and that would be the end of consistency. The other is that he is inviting this court to lay down fresh guidelines different from Jefford v. Gee, which was referred to without disapproval in Cookson v. Knowles. It is primarily for the Court of Appeal to lay down or amend the guidelines. See Wright v. British Railways Board [1983] 2 A.C. per Lord Diplock at pages 784*5. To reduce the part of the interest which is to be forfeited by a dilatory plaintiff in Fatal Accidents Act cases or from his special damages in personal injury actions (where the same reasoning applies) would remove a large part of the incentive to get on with the action quickly.
I would allow the defendant's appeal on the question of interest, and deduct two years of the total interest on the lost dependency at the full rate up to trial.
LORD JUSTICE WOOLF: I agree.
LORD JUSTICE DILLON: I also agree and have nothing further to add.
Order: Appeal allowed to the extent outlined in the judgment; judgment for the plaintiff to be entered for £39,609 inclusive of interest; costs order below to remain undisturbed; no order as to costs of the appeal, save for legal aid taxation of the plaintiffs' costs; payment out to the defendant's solicitors of the accrued interest on monies in court up to the date of the judgment at first instance; liberty to apply to the local district registrar for any orders for payment out.
