England and Wales Court of Appeal (Civil Division) Decisions

(HIS HONOUR JUDGE MACHIN )

B e f o r e:

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CLAIMANT/APPELLANT

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DEFENDANT/RESPONDENT

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(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)

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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

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(As approved by the Court )

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©Crown Copyright

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.