England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand. London. WC2A 2LL
		20/06/2007

Mr Justice Mackay:

1. RH is now six and a half years old and was born with severely disabling brain damage as a result of hypoxic ischaemia prior to his birth. The brief description of his disability necessary for an understanding of this case is that he now has a form of cerebral palsy affecting all his limbs, visual impairment, some hearing loss, controlled epilepsy, severe learning and speech difficulties and limited mobility. It is agreed that his probable life expectancy is to age forty five. He currently lives with his parents and younger sister in the Bristol area. He has a very high requirement for care and will continue so to do for the rest of his life.
2. The parties reached agreement as to the quantification of this claim at the start of a hearing which would have been the occasion for the assessment for damages, judgment having been entered in relation to liability in February 2006. The parties agreed a valuation of the claim, subject to the approval of the court, assuming it was to be assessed on the conventional lump sum basis. On that basis the total valuation was £4,713,100 of which some £2.5m related to the provision of future care. That care, it was agreed, had to be valued over three periods, since it differed over time, namely age 6-11, 12-19 and 19 onwards.
3. The parties were at issue as to two matters. If any part of the award was to be made by way of a periodical payments order (PPO), what was the appropriate index or indices or measure to apply to escalate such order or orders, to counter the effects of inflation (the indexation issue)? Secondly, depending on the form of index chosen, what was the appropriate division of certain heads of damage between lump sum and PPO (the format issue)?
4. Accordingly on the 5^th February 2007 Owen J ordered that issues be tried on those matters and statements of the case exchanged.
5. The Claimant's statement of case is that the award should be a combination of a lump sum and periodical payments. So far as future care and case management are concerned that PPO should vary by reference to one of three specified indices or measures. All other heads subject to a PPO should vary with the Retail Prices Index (RPI). The Defendant argues that the majority of the future loss items on the agreed quantification of the claim should be the subject of a PPO (with the exception of future loss of earnings and certain accommodation costs) and should all be subject indexation by reference to a single index, namely RPI.
6. This will be the fourth decision by this court on the question of indexation. The first was Thompstone v Tameside and Glossop Acute Services NHS Trust [2006] EWHC 2904, a decision of Swift J, later followed by Corbett v South Yorkshire SHA. (28^th March 2007) a decision of HH Judge Bullimore sitting as a Judge of the Queens Bench Division. A third decision Lloyd Jones J in Sarwar v. Ali and MIB [2007] EWHC 1255 Admin, was handed down on 25^th May 2007, the day on which the evidence in this case concluded. Owen J ruled, contrary to the Claimant's argument, that the issues in this case should be tried prior to the anticipated appeals in the first two of the cases above, since it raised or might raise further or distinct issues, with which I deal below.
7. While the three previous decisions are not binding on me, the fact that three judges of the High Court have come to the same or closely similar conclusions on the same issues, in some instances based on the evidence of the same expert witnesses, is strongly persuasive, representing as it does something of a consensus on these matters. I have a duty, however, to form my own judgment. Where I find myself in agreement with those decisions I trust I will be forgiven for stating my reasons more concisely than I would need to have done were I approaching the matter for the first time. It is plain that whichever party sees itself as the loser in this case will want to seek the views of the Court of Appeal, and to do so with the other cases in a conjoined appeal.

Introduction and legal issues

8. The background to the problems in this area of compensation for future pecuniary loss caused by personal injury has been fully and clearly set out by Swift J in Thompstone at paragraphs 14 to 31, and I cannot improve upon it, but I will nevertheless set it out briefly in this judgment which will have to be capable of speaking for itself in isolation.
9. The conventional method of quantification of damages for personal injury comprised a lump sum payment, given on a once and for all basis, including compensation for pain and suffering, past losses and future loss and expense. So far as the last was concerned the principle was that the multipliers applied to the annual losses would be calculated by the references to a "real rate of return" from the invested damages sufficient to meet the future losses, taking inflation into account. The object of the exercise was, as is trite law, to put the Claimant as nearly as possible into the position he would have been in had the injuries not been caused as a result of the negligence.
10. The only thing one could ever say with certainty about conventional awards, particularly in the last 15-20 years when the seven figure award has become increasingly common, was that they failed to achieve that goal. The so called "100% principle" by which the Claimant was expected to exhaust his damages precisely on the day he died, neither earlier or later, was never more than a pious aspiration and almost certainly has never once been achieved, at least in cases at this level of severity. Whatever order is made in this case is likely in its turn to fail to reach that unreachable goal. But if the court can arrange the order in such a way that it gets significantly closer to the 100% principle, the fact that the award may well in practice overshoot the mark or fall short of it ought not to deter it from making the best attempt it can.
11. The benefits of the lump sum system were its relative simplicity, the flexibility it gave to Claimants in terms of handling their own money and making their own investment decisions, cutting their coat to suit their cloth, and the not inconsiderable psychological benefit of severing all contact with those who were perceived as standing in the shoes of the tortfeasor. The disadvantages were obvious. The damages, as I have said, were invariably either too much or too little and if too little the Claimant was thrown upon the state for the provision of his basic care and needs. The award was always predicated on a finding of anticipated expectation of life which might prove to be wrong in either direction. The Claimant bore all the risks of mortality and inflation.
12. From the end of the 1980s parties developed alternatives to the lump sum award, principally in the form of structured settlements by which an annuity could be paid to a Claimant in respect of future losses, the receipts being free of tax in his hands. While avoiding many of the problems of the lump sum settlement, particularly mortality risks, this form of award, often approved by courts, suffered from two particular problems. The pool of providers of such annuities became smaller and their terms less attractive; also they could not be imposed on an unwilling litigant.
13. Under the Damages Act 1996 ("the 1996 Act"), as amended with effect from 1 April 2005 by the Courts Act 2003, there is now a new, and as I see it radical power in the court to order periodical payments even where both parties or one of them objects. Lloyd Jones exercised this power in Sarwar. where the Claimant by the end of the case had changed his mind and was expressing a preference for traditional lump sum orders in respect of the two heads of damage there in issue. The court thus has an interventionist role in cases where the evidence requires a PPO to be made, even with parties who are sui juris. It may also, where the Claimant is under a legal disability, intervene when asked to approve conventional settlements, although it will usually only do so where it has evidence before it requiring that step to be taken. I must first set out the relevant parts of the 1996 Act, as so amended.

1996 Act: Section 2

(1) A court awarding damages for future pecuniary loss in respect of personal injury: -

(a) may order that the damages are wholly or partly to take the form of periodical payments and

(b) shall consider whether to make the order

(2) A court awarding other damages in respect of personal injury may, if the parties consent, order that damages are wholly or partly to take the form of periodical payments........

(8) An order for periodical payments shall be treated as providing for the amounts of payments to vary by reference to the retail price index (within the meaning of section 833(2) of the Income and Corporation Taxes Act 1988) at such times and in such a manner as may be determined by or in accordance with Civil Procedure Rules.

(9) But an order for periodical payments may include provision:-

(a) disapplying sub section (8), or

(b) modifying the effects of sub section (8)

14. The Civil Procedure Rules, so far as relevant to these issues, provide as follows:-

CPR 41.7 When considering - ...

(a) whether to make an order under section 2(l)(a) of the 1996 Act, the court shall have regard to all the circumstances of the case an in particular the form of award which best meets the Claimant's needs, having regard to the factors set out in practice direction.

CPR 41.8(1) Where the court awards damages in the form of periodical payments, the order must specify: -

(a) The annual amount awarded, how each payment is to be made during the year and at what intervals;

(b) The amount awarded for future -

(1) loss of earnings and other income; and

(2) care and medical costs and other recurring or capital costs

(b) that the Claimant's annual pecuniary losses, as assessed by the court, are to be paid for the duration of the Claimant's life, or such other period of the court orders; and

(c) that the amount of the payment should vary annually by reference to the retail prices index, unless the court orders otherwise under 2(9) of the 1996 Act

The Practice Direction to Part 41 in its relevant parts reads as follows:-

41BPD. 1 The factors which the court shall have regard to under rule 41.7 include -

(1) The scale of the annual payments taking into account any deductions for contributory negligence ...

(3) The form of the award preferred by the claimant including-

(a) the reasons for the claimant's preference; and

(b) the nature of any financial advice received by the claimant when considering any form of award; and

(2) The form of award preferred by the defendant including the reasons for the defendant's preference.

The Approach to the Application of the Act

15. The Defendant wishes to argue that modification of section 2 (8) should only be undertaken in "exceptional circumstances". The Claimant's position is that this argument is precluded, at least so far as I am concerned, by the Court of Appeal's decision in Flora v Wakom (Heathrow) Ltd [20071 1 WLR 482 where Brooke LJ held, dismissing a strike-out application based on this argument, as follows

"...it will...be for the trial Judge to decide whether it is appropriate to use the powers given to him by Parliament by Section 2(9) and to make such order for index linking the periodical payments... as he considers appropriate and fair in all the circumstances, without being obliged to detect exceptional circumstances before he is at liberty to depart from the RPI"

16. Mr Paul Rees QC for the Defendant devoted much of his final oral address to this issue. He argued that Flora was wrongly decided and is contrary to Wells v Wells [1991] 1 AC 345 and a decision of the Court of Appeal in Cooke v United Bristol Healthcare NHS Trust [2004] 1 WLR 251. In my judgement Flora is binding on me for the purposes of this trial. The issues in Cooke and Wells were entirely different. In Wells the question was whether the Lord Chancellor's exercise of his power to set the 2.5% discount rate could be circumvented by increasing the multiplicand to meet future inflation. The second considered the adequacy of the traditional 4 - 5 % discount rate thitherto prevailing, and indeed concluded that the imperfections of the conventional award were such that a move to court-imposed PPO's was much needed - see Lord Steyn at 384B. As an authority Cooke was cited in Flora where the Court of Appeal plainly saw no conflict between it and the decision it was making - see paragraphs 27-28. I regard Flora as binding on me in this case. But even if it was wrong it would not be open to me to say so.
17. The test therefore I consider appropriate to apply when considering whether to exercise the power of modification is that propounded by Swift J and followed in the other first instance decisions, namely whether it is fair reasonable and appropriate in all the circumstances to exercise my discretion to modify the statute on the basis of the evidence, my judgment being informed by my awareness of the need to respect the 100% principle.
18. As to the meaning of "modifying" in section 2 (9) (b) Mr Rees argues that this cannot be construed so as to permit replacing the RPI with some different index, or a measure converted to operate as an index. He says it restricts the court's power to making partial changes to the effect of the RPI, which he describes as the presumption as to the appropriate index in the scheme of the statute. He cites Waitamata v Local Government Commission [1964] NZLR 689, which construed the word "modify", used in a statute concerned with schemes for local government, as meaning "to make partial changes in" a proposal. The key difference as it seems to me is that the same statutory provision included a separate and express provision to substitute a new proposal in replacement of the original. That decision does not assist me to construe the 1996 Act, whose terms and context are as different as could be.
19. The practical consequence of the Defendant's argument is that all the court could do would be to order that the PPO should vary annually in accordance with "RPI plus (or minus) x%". I am quite unpersuaded by this argument, and unattracted by its consequences, which would be that the court would be required to patch up or reconstruct an index which it has found to be inadequate, and to ignore the possibility that other and better ready-made indices or measures might be available for use.
20. Alternatively, Mr Rees invites me to look at the Parliamentary material, on the ground that section 2 (9) (b) is ambiguous, applying Pepper v Hart [1993] AC 593. I see no ambiguity to justify this exceptional step. Nor do I consider that the material which I have looked at de bene esse lends any support, let alone clear support, to the Defendant's argument. I agree with what HHJ Bullimore said on this issue at 108-112. The discretion to modify is in the words used by Mr Robin Oppenheim QC, the Claimant's counsel, "open textured", and falls to be exercised in the way I have set out at 17 above.
21. The Defendant also seeks to argue that if modification is effected it can at most be so as to vary the escalating index to RPI to another index, which would exclude ASHE (considered below) either in its aggregate or disaggregated versions, and to a single index throughout. The Defendant further argues that the Claimant must elect which index he is seeking to have substituted for RPI. Both these arguments seem to me to be unwarranted glosses on the plain discretion conferred by the statute and the rules. Properly analysed this claim involves a minor under a disability and the approval by the court of the form of the award appropriate in his case, taking into account the matters referred to in the rules and particularly the form of award which best meets the Claimant's needs. The duty of the Claimant's advisors is to lay all relevant material before the court which may affect the grant or withholding or of such approval. The Claimant can then make submissions as to which of the various indices or measures is most likely to achieve the purpose of the statute. I see no warrant for requiring the Claimant to pin his colours to any particular mast. This is a radical new power in the hands of the court, and it must not be restricted, especially where a minor or patient is concerned, to narrow adversarial notions of procedure.
22. It follows that references to the burden of proof are not helpful in the exercise I have to carry out. It is open to the court to take a course, if it feels it necessary and just to do so, which neither party wishes to be taken, as Lloyd Jones J did in Sarwar. The exercise I am embarking on is therefore a comparative and quasi-inquisitorial one looking at all the possibilities placed before me, with the above principles in mind.

The Claimant's future care needs

23. It is necessary at the outset to set these out in summary form, since they have an obvious bearing on the type of carer he will need to have in the future, and thus the cost of hiring such a person.
24. Ms Sargent, the care expert for the Claimant, has seen him and talked to his parents about his needs. In her care report of December 2005 she described him as requiring high levels of support, demanding attention, spending hours being cuddled, and needing a great deal of stimulation. His incontinence means that his carers have to be able to interpret such sounds as he makes to communicate his needs or distress. They will have to be trained in the management of an epileptic, who has spasms daily, and his handling will become more difficult as he grows bigger. They will have to be "skilled, experienced" carers, she said.
25. In evidence before me she explained how she had reached the hourly rates in her report (£10 for weekdays and £11.50. for weekends). She used what she called "indicative rates of pay" to which she had recourse when assessing care costs in complex cases, which were adjusted to meet particular needs or local recruiting conditions. She used her own experience of the area and of RH's needs, discussed the matter with one of her case managers in the Bristol area, and with another organisation providing case management services there. She reached the conclusion that she should recommend a figure higher than her indicative rate.
26. The trial expert for the Defendant, Mr Pace, did not disagree with this general approach. He suggested a rate of pay substantially higher that that which would be paid to carers currently supplied by the BNA/Goldsborough organisation, justifying his figures in these terms - "I believe it is right to pay the employed carers more than they could earn elsewhere because it is crucial that a good calibre of staff is recruited and retained, providing continuity for [RH's] care". His equivalent hourly rates were respectively £9 and £10.
27. So the issues between the parties' experts were not unbridgeable, being as to the hourly rate, and a marginal disagreement as to the number of hours per week at different stages. The result was a compromise agreement as to three multiplicands or annual figures. The first, which ran to age 11, was £40,985; the second, to age 19, was £56,580; and the third from age 19 was £ 139,849. The figures for the first two stages include a substantial figure representing the value of the gratuitous care which the family would provide; this was calculated by applying a conventional noncommercial discount to the NJC (National Joint Council spine point 8) rates then prevailing, which were not relied on by either expert as a means of quantifying the paid care element at any of the three stages. They also included a substantial element representing the cost of case management, and a small amount for extra expenses in the form of true disbursements. In broad terms the care issues were resolved rather closer to Ms Sargent's recommendations than those of Mr Pace. The picture is well demonstrated by a series of tabular analyses which Mr Rees QC for the Defendant put in during the course of the case (4.38 A-C).
28. With this introduction I should turn to consider the various indices or measures about which evidence has been led.

The Retail Price Index (RPI)

29. This well known index is produced by the Office for National Statistics (ONS) and appears monthly. Prices of some 650 representative consumer goods and services are collected around the UK to form a basket of representative items which is appropriately weighted and whose content is updated to match changing tastes in consumption.
30. The contents of this basket in 2006 included a negligible element of homecare costs accounting for 0.12% of its overall value. While there are labour costs embedded in the goods and services measured, RPI is not intended to be a measure of earnings generally, let alone the earnings of carers. If therefore the court's concern is to arrive at a measure which will capture the likely growth rate for the earnings of the carers looking after the Claimant it is quite obvious that the RPI will not do so. It would only do so if those earnings were in fact in some way linked to the RPI, as to which there is no evidence in this case, or as a result as the operation of chance.
31. The experts are in agreement about the RPI. They defined the "target expenditure" as the payments which are to be made to the carers of the Claimant in his recommended care package with the intent of capturing the growth in those payments over future time.
32. The experts agreed that-

"Historically earnings in general (and pay settlements) have increased faster than prices. If this trend were to continue an index based upon RPI will not meet the increase in the target expenditure."

One expert for the Defendant, Mr Storry, a pay data analyst with IDS, entered a reservation to this agreement. Mr Hall, the forensic chartered accountant retained by the Defendant agreed with the proposition unreservedly, after having inserted into the note of the agreement the words "in general" in the first line. In cross examination he agreed that the "target expenditure" referred to in the second sentence was a reference to the Claimant's carers' remuneration, as it had been defined earlier in the note of their agreement.

33. This is an unsurprising concession, in my judgement, since it would be curious if an index which did not set out to measure the cost of purchasing labour of any kind, let alone the provision of domiciliary care, in fact succeeded in doing so. Mr Storry's qualification to this agreement is hard to fathom. He expressed his disagreement in these terms. "RS does not agree with this because, in some pay settlements, there are factors which increase pay which are analogous to the factors behind pay drift". Pay drift as a concept will have to be encountered later in this judgment. From his evidence he appeared to be saying that some instances could be encountered in industry or local government where pay settlements based on an increase in line with RPI in fact involve elements of restructuring pay - for example long term pay deals. This may be the result of his particular expertise which is not academic (he has no post-graduate qualification) but practical, the company for which he works providing services to commercial client and local authorities called "pay benchmarking" in which he researches pay rates and increases and analyses them. His reservation has in my judgement no useful function to play in this case. The NJC pay rates spine point 8, which includes care workers working for local authority employers, did, he accepted, demonstrate increases above RPI without any element of pay drift, and he was not in the end contending that in relation to carers' earnings in general there had been zero growth above RPI historically. His qualification therefore is not of any significance in this case.
34. The other witnesses being of one mind, I have no hesitation in finding that indexing the future care damages of this Claimant to the RPI will produce a shortfall over the likely lifetime of this order, namely the next 38 years.
35. How great that shortfall will be is less clear. The evidence of Dr Wass went into this in some detail. She is a labour economist at the Cardiff Business School and was in my judgement a most impressive witness. She avoided partisan selection of material, and gave straight answers to questions even when they did not suit the Claimant's case. She produced a number of tables in her report, principally Tables 3, 4 and 5, indicating that whatever measure of carers' earnings was considered there was a visible and significant average above RPI growth.
36. Mr Hall in his report (23.3.2-4) demonstrated that in the 25 years up to 2005 local authority pay rates as measured by the NJC outstripped RPI by an annual average of 1.03%. It should be stressed that these were pay rates not earnings and that they fall well below the anticipated wage that would be paid to the Claimants carers.
37. On any view therefore the shortfall will be not insignificant and possibly substantial, probably falling within the broad range of 0.5% and 2% p.a. As to the sensitivity of the award to any shortfall, in a calculation which was not controversial Mr Cropper, the independent financial advisor called by the Claimant, calculated that if earnings in fact were to increase faster that prices measured by the RPI by 0.5% per annum the present value of the shortfall over the anticipated life of the order will be £253,297, a 1% differential leads to a shortfall of £538,673 and a 2% differential to one of £1,223,837.
38. In my judgement it can be said with a degree of certainty that indexing future care costs to RPI will result in a significant and possibly substantial shortfall for this Claimant, somewhere within that wide bracket. Unless, therefore, there is other evidence that the target expenditure is in a different position from general earnings, and in fact (albeit coincidentally) keeps station with RPI, this finding compels me to consider whether there are alternative methods of uprating more suited to the task, and to adopt the most apparently suitable one of them, unless it is flawed or otherwise unfit for the task, in which case the default position of the RPI will have to remain for want of any alternative. For this reason, it seems, the Defendant called what it called empirical evidence supporting the proposition that the target expenditure would in fact rise broadly in line with the RPI, evidence to which I must now turn.

The Evidence of Barbara Scandrett

39. Mrs Scandrett is the managing director of Complete Care Holdings Ltd, one of whose divisions Complete Personal Assistance (CPA) employs approximately 800 carers servicing about 200 severely disabled clients, all with high levels of need. Her company has grown from small beginnings up to 2006 when its sales were £13.3m. 90% of its clients are publicly funded. The majority of the carers are now hourly paid, the remainder being classified as live-in carers. CPA provides a complete service to its clients, as its name suggests, including recruitment, training, payroll and the like. The shape of the Claimant's package, by contrast, is that it is a direct private package, in the sense that there will a team of hourly paid carers directly employed and supervised by the Receiver acting through a Case Manager retained on the Claimant's behalf, and providing 24 hour care from one carer plus a second carer for certain hours of the day.
40. For the five years 2001-6 the average annual agreed increase achieved by CPA with a selection of its publicly funded clients was 2.37%. These increases were in respect of existing clients, not new contracts where the evidence was that higher rates would be commanded.
41. Mrs Scandrett gave details of 4 particular clients with whom she has been professionally involved whose funding comes from litigation damages and whose needs have been serviced by the company over a 10 year period. One of these clients was ventilator dependant, one had a live in carer scheme, and the other two were cared for by hourly paid workers. The average annual rate of increase in sales for the 4 packages over the ten year period was 2.2%. Both these figures are less than the average annual rate of increase in RPI for the corresponding periods.
42. A further exercise was carried out under Mrs Scandrett's supervision. A cohort of hourly paid carers with at least 5 years continuous service with the company was chosen on a haphazard (as opposed to truly random) basis. One element of their pay was examined for the 4 years 2003-6, namely the basic hourly rate for work done on Monday to Friday between 8 a.m and 8 p.m. The final number of these workers was 124. All carers whose remuneration included any additional elements, specifically those for promotion, training or moving to a new client, were stripped out leaving only a subset of 79 who were paid in respect of their weekday work the "basic rate" allowed by CPA.
43. The net result of the exercise, says the Defendant, is that the group of 79 is shown to have received increases in the basic rate very much in line with the increases in RPI. It says that these 79 are the most proximate members in CPA to the Claimant's carers. From that it argues that this empirical evidence supports the proposition that indexation of care costs by the use of the RPI will not result in under-compensation.
44. The Claimant argues that the data produced by Mrs Scandrett is not complete or reliable, nor if it was should it be used in the way the Defendant seeks to use it.
45. The basic CPA rate in 2006, the year in which the care experts reported in this case, and without any increments, was £6.85 per hour. This was the figure according to Appendix 6 to Mrs Scandrett's statement, which she more than once said in evidence was the most reliable indicator of the true basic weekday rate. It was a document prepared by her on a good faith basis in the context of a potential purchase of the company. In view of the unsatisfactory nature of much of the rest of her evidence about pay rates and despite Mr Rees's evident desire to distance himself from this document I see no reason not to take Mrs Scandrett's evidence about it at face value.
46. The equivalent figures put forward by Ms Sargent for the Claimant and Mr Pace for the Defendant for this element of the care packages they were proposing were, as set out above, respectively £10 and £9, very much higher than CPA's basic rate. Since the Defendant cannot now impugn their own care expert, whose views have contributed to the settlement multiplicand, the inevitable conclusion as it seem to me is, as Dr Wass said, that there must be something very different about CPA as an employer and what it offers its "basic level" carers. That fact alone casts considerable doubt over the validity of the CPA exercise from the outset, in my judgment.
47. Had the Defendant put forward a comparison between overall earnings of all CPA carers as the comparison, or all hourly paid carers if there was no transferability between the two categories, that would have been a more appropriate approach, argued Dr Wass. But it chose to isolate one component of the CPA carers' pay packet, and a like for like comparison produces the immediate problem I have set out above.
48. The basic rate figures in Mrs Scandrett's Appendix 6 are available from 1997 to 2006. For the first four years they were increased by £0.10 only, and then they increased from £5.10 to £6.30 (or 23.5%) in 2000 - 2001. Over the whole period they increased 0.96% above RPI. The choice of the period over which the average growth rate is calculated has a critical effect, as is shown in a useful spreadsheet generated by Dr Wass looking at all the data on basic rates [4.386]. Merely by omitting the first year from the period, for example, causes the relative increase over RPI to increase to 1.58%. Starting the comparison in 2000 or 2003 produces respectively a growth of 2.54% and a decrease of 1.70% this is what Dr Wass called "lumpy" data, and her misgivings were I find well demonstrated.
49. The effect of Mrs Scandrett's evidence, as she herself said, was that her company could have provided care for the Claimant at a significantly lower cost than either expert suggested or the parties agreed as the fair figure. It is important to record that it was her view that the care needs of the Claimant were not typical of those of her private clients, who she implied were more severe cases. She was plainly wrong in this assessment, as Ms Sargent said, and she had not seen the Claimant or his family or considered his needs in any sort of detail. He is clearly at the top end of the range of cerebral palsy Claimants, as the trial experts' evidence and the eventual rates proposed make clear. I consider this misapprehension may have coloured Mrs Scandrett's views.
50. Mr Hall, a very experienced and senior consultant forensic accountant, gave evidence for the Defendant and considered the material from CPA. He thought that there were three sources from which it was possible to derive the average annual increase in the cost of the carers it employs, as he put it. Those sources were :-

i) The agreed annual increase in costs to what he called the majority of its clients - Appendix 4

ii) The changes of the costs of carers in the 4 packages identified in Appendix 12

iii) The actual hourly rates paid to what he called a random sample of specific carers, referring to the cohort of 79 whom I have identified above.

His conclusion in his report was that these pieces of evidence combined to indicate an average annual increase less than RPI in the years in question.

51. It is the Claimant's case that the only true or safe conclusion from the CPA data is that over the period 1997 - 2006 the basic weekday rate has increased on average by 0.96% per annum over RPI; if one limits the period to 2000-2006 it has increased by 2.45% per annum.
52. Returning to the three bases for Mr Halls opinion, the first, as it seems to me, takes the matter nowhere. The clients considered in appendix 4 were as I have stated a selection of local authority clients (those who had confirmed their agreements by letter), included no private clients and more importantly no new contracts, where all the evidence was that more lucrative rates would be obtained as a general rule.
53. As to the second, attempts were made to perform a back calculation from the cost to the client of each of the four packages in each year, its rate of annual increase and the application of a gross profit margin of some 27%, which Mrs Scandrett said was the target her company set and achieved, so as to reveal what was left namely the cost of hiring the carers to provide the package.
54. This section of Mrs Scandrett's evidence was plagued by inconsistencies and in my judgement inadequate and entirely unsatisfactory disclosure on her part. The problem for her was that Appendix 6 showed an increase in the hourly paid basic weekday wage between the years 2001 and 2001 of 23.5%. The Claimant's cross examination was to the effect that this could only have been accommodated by achieving a higher gross profit percentage on new contracts, thus maintaining the business by means of a cross-subsidy of existing client business from that source. Mr Hall made an unconvincing and erroneous calculation (2.93B) intended as a credibility check on this aspect of Mrs Scandrett's figures; it contained the basic error of including both the hourly paid and live in carers. But his evidence was that he accepted that there must have been cross-subsidy going on in the business, that it was as he put it "there, but we can't quantify it".
55. It is perhaps unnecessary to go further into the detail of the problems Mr Hall faced in this area of his evidence which were evident and acute. I can go to the end of his cross examination on this point when he accepted that there were plain and fundamental inconsistencies between Appendices 6 and 12 that Mrs Scandrett had produced, that it was a reasonable conclusion that 12 could not be relied upon and was unreliable data for the purposes which the court was concerned to use it To have resolved the conflicts which had been drawn to his attention he concluded "I would have needed to have looked at more detail of the underlying records, which I do not have access to". I agree, and the exercise carried out on incomplete and unsatisfactory evidence is unconvincing.
56. Mr Rees's response is really to say this, that I should stand back from this problem and look at the accounts which appear to support a maintained gross profit percentage of around 27% over the relevant years. While I will stand back from this evidence in due course this does not meet the detailed attack that Mr Oppenheim mounted and which led to the effective abandonment by Mr Hall, his key witness on this issue, of the second method of proving what the evidence was intended to prove.
57. This therefore requires me to come back to the third limb namely the sample of 79 "basic" carers. Here it seems to me I can and should stand back. Dr Wass's evidence, soundly based as I consider it to be on fundamental principles of economics, was that you cannot buck the labour market, or at least you cannot do so for more than a relatively short period of a year or two, and that suggests that the Defendant central proposition here is prima facie unlikely. The Defendant's answer is that the retention rates of staff (about 25% per annum are lost over a 7 year period) refute Dr Wass's view. Her counter-response is that one needs to look at the durations of employment rather than an annual rate of attrition.
58. But in any event Dr Wass's position was that the true view of the CPA data was that there had been earnings growth in the basic rate, in one or other of the percentages I have set out above in paragraph 51, both of which exceeded RPI. She said, as seemed plain, that the selection of the period over which the calculation is done is crucial to such an exercise. Rather than the cohort of 79 she wanted to see a comparison of earnings of CPA staff not their pay rates, and would want to look at least at all hourly paid staff. It was therefore inappropriate to consider the sub-set of 79, or to limit their selection to those who had worked for 5 years continuously (bearing in mind that it is anticipated that there will be a 25% turnover in the carers working for the Claimant). It was also inappropriate to measure only one element of the pay. It was particularly inappropriate to ignore pay increases before 2003, particularly in view of the substantial increase apparent in 2000/2001. The position was clearly illustrated by Dr Wass in her spreadsheet which shows the critical influence of the period selected on such statistics, and compares on a single sheet all the other data that has been collected for this case, all indicating increases of different magnitude above RPI.
59. I should deal specifically with the elimination from the cohort all those with promotion, training or who had moved to a new client. Ms Sargent's evidence was that the impact of the Care Standards Act 2000 and the National Minimum Standards made under it will mean that for the future all of the Claimants carers will have to hold the qualification of NVQ level 2 or 3 either on hiring or within 3 years of it. The exclusion of the balance of the 124 CPA employees was inappropriate.
60. I accept Mr Rees's sensible suggestion to stand back when looking at this evidence. It is to the effect that CPA were able to and will be able to "buck the market" which as I have said Dr Wass, an economist, and the only economist giving evidence to me, said was "simply not sustainable" in the long term and she had seen no evidence in any event to support it. Ms Sargent's evidence is that the increasing professionalisation of the care profession would make the market more mobile not less, and I accept that. There is no support that I can see for the Defendant's counter argument that the Claimant's carers will be segmented in a sub-set of their own and insulated from the rest of the labour market. Ms Sargent said that she simply could not recruit for the Claimant at the CPA basic rate. Finally there is the dramatic difference which I have already set out between the CPA figures and those advised to the Defendant by its own expert Mr Pace at trial.
61. My conclusions on this evidence are therefore that the CPA evidence provides me with no justification for a finding that the Claimant's carers will not require wage increases in excess of RPI. The best view of the evidence is that the CPA rates are increasing above that level. They are lower by a very considerable margin than the rates which the Claimant will have to pay, but the time has passed when the Defendant could have argued that they were the appropriate rate. To the extent that the rates are different from those advocated by the trial experts that may be explicable by the fact that CPA as an employer may offer its staff benefits which the direct care package that the Claimant will be offering cannot offer, such as training supplements, opportunities for promotion, overtime, merit and bonus awards and the like. Be that as it may the CPA evidence does not satisfy me that the Claimant's carer's wages will not rise in excess of RPI in the future.
62. I should add this as a postscript. This exercise was carried out by the Defendant, presumably, because with Mr Hall it sees something of a cultural divide, and considers the Claimants approach in this and the preceding cases as theoretically based, whereas he favoured approaching the matter "in the way that a forensic accountant would, in terms of investigating and trying to find explanations". The CPA evidence, even had it succeeded in demonstrating that one employer paid equivalent carers to the target carers rates which matched RPI and did not exceed it, would have been a relevant part of all the evidence in the case, but in the final analysis no more than a single observational study of one small corner of the wider market. I believe in the final analysis it would have been no more than anecdotal, as was for example Ms Sargent's evidence of her own rates.

Pay Drift

63. Before considering the suitability or otherwise of any alternative index or measure there is a clear and important ideological dispute between the parties as to the relevance of pay drift in this case.
64. The wide definition of pay drift in the agreement between the experts is that it is "the difference between pay settlement inflation and earnings inflation" and it is a potential source of imprecision and bias. The experts profoundly disagree as to whether in this case it is a distortionary factor which should be omitted from consideration in any escalating or modifying index, or whether it is relevant and therefore necessary to take it into account when considering such an index or measure.
65. The Defendant argues that the target expenditure in this case is a group of carers who are static in the market place. There is no team leader, no grading structure, no overtime or bonus payments, no service increments, no qualification increments and no requirement for qualification at all. Any earnings based index or survey will capture such elements, which the experts defined as market related adjustments, productivity merit performance and qualification based payments, pay re-structuring and changes in work force composition.
66. The Claimant's response is to say that pay rates are not what the Claimant will have to pay in this case, there being no pay settlement under which the carers whose wages will be the target expenditure will be paid. They will be recruited directly and individually by the case manager and what the Claimant will have to spend his money on is wages not rates. It is therefore relevant and therefore important to measure, as Mr Oppenheim puts it, what is "in the envelope" that is say the pay packet received by the carer. This will be governed or at least influenced by the market rate because the Claimant's carers will be recruited from the wider market and will not exist in a bubble. The short way of disposing of this issue would be to say that I have read the section of Lloyds Jones J judgment on Sarwar on this issue at paragraphs 168-176 and agree with what he says and in particular his conclusions at 173-176.
67. I add only this from my own thoughts on the subject. Mr Rees's argument is that the multiplicands in this case have been agreed, and to allow them to increase by reference to a market, which will itself increase for reasons that do not apply to the target expenditure carers, will be to re-write the multiplicands by redefining the Claimants care and needs. He rejects the metaphor which has found favour with previous judges that the Claimants care package does not exist within a bubble. On the contrary he argues the reality is that there are many small bubbles and those carers will be in one of them.
68. In so arguing Mr Rees was running counter to his own witness Mr Storry who volunteered the proposition that if there were productivity gains in another sector of the labour market that would have an upward effect on rates generally in the pool in which the Claimant would have to fish for his carers and he said in terms "nobody exists in a bubble at any time". One could test this proposition, as I did with Mr Storry and Mr Rees, by supposing that in the future, sometime over the 38 or so years covered by this order, there came about a position, admittedly extreme, when the caring profession became entirely professionalised, say a graduate profession, rather as nursing has done now. Were that to happen and were that to result in overall significant increases in the wages of carers in a domiciliary setting it seems likely that the 2006 multiplicands up-rated only by RPI would result in a very large shortfall. Mr Rees accepted and indeed contended that by his definition it would be re-writing the multiplicand to increase it by a measure which enabled the Claimant to meet that overall increase. Even if the price to be paid was that the Claimant could not find any carers at all when he needed replacements, and thus he would be unable to meet his care needs at all, Mr Rees stuck to his proposition. That is not merely unattractive, in my judgement, but it demonstrates the fundamental flaw in the Defendant's argument on pay drift.
69. My conclusion therefore is that if a proposed alternative measure captures pay drift elements within it that is not a de-merit or a feature which disqualifies such a measure from use, but rather it is a virtue which lead to accuracy and an improved chance of achieving the 100% principle of compensation.

Appropriateness of Alternative Measures

70. Before considering individual measures proposed I should consider the criteria that should be applied when making what I consider to be a comparative assessment as to whether each meets the test of fairness of appropriateness defined above.
71. The experts helpfully agreed the criteria for the suitability of an index as being:-

(i) accuracy of match of the particular data series to the loss or expenditure being compensated;

(ii) authority of the collector of the data;

(iii) statistical reliability;

(iv) accessibility;

(v) consistency over time;

(vi) reproducibility in the future;

(vii) simplicity and consistency in application.

This appears to me an entirely appropriate and sensible list of the qualities which are to be looked for. Mr Hall sought to add that the candidate measure should be "free of distorting factors". Dr Wass, more realistically in my view, said that that is in effect asking for the impossible though it should be as free as possible.

72. To these preliminary observations should be added only this. There is no data series in existence which specifically sets out to measure the group of workers who will be in the Claimant's care team, and so precision of a complete nature is therefore not possible. The question therefore is whether the accuracy achieved is to an appropriate and acceptable level.

Average Earnings Index (AEI)

73. This index is the companion to the RPI and looks at earning in a similar way to that in which the RPI looked at prices. It is authoritative, produced by the ONS, easily accessed and regularly updated. It is widely used by those seeking to monitor earnings inflation. It includes earnings for overtime payments for unsocial hours and is likely to be in continued use for some time.
74. The experts agree that its use in this case would generate potential for imprecision in relation to the target expenditure. Because of the width of its focus it does not set out to be a measure of carers' earnings, though carers will be included within it. It is also agreed that it is a disproportionately affected by high earners.
75. The experts agreed that AEI was not just the subject of distortion but was biased in an upward direction as compared with RPI. A comparative exercise was carried out by Dr Wass. She took the ASHE aggregate median point and assumed that to be an unbiased measure (as it was close to the care costs in this case) and then looked at the annualised growth of the AEI above that, calculated as a ratio, and found that it had an upward bias of 0.38% per annum. She did the same exercise to estimate the downward bias of the RPI and found that the annualised growth in RPI below the unbiased standard was at 1.25% per annum. In other words both missed the mark, but RPI missed it on the low side to a far greater extent than AEI missed it on the high side.
76. The effect of all this is that were I to order the use of AEI I would be directing the use of an index which I knew to be biased towards over compensation, notwithstanding that it was biased less severely than RPI was in the opposite direction. The other attractions of AEI when measured against the hallmarks or criteria I have listed are such that if the only choice was between the RPI and AEI I would have been tempted to order its application notwithstanding that apparent degree of bias. But for the reasons stated below I do not feel that I need to do so.

The Annual Survey of Hours and Earnings

77. This is an annual survey conducted by the ONS which replaced the New Earnings Survey. These earnings are reported as a level of earnings on an hourly basis and are available from 1998 as a series. It is an aggregate survey which includes all the occupations of the 23 million or so people making up the UK working population. These are sampled in April of each year on a random basis, the results are published annually as provisional figures in the October of the year of which they are sampled and confirmed a year later. There is therefore a considerable time lapse in the publication of the data. The different levels are given at various points across the distribution of earnings. It was the evidence of Dr Wass, as referred to above, that the ASHE median earnings level of £9.56p per hour was the most appropriate to take for the earnings of carers to be caring for the Claimant.
78. Like AEI it is a broad brush survey and will include overtime, productivity payments and other such increments, and therefore includes pay drift elements. Dr Wass thought it avoided bias towards over-recovery, if considered at its median level, as compared with the AEI and was a more reliable level of future care costs than the RPI. Mr Storry thought it included the impact of compositional changes in the workforce on earnings which would tend systematically to over estimate growth rates of pay. Mr Hall thought it would be influenced by changes in the rates of pay of workers irrelevant to the Claimant's loss, the pay drift point again.
79. It is accessible, reliable, authoritative and likely to continue. The time lag in confirmation of data is a disadvantage but the order in Thompstone shows that can be catered for, and it does so in my view quite neatly. It is better as an uprating measure than either RPI or AEI.

ASHE 6115

80. This is a disaggregated sub-set of the ASHE data series which measures the earnings of a particular group or "SOC" of workers, namely care assistants and home carers. These are defined as those who "attend to the personal needs and comforts of the elderly and infirm, either within residential establishments or at home" and they are further defined by reference to the tasks they carry out namely that each subject of the survey -

"assists residents to dress, undress, wash, and bathe; serves meals to residents at tables or in bed; accompanies residents on outings and assists recreational activities; undertakes light cleaning and domestic duties as required"

81. The Claimant's carers, or rather the pool from which they will come, will clearly be caught by this survey. The population covered by 6115 is one of some 660,000 workers and the survey sample is 1%. There will be carers within that population, and thus within the survey sample, who are doing different caring jobs from the Claimant's carers. It is however the closest to an observational survey which focuses on the Claimant's carers that there is to be found, and there is no narrower or more specialised sub-set surveyed anywhere else. It is plainly the Claimant's preferred index or measure in this case and has found favour with other judges. I must consider the respects in which it is said to be unsuitable.
82. As he did in Sarwar, Mr Hall argued that compositional changes in the cohorts of care workers within 6115 could result in an upward adjustment of the Claimant's compensation when his own care costs would not have increased. He illustrated his argument by supposing that 10 additional workers were added to a hypothetical sample of 100 workers entering at the 90^th centile. This would result in a substantial increase. Dr Wass was dismissive of this as being a matter of any concern. Factually she said it was unlikely that there would simultaneously arrive within the population being studied a 10% addition to the overall total all at the 90^th centile. Mr Hall agreed on the grounds of probability that his picture was an unlikely one - most would be likely to come in below that level. Secondly Dr Wass pointed out that even if such an event occurred it would be wrong to assume it would not have an effect on other workers within the rest of the distribution and would have an upward effect on the market rate. I sensed that Mr Hall was uneasy about this idea of his. I note the terms in which Lloyd Jones J dealt with it in Sarwar at 193-4 and can only express my agreement with them.
83. The next main objection to 6115 is the argument as to changes in the skill mix and increased "professionalisation" within the population of care workers - in effect the pay drift argument in other clothes. For the same reasons I do not think this is made out. As Dr Wass pointed out, in any event, the Claimant's particular carers are "at the top of the tree" as things stand at the present time. The Claimant will have to keep pace with the market for care. Insofar as the cost of meeting his needs will change over time he will need to pay that cost, whatever it is, and any uprating instrument must capture those changes. That is not to permit the re-writing his care needs, it is merely reflecting the increasing costs of meeting them.
84. The next head of objection is volatility. I agree with the manner with which this was dealt in Corbett at 180-187 and Sarwar at 190-192. Dr Wass as the only economist giving evidence before me was not concerned with volatility; indeed she had never encountered it as a concept before this series of cases. It is an accountant's point not an economist's point. Where spikes in the 6115 data could be seen, as they can in places, provided the data are statistically reliable it means "that is what is happening" in the market, caught by the precision of the survey.
85. Mr Hall's argument was that this was part of what he described as "road testing" 6115. The two other examples of disaggregated ASHE surveys referred to, SOCs 4212 and 1172, do not undermine my confidence in 6115 as a measure. The first example of the legal secretaries is the product of unreliable data due to the very small numbers of this sub-set, and its statistical unreliability is clearly flagged up and apparent from the coefficients of variation (CV's) which ONS has attached to the data. The second example of the Police Inspectors is a curious phenomenon, which resulted from a change in the rather arcane measurement convention for this sub-set's pay, as Dr Wass's researches discovered. It was neither a measurement error or a problem of statistical imprecision. It is a long way away from anything that might happen in 6115 in my judgement. The population surveyed in 6115 is a mixed population and not a homogeneous group, as were the police, who had a common set of pay and conditions.
86. Reclassification of 6115 is another concern raised by the Defendant. Dr Wass understands from her discussions with ONS that the composition of workers caught by 6115 will be reconsidered periodically, and this will probably happen in the next few years. If this results in some redefinition which moves the population of carers from which the Claimant will recruit, say, into a separate SOC then the problem shown by SOC 4212 (the legal secretaries) may recur. This is indeed a risk, as I acknowledge, but I doubt if it is a real one. In the first place if it does result in statistically unreliable data that unreliability will be readily apparent from the width of the published CVs which will accompany it, and a reasoned objection could then be made to the use of the new measure. Secondly I expect the ONS to proceed with care where reclassification of this measure is concerned if, after the Court of Appeal's consideration of these issues, it proves to be the case that there are by then a significant number of these high value awards linked to it.
87. If these objections are put aside, as I believe they should be, it seems plain to me that, as Mr Storry conceded, 6115 is the closest approximation to carers' earnings in general that exists; there is no more precise measure available; and it is authoritative, accessible, and statistically reliable. I return to the criteria against which the measure should be judged. First and foremost I regard 6115 as the most accurate match to the target expenditure; it is of undoubted authority, coming from the ONS; it is statistically reliable as all agree, with tight CVs; it is freely accessible, albeit with a time lag problem which I believe can be overcome; it is consistent over time past, although it does not go back beyond 1997, not a serious flaw in my view; it is reproducible in the future; I have felt some concern about what might be called "workability" or simplicity of application from a practical view point. Having read the form of order that was the result of the decision in Thompstone and having heard the evidence of Mr Cropper about his proposed or suggested improvements to it, while the use of 6115 is novel and requires care in its application, and will at least will in the initial stages always call for the services of expert assistance to support solicitors acting for Claimants in this field, as Dr Wass put it the relevant material can be put in such practitioners' works as Facts and Figures and will become familiar over time. Its application while requiring expert guidance in the initial stages is or could be made simple and consistent, perhaps with approved forms of order catered for in the procedural rules of the courts.
88. In my view 6115 is markedly superior to RPI and I should modify the Act so as to order its application to the Claimant's future care damages, unless any of the other arguments against its application, which I deal with below, make it inappropriate or unfair to do so.

"Swings and roundabouts"

89. This heading is rather tendentious, but describes a part of the Defendant's argument tolerably clearly. It cannot be described as an "offsetting" point because Mr Rees says he is not arguing for any calculated reduction from the claim. These factors go, he says, to the court's exercise of its discretion when deciding whether to move from the RPI to any other index or measure. There are areas of the agreed award where it is argued that the Claimant has received a financial benefit, or in plainer language overcompensation in breach of the 100% principle.
90. This raises an immediate problem which HHJ Bullimore expressed in Corbett at 200. It amounts to saying that the Defendant has agreed to pay damages which over-compensate the Claimant. I share his difficulty with that proposition.
91. In any event, the first area is the Roberts v Johnstone element of the compromise figure, relating to the loss flowing from the Claimant's need to tie up more capital in a house than he would otherwise have spent on providing his accommodation. In a lengthy calculation Mr Hall reached the conclusion that there would be a benefit to the Claimant's estate somewhere between £116,000 and £462,000 on his death resulting from the increase in the value of his house over the next 38 years.
92. There are many factual assumptions made by Mr Hall along the way which I am unhappy to make with him, especially as his evidence on this topic was taken at something of a gallop, in marked contrast, I should say, to much of the other evidence in the case. He professes to be able to tease out of an overall agreement on accommodation-related damages the respective Roberts elements advanced by each side. From these he then calculates two figures for additional value and then the overall value of the house to be acquired. He assumes a growth rate for houses in the south west in excess of RPI over the next 38 years of either 1.75% or 3.5%, while disavowing any expertise in the subject. He makes no counter-calculation of the present value of the Claimant's losses if this argument succeeds and results in RPI remaining the index for care costs - an exercise which Mr Cropper has carried out and which was not challenged. These would be real costs incurred, as opposed to the notional benefit apparent from the "balance sheet at death", as Mr Oppenheim correctly if tartly characterised the results of this exercise.
93. These problems apart, the powerful demolition of this argument by Lloyd Jones J in Sarwar between 209 (2) and (5) is something with which I entirely agree. This argument is not open to the Defendant.
94. A similar argument is founded on what Mr Rees calls the "0.6% point". It runs this way. On those items of future loss where it is agreed that RPI should be the escalating index there will again be over-compensation, to the tune of 0.6% overall according to Mr Hall, because RPI as an index is heavily influenced by the inclusion of mortgage costs in its "basket", costs which the Claimant will not in fact be paying.
95. Mr Rees asks me to stand back and agree with this "broad approach" as he called it. I am wholly unprepared to do so. In the first place if this is a good point the Defendant could have stipulated for an index in respect of these heads which did not contain mortgage costs (e.g. CPI or RPIX), and did not do so. Secondly, this simply cannot be done on the broad brush basis suggested. Many of these other multiplicands themselves contain heavy elements of labour costs, and a careful investigation would have to be carried out.
96. Finally, under this head though it is really a different point, Mr Rees relies on the notion of distributive justice. As a concept it appears to have come a long way since Aristotle identified and defined it in the Nicomachean Ethics, but that is a debate I would be wise to leave to others. In this case it is put forward as an element in the exercise of discretion, but also as a complete bar to the remedy of modification. It is, says Mr Rees, different from what was called "affordability" in Flora and thus I am not bound by that decision. Affordability is inability to pay the sums ordered, he says, as opposed to saying the order proposed would have, and here I quote Mr Rees' exact words, a "very, very significant effect [sc. on the financial position of the NHSLA]" and that "every additional cost in legal claims results in fewer resources available for healthcare" (opening note 113).
97. This argument was very fully considered by HHJ Bullimore at 113-143 and I agree with his analysis, with one exception. Like Swift J in Thompstone at 61 I cannot see that the references to affordability in Flora were to anything other than this same argument, and I am therefore bound to reject it. It cannot have been the Defendant's argument in that case that the NHSLA was literally unable to pay the likely damages (which had not in fact been calculated by that stage). But were the matter open to me to decide I would also reject it unhesitatingly. Cases in which novel extensions of the duty of care are concerned, such as are relied on by the Defendant here, principally Frost v Chief Constable of Yorkshire [199] 2 AC 455 and McFarlane v Tayside Health Board [2000] 2 AC 83, are concerned with the limits of what is "fair just and reasonable", and invoking the supposed reaction of the man on the underground train is one approach to that task. If that same man were asked whether, if there were two identically injured Claimants, one as a result of a road accident and the other by clinical negligence, the second should have his compensation reduced by several hundred thousand pounds to help pay for the running of the NHS and the first should receive full compensation, I suspect the answer would be a short and unfavourable one.
98. If this notion is to have any place in the assessment of damages for clinical negligence caused by those for whom the NHS is legally liable it can only do so after the most careful consideration, I would suggest by Parliament, of the policy issues involved, and is quite unsuitable for a judicial decision based on no evidence at all.

Other problems 1: different elements in the agreed multiplicands

99. In his opening note Mr Rees set out tables highlighting a significant problem, namely the fact that the agreed multiplicands are not exclusively composed of future commercial care costs, or what I have been calling the target expenditure. There was also family care in the first two stages, and in all three case management fees and pure disbursements. Short of looking at the approval opinion shown to Owen J when he approved the conventional award settlement I have no insight as to what elements were discounted and to what extent by the Claimant in seeking approval of the compromise multiplicand. Take stage 1 as an example. The Claimant sought £44,056, the Defendant offered £34,030 and the compromise was, as I have stated above, £40,985. It is possible that Mr Oppenheim thought his claim was sound on paid care, for example, but that he could justify decreasing the claim in respect of case management, or vice versa. I believe (but would welcome the views of a higher court on this) that I could justify looking at this opinion, without it being shown to Mr Rees, just as Owen J will have done, since my role is inquisitorial and a minor is involved. But I do not believe it is necessary to do so for reasons I will give below.
100. The respective positions of Ms Sargent and Mr Pace in this respect are well demonstrated by two tables at p.20 of Mr Rees's opening note. "Pure" disbursements comprised between 4% and 8% (Sargent) and 3% and 8% (Pace). I agree this element in principle ought not to be escalated by any earnings based index. As for family care, that was assessed by reference to NJC spine point 8 rates less a discount, which would come lower in the distribution of ASHE 6115 than the carers' rates. Case management was the second largest component, and was at 23 -25% in stage 1, 17% in stage 2 and 8-9% in stage 3.
101. There is clear evidence from Ms Sargent that costs of case management have risen faster than RPI and at an annual average of over 5% over the last 15 years. NJC rates have also outstripped the growth in RPI over the period 1997 - 2006 (by either 1.2% or 0.6%, depending on which version of them is used). In future cases this argument can be obviated by more detailed stratification of the heads of damage. All but a small part of the overall multiplicand is driven by wage inflation and the small element of over compensation in respect of non-care items does not cause me undue concern. I propose to take the robust and sensible approach that Swift J did at 148.

Other problems 2: locating the appropriate centile on ASHE 6115

102. This is a related issue. If I were to adopt Ms Sargent's weighted average rates without any reduction the care costs would fall to be located at the 90^th centile for the first two stages and the 80^th for the third stage. The same exercise using Mr Pace's weighted average rate puts them at the 80^th for the first two stages and the 70^th for the third.
103. The Defendant could have no cause for complaint if I selected the 80^th centile for the first two stages and I propose to do so, conscious that there may be some slight element of over-compensation inherent in the problem discussed immediately above. As to the third period, which will be the longest of the three by far, Ms Sargent's figure stands at the midpoint of the 80^th centile and Mr Pace's towards the bottom of the 70^th. I consider a conservative but just resolution would be to link this multiplicand to the 75^th centile of 6115. I therefore exercise my discretion to modify section 2 (8) of the 1996 Act so as to replace the RPI by ASHE 6115, in the above centiles in respect of the three stages of future care.

The Format issue

104. This issue concerns the balance to be struck between capital and PPOs in the ultimate form of order. While both parties agree that it is appropriate for the order to include some element of capital, both to meet immediate needs and as a contingency fund for the future, as was always the case with structured settlement schemes, there is an acute issue as to (a) what if any voice the Defendant has in this issue, and (b) what the fund or balance should be.
105. Mr Rees argues, and I accept, that the NHSLA which stands behind this particular Defendant, and which regularly faces high value claims such as this, has a legitimate interest in paying as much of its obligations of this nature out of revenue not capital, and therefore maximising the PPO element of these awards. The rules require the court to consider the preference of the Defendant as to the form of award and the reasons for it. To shut it out from the format issue would or could deprive it of this right, if to take an extreme example the court made a PPO under a given head but in such a small proportion of the claim as effectively to reconvert the award to a lump sum. The Claimant's views are not to be given primacy on this question.
106. Mr Oppenheim replies that the court should be careful not to allow a Defendant to make detailed suggestions about allocation, as opposed to the principle of whether a PPO is appropriate. The CPR makes it clear that the primary aim is to craft an order which "best meets the Claimant's needs". Those needs have been assessed by the Claimant's parents, in close consultation of a privileged nature with their legal advisors and Mr Cropper their Independent Financial Adviser. The role of the Defendant at most is to submit where appropriate that the resulting apportionment fails to achieve that primary aim, is illogical or has failed to take a correct approach to the matter.
107. It is not disputed that the Claimant has an immediate capital need for £1,017,731 as calculated by Mr Cropper. There may be a need for a further £91,696 to meet the cost of a hydrotherapy pool, which the parents think will be beneficial for the Claimant, provided the Court of Protection approves that expenditure. There was no claim and thus no approved award in respect of this in Owen J's order. The respective positions of the parties are best set out in tables annexed to the respective case statements and I reproduce them, with minor modifications to help clarity, below.

Table A: the Claimant's proposed format

	Item	Capital	To 11	11-19	19+	All capital
1	PSLA+interest	211,808				211,808
2	Past loss + interest	105,034				105,034
3	Fut.loss of earnings	310,381				310,381
4	Future Care		40,985	56,580	139,849	2,512,839
5	Physiotherapy		1,320	1,320	2,063	43,271
6	SALT	2,117	840	840	840	22,991
7	Occ. Therapy		2,743	1,596	642	31,105
8	Chiropody		168	168	168	4,175
9	Education	42,749				42,749
10	Holidays		3,710	3,710	5,550	118,119
11	Equipment	In 12 below				-
12	Technology	15,719				150,719
13	Music therapy	22,253				22,253
14	Transport	117,762.16	3,481	4,049	3,192	203,950
15	Miscellaneous	1,000				1,000
16	Household exp.		612	612	1,090	21,943
17	Court of Protn.	19,191	7,113	7,113	7,113	195,949
18	Accommodation	610,196.66	4,210	4,210	4,210	714,815
	TOTAL	1,593,210.66	65,182	80,208	164,717	4,713,100

Table B: the Defendant's proposed format (final column and Totals omitted)

	Item	Capital	To 11	11-19	19+
1	PSLA+interest	211,808
2	Past loss + interest	105,034
3	Future loss of	310,381
4	Future Care		40,985	56,580	139,849
5	Physiotherapy		1,320	1,320	2,063
6	SALT	2,117	840	840	840
7	Occ. Therapy		2,743	1,596	642
8	Chiropody		168	168	168
9	Education	42,749
10	Holidays		3,710	3,710	5,550
11	Equipment	39,000	3,750	3,750	3,750
12	Technology	In 11 above
13	Music therapy	2,000	815	815	815
14	Transport	30,000	7,000	7,000	7,000
15	Miscellaneous	1,000
16	Household exp.		612	612	1,090
17	Court of Protn.	19,191	7,113	7,113	7,113
18	Accommodation	518,500	7,900	7,900	7,900
	TOTAL	1,284,780	77,581	92,029	177,405

109. It will be seen from the above, therefore, that there are areas of agreement, all of which I approve as reasonable and fair, and there are remaining issues, all as follows:-

(a) Items 1 - 3; it is agreed these should be awarded as capital sums.

(b) Item 4 future care is agreed as being appropriate for a PPO, the issue being as to indexation, as to which I have made my ruling above.

(c) Items 5-10 and 15 - 17; the balance between PPO and capital is agreed, and it is agreed that indexation should be by reference to the RPI.

(d) Items 11-14 and Item 18; there is disagreement as to the amount to be allocated to capital, but agreement that so far as there are PPOs in respect of the balance indexation should be by reference to the RPI.

110. Both IFAs (Ms Stone was called by the Defendant) were clear and impressive witnesses. Mr Cropper made a convincing case for a substantial lump sum element to act as a contingency fund, to be invested on a long term basis to guard against unexpected deterioration in the Claimant's position leading to extra needs, the risk of family care failing to last till 19 for whatever reason, unexpected capital needs and the chances of life, or "unknown unknowns".
111. The principle of this was not challenged. The extent of the issue is, ignoring detail, that the Defendant's case allocates some £175,358 to this fund and Mr Cropper has advised a corresponding figure of £483,783. This latter figure allows for the possibility that there may be an additional need for immediate capital if the Court of Protection sanctions the spending of some of the damages on the hydrotherapy pool, though there is no head of damage and therefore no specific recovery of a sum allocated to this expenditure. I express no view as to the advisability of such spending, which the parents consider would benefit their son, but note that if it is not allowed Mr Stone's "cushion" figure increases accordingly.
112. Ms Stone, herself familiar with advising Claimants in this context, frankly acknowledged that there was room for different views in these matters and that an IFA was always anxious to get the full views of the family before making such recommendations. She thought the differences between herself and Mr Cropper were "reasonable differences", and in that she was right in my view. In my judgment, though this is not strictly speaking an approval exercise, in that the allocation will be the result of the order of the court, I see the court's role as ensuring that the allocation has proceeded on the basis of suitably qualified advice, which appears to have taken all relevant matters into account, from a source which has had the advantage of a free discussion with the family as to their hopes and fears for the future. That is what has happened here, in my judgment. Nor is there any suggestion to the contrary.
113. It is not, therefore, open to the Defendant to challenge this proposal, or put forward a counter proposal, merely on the basis that there is another way of arranging the award that suits its own interests better. Its role in this exercise is a very limited one, and in view of the respective positions of the IFA experts in this particular case, it does not come into play. If Mr Rees's extreme example in paragraph 105 above were ever to come about then intervention by the Defendant would be permissible, but hardly necessary as such a proposal by the Claimant would be objectionable in principle as wholly subverting the court's decision that the relevant damages ought to be the subject of a PPO. That is plainly not even arguably the case here.
114. I therefore rule that the Claimant's format should be adopted in this case.
115. As to the eventual form of order, I have seen the form adopted in Thompstone and heard Mr Cropper's suggestions as to what amendments he considers would enhance its clarity without altering its essential features. That evidence was relevant to my decision as to the workability of ASHE 6115 as an indexing measure. The NHSLA is entitled to a fuller opportunity to consider these proposals and make its own views on them known, and I do not propose at this stage to impose any form of order on the parties, having as I see it made the findings necessary to enable them to do so. If I have to the matter can be restored to me for further argument.
116. I finish by expressing my gratitude to counsel for their assistance and hard work in this case. Seldom have two advocates had a more detailed grasp of the detail of a complex case. If I have not done justice to every one of their arguments it is in the cause of keeping this over-long judgment within bounds, for which I hope to be forgiven.