This decision of the Royal Court in Guernsey is important as it sets out the principles to be applied when determining the measure of substantial general and special damages awarded in personal injury cases.
In outline, the factual background was as follows:
- The case concerned an accident which occurred in which a motor car driven by Mr Simon (the "Defendant") collided with Mr Helmot (the "Plaintiff"), who was riding a bicycle.
- Proceedings were first issued and served on the Defendant on 1 August 2008, nearly 10 years after the accident. The reason for the delay in issuing proceedings was down to the nature and seriousness of the Plaintiff's injuries. The Defendant had, however, agreed to extend the limitation period in this regard.
- As the Defendant had previously admitted liability, the court was concerned only with issues of loss and damage in relation to his extensive physical injuries, the psychological damage he experienced and loss of quality of life suffered as a result of the accident.
Issue of General Damages
The court underlined that this head of damage concerned the award for the injuries themselves being the damages awarded for the injuries and their mental and physical consequences in terms of disability, symptoms, longevity and capacity for daily life. The upper limit for such damages under the JSB Guidelines for the Assessment of General Damages in Personal Injury Cases (9th Edition) (the "JSB Guidelines") is £250,000. Assessing the injuries sustained by the Plaintiff against the JSB Guidelines, the Jurats felt that such injuries placed him well within the upper half of that range but not at the top of the range and therefore awarded the Plaintiff the amount of £235,000. The Jurats noted that they took account of the Plaintiff's other injuries, the severe pain he suffered and the loss of an amateur cycling career.
It was common ground between the parties that the award for future loss in this case was to be by way of a lump sum, as Guernsey law does not enable the court to award periodical payments.
The starting point for the court was the fundamental principle of Guernsey law and English law that a plaintiff is to be compensated as nearly as possible in full for all pecuniary losses arising from the accident. This would therefore include compensation for the cost of care, medical expenses and loss of earnings both past and in the future.
The key issue in this case was whether the discount rate of 2.5% to the award of damages (set by the Lord Chancellor by statutory instrument under provisions in the Damages Act 1996 of England and Wales) had been adopted in Guernsey through both custom and practice. The discount rate was to allow for the income that a plaintiff could earn by investing the lump sum in a mixed portfolio of equities and gilts. The UK Government had previously held that the guideline net current discount rate should be calculated by reference to the net current rate available from investing in index linked government securities ("ILGS"). There had been criticism of the level of this discount rate in respect of the rate of interest such ILGS could be expected to achieve in the present climate. There was also a question over whether it was right to apply such a rate to cases decided in Guernsey which has historically had a different level of inflation to that of the UK.
The conclusion reached by the court was that the discount rate of 2.5% has not, as a matter of law, been adopted by legislation or by custom and practice in Guernsey. It is therefore up to the court to decide the appropriate rate after taking into account the evidence and the submissions of the parties. The court did, however, state that it was appropriate to start with the discount rate of 2.5% for reasons of certainty and consistency. It would then be up to the court to adjust this rate to take into account the factors specific to Guernsey. In the present case, the court deducted 0.5% for the difference between UK RPI and Guernsey RPI and deducted a further 1.05% to allow for a reduction in the return on ILGS since the rate was first set. After rounding to the nearest 0.5%, the Jurats arrived at a figure of 1% as the discount rate to be applied in the present case.
The award for special damages included compensation for the care provided for the Plaintiff by his family and external carers.
The special damages also took into account the loss of employment in respect of his cycling career, his career after cycling and an assessment of his likely earnings up until the working age of 65. This was added to by an award in respect of property costs (which involved an analysis of what was reasonably necessary in consequence of the injuries suffered by the Plaintiff in the accident) and the costs awarded for future trust administration expenses in respect of his award of damages.
The total damages received by the Plaintiff amounted to £9,337,852.27 which included £235,000 for general damage, £1,328,389.57 for past losses and £7,774,462.70 for future losses.