Reduced life expectancy and the possibility of a periodical payment order (PPO) can make it difficult to obtain sizeable interim payments for care and accommodation needs following the decision in Eeles v Cobham. In this article, we consider how the lost years claim advanced in the recent interim application in Chaplin v Pistol & the MIB circumvented this problem.
Life expectancy and PPOs in brain injury
Life expectancy issues often arise for those with serious brain injury. There are numerous studies looking at this issue, including Long-Term Survival After Traumatic Brain Injury by Brooks JC, Shavelle RM, StraussDJ, Hammond FM, Harrison-Felix CL (2015). In relation to adults in a minimally conscious or persistent vegetative state (PVS), one of the best regarded studies is Life Expectancy, Brain Injury Medicine: Principles and Practice by Shavelle RM, Strauss DJ, Day SM, Ojdana KA(2007).
According to the 2007 Shavelle (and others) study, a male patient at the age of 30 in a vegetative state has, on average, 22% of normal life expectancy. Someone who cannot walk and is fed by others has, on average, 48.5% life expectancy.
In Chaplin v Pistol & the MIB EWHC 1075 (QB), the claimant sadly sustained severe brain damage in abroad traffic collision.
Mr Chaplin was 28 years old at the time of the accident, which left him in a minimally conscious state. Although the precise impact on Mr Chaplin’s life expectancy is still yet to be determined, both the claimant and defendants agreed that his life expectancy was substantially reduced.
PPOs are often the most appropriate option when it comes to the final award or settlement where the claimant has a reduced and uncertain life expectancy.
A PPO provides that all or part of the claimant’s damages are to be paid by way of a series of regular payments, which continue for the rest of their life. This means that vital funds for future losses are secured for however long the claimant may live, and are provided tax free.
The payments also increase with inflation, and remove the risk of investment from the claimant. PPOs can be ordered by the court, even if they are not ultimately the claimant’s preference, if the court concludes they are the most appropriate award.
PPOs are most usually given by the court in relation to substantial claims for future care and case management.
Mr Chaplin has significant, lifelong care and case management needs, and it is foreseeable that the court may order that any final award should consist of PPOs for at least some of his future losses.
While PPOs provide certainty for claimant, the issue of a reduced life expectancy and the possibility of PPOs being awarded can present a problem when seeking sizeable interim payments for care and accommodation needs.
This follows the guidance provided by the Court of Appeal in Cobham Hire Services Limited v Benjamin Eeles  EWCA 204 (known as Eeles v Cobham).
The test for interim payments
Interim payments allow claimants to obtain part of their compensation before the final judgment in their case. They can provide vital funding for the claimant’s rehabilitation, accommodation and care needs throughout the litigation process before the case concludes.
When assessing whether to make an interim payment, the court has long looked to identify a conservative assessment of the likely amount of the final judgment. CPR 25.7(4) provides: ‘The court must not order an interim payment of more than reasonable proportion of the likely amount of the final judgment.’
The court must also consider the guidance provided by the Court of Appeal in Eeles v Cobham – that the court must be careful when awarding interim payments not to fetter the discretion of the trial judge to deal with the claimant’s future losses by way of a PPO, rather than a lump sum award.
Eeles v Cobham is regarded as comprising two stages. Under the first stage, the judge hearing the application must assess the likely amount of the final judgment by reference to those heads of loss that the trial judge is bound to award as a capital sum, and ignoring those heads of future loss that the trial judge might wish to deal with by way of a PPO.
The judge hearing the interim application ‘will be entitled to include in his assessment of the likely amount of the final judgment additional elements of future loss’. However, the judge can only do this if he can ‘confidently predict that the trial judge will wish to award a larger capital sum than that covered by general and special damages, interest and accommodation costs alone’ (paragraph 45 of the judgment of Lady Justice Smith).
Under the second stage, the court must also be satisfied that (1) there is a real need for the payment requested now as opposed to after the trial, (2) the expenditure of that amount is reasonably necessary. The court must be sure of this to high degree of confidence.
This is a high threshold, and there have been a number of reported decisions in which the claimant did not achieve the interim sought; and no doubt countless others where no application was even attempted.
The interim payment application in Chaplin
In Chaplin v Pistol & the MIB, Mr Chaplin had been resident at specialist hospital and nursing service for people with complex long-term neurological conditions for over two years.
Judgment had been entered for the claimant in respect of primary liability, but contributory negligence issues were alleged by Ben Browne for the defendants, who suggested a deduction of 40%.
Mr Chaplin had already received £325,000 in interim payments at the time of the application hearing. He sought a further £400,000 to enable an adapted house to be rented close to his parents’ home, and a bespoke private care regime set up.
The judge’s conservative assessment of general damages and past losses, less up to 40% for contributory negligence, less the earlier interim payments of £325,000, only led to a further interim payment of £231,200 for the claimant.
However, by including a lost years claim for Mr Chaplin, which by its very nature would never be given as a periodical payment, that figure was substantially increased.
Lost years claim – a quick overview
The underlying principle of a lost years claim is that if, as a result of the defendant’s negligence, a claimant’s life expectancy is reduced, a claim can be made for the associated loss of years in which they could have earned salary and received a pension.
Logically and philosophically, there were initially some difficulties understanding how a person whose life had been shortened by a tortious act could suffer a loss recoverable in damages after their death, when he or she would not be around to make use of the claimed pecuniary benefit which would have otherwise occurred.
However, in Pickett v BRE  AC136, the House of Lords held that such losses were pecuniary losses that did have a genuine value to the claimant, because he would be deprived of the opportunity to employ the income in the way he desired, for example spending it on himself (had he lived), providing for his dependants or giving it away to charities. The unfairness to dependants by not allowing recovery for income during the ‘lost years’ was the principal social reason for permitting recovery of such claims.
Pickett held that these losses are considered to be those of the claimant for which he has a claim in his own right. The recovery of claims for ‘lost years’ therefore applies regardless of the existence, or likelihood of existence, of dependents.
Once the loss is considered to be pecuniary in nature, the law dictates that there should be full recovery of that loss, and therefore an assessment of the extent of the loss has to be made, no matter how difficult the assessment might be. The only qualification is that the loss must not be too remote to be measurable.
The conventional approach is to take 50% of loss of earnings over the relevant period.
Lost years claim for Mr Chaplin
In Chaplin v Pistol & the MIB, the claimant put forward that he has significant lost years claim. This was on the basis that he would have still been working, and made use of his earning capacity up to 68 years old.
Thus, he was entitled to make a lost years claim for loss of earnings over the period aged 51 to 68, and lost years based upon loss of pension after that time.
Mr Chaplin had a significant loss of earnings as an investment banker. Using a discount rate of 0.5% for the purposes of the interim application only, and a lost years surplus of 50%, the claimant’s total figure for the lost years claim was over £970,000 on a conservative basis.
The defendants’ submission was that there were too many imponderables including life expectancy, that the claimant may well have retired at 60, and that the discount rate might change to 1% (the application being heard before the recent announcement of -0.25%).
Mr Justice Stewart was not overly impressed by the defendants ’arguments, and thought it was almost inconceivable that they would argue at trial for a longer life expectancy.
He went on to find a figure of£600,000 for the claimant’s total lost years claim, and awarded the further interim payment sought of £400,000.
The £600,000 attributed to Mr Chaplin’s lost years was crucial in securing the interim payment sought by the claimant. Without it, Mr Chaplin’s application would have failed under the first stage of Eeles. This pioneering approach will enable him to move into the community with a full care package.
The following practice points are reinforced by the claimant’s experience in this litigation:
- Lost years claims should always be pursued for those with brain injury-related impairment of working life expectancy, and can now be advanced in support of applications for significant interim payments for adults.
- Lost years claims can apply to claimants with a life expectancy into their 70s.
- There is an argument based on Lowe v Guise  EWCA Civ197 that a claim could be made for a claimant who is unable to provide gratuitous services to a third party living in the same household during the lost years.
- Lost years claims for children should certainly be made and significant value will likely attract to the lost years claim in negotiations. However, until someone takes the point to the Supreme Court, it is unlikely such claims can be factored in by courts when considering interim applications.
This article first appeared in PI Focus magazine in September 2019, Volume 29 / Issue No.7 (subscription required)