Lost Years After CCC: A Doctrine Under Strain

In CCC, the Supreme Court has extended the availability of damages for “lost years” to child claimants. Judith Ayling KC and Nigel Mpemba Patel have explored this issue here. In short, the Supreme Court held that any rule excluding lost years awards to child claimants based on an absence of dependants was inconsistent with established authority and legal principle [48]-[49]. Equally, there could be no objection on the ground that the losses were too uncertain to quantify [55]-[62].

The claimant as a capital asset?

However, CCC leaves open fundamental questions about the conceptual basis of lost years awards and the coherence of the structure of lost years and dependency claims. As Lord Burrows noted at [143], the parties in CCC agreed that claims for lost years were valid. For that reason, the Supreme Court heard no real argument as to the basis on which lost years damages are awarded, in particular:

“whether they are intended to compensate for the non-receipt in the future of economic benefits which, but for the injury, the claimant would have received during the lost years, or whether they are intended to compensate for the immediate diminution in the claimant’s earning capacity, viewed as a capital asset. That is a matter which it would be desirable to clarify when the opportunity arises, as it may have implications for the damages recoverable in some cases.” [5]

Lords Reed and Burrows invited reconsideration of the conceptual basis of lost years awards. Lord Burrows considered there were two interconnected issues, the first being whether there is any convincing justification for treating a lost years award as compensating a pecuniary loss of the injured claimant:

“Lost years damages are controversial when viewed as compensating the claimant’s own loss because they cut across the normal principle that there can be no loss to the claimant suffered after the claimant’s death. The claimant can suffer no pecuniary loss (or nonpecuniary loss) once he or she is dead. As it is put in McGregor on Damages at para 41119, “Wages in heaven should not be awarded when they are not needed on earth.” It follows that there is a strong argument that it is difficult to justify the lost years award when viewed as compensation for a loss of the claimant. Hence, the former view taken, that there should be no lost years damages, by Slade J in Harris v Brights Asphalt Contractors Ltd and by the Court of Appeal in Oliver v Ashman” [145]

Lord Burrows reluctantly observed that to avoid the unattractive argument that a claimant suffers no loss because he or she will not be alive to suffer it, it may be necessary to “accept the approach of treating the claimant as if an objective capital asset whose life expectancy and hence value and earning capacity have been diminished by the injury”, such loss being suffered immediately [147]. However, “it may not be easy to justify conceptualising a human being in this way.” [147] It might be said, though, that the non-receipt of a future revenue stream approach preferred by Lords Salmon and Scarman in Pickett may be equally artificial, in that it locates the loss in a period after the claimant’s death.

Considering other jurisdictions’ approaches to lost years awards, Lord Reed observed that Australia and Canada take the view that a claimant whose life expectancy has been reduced as a result of an injury suffers an immediate loss of earning capacity in respect of the lost years for which, in accordance with the compensatory principle, he or she should be compensated.

• Amaca Pty Ltd v Latz [2018] HCA 22; (2018) 264 CLR 505, where loss of earning capacity was described as the diminution of value of a capital asset of the claimant, namely his or her capacity to earn money from the use of personal skills.
• Andrews v Grand & Toy Alberta Ltd [1978] 2 SCR 229, where Dickson J took a similar approach at p.251: “A capital asset has been lost: what was its value?”
• Toneguzzo-Norvell v Burnaby Hospital [1994] 1 SCR 114 where a child who was severely injured during birth received a lost years award which included an uplift to reflect the expectation that women’s earnings would increase as greater equality was achieved between men and women.

Notwithstanding the courts’ willingness to make informed speculations using increasingly sophisticated actuarial tables, the underlying tension remains: what and who is being compensated? The Supreme Court declined to resolve this tension, but its importance is obvious as the conceptual basis for lost years awards may have consequences for the treatment of other economic benefits the claimant might have received during the lost years [17].

The reasoning in Pickett

The second issue Lord Burrows identified was whether lost years awards should be reinterpreted as awards designed to compensate dependants [148]. Earlier in his judgment, Lord Burrows had drawn out a strand in the House of Lords’ reasoning in Pickett where Lord Wilberforce and Lord Salmon’s recognition of the availability of lost years damages appears to be driven by a policy concern to ensure dependants were compensated for their loss [86]-[88].

It was particularly important in that case, where Mr Pickett had brought a claim for his personal injury which had proceeded to judgment prior to this death. As such, no claim could be brought by his dependants for his death under the Fatal Accidents Act 1976. Therefore, unless Mr Pickett could recover lost years damages, his dependants would stand to lose out if he died, as a result of the tort, after judgment or settlement.

Lord Burrows asks whether Pickett might be regarded as correct on its facts because there were dependants who would lose out if no damages for lost years were awarded:

“This fits with the explanations of the policy justification given in Pickett itself […]. There are also more recent obiter dicta of Lord Phillips in Gregg v Scott [2005] UKHL 2; [2005] 2 AC 176, at paras 178-182 that may be said to offer some support for this approach (although this was not mentioned in any of the other four judgments). Furthermore, this view has the strong support of McGregor on Damages at para 41-119:

“The point of principle is that the lost years award does not apply where there is no real prospect of dependency … That applies as much to adults as it does to children.”” [148]

This approach gives rise to its own problems as Lord Burrows acknowledged. Firstly, it appears to run contrary to the normal principle that the claimant recovers for his or her own loss and not for the loss of a third party. Secondly, there are consequential difficulties: Must the lost years award be held on trust for the dependants? What if there are no dependents? Would the assessment of living expenses need to be brought in line with the approach to assessment under the 1976 Act? [149]

Comment

The current framework, which combines common law claims for lost years with statutory dependency claims, appears to reflect historical contingencies rather than a unified theory. The Supreme Court agrees that the doctrinal foundations of lost years awards are uncertain and encourages reconsideration: should lost years awards continue to rely on conceptual fictions, or should the law move towards a more coherent framework of lost years and dependency claims?

CCC identified a range of possible responses. First, to deny recovery altogether, as was the position prior to Pickett. This is conceptually coherent but risks producing unjust outcomes for dependants, and CCC has for the moment put this response to bed. Second, to adopt the capital asset model, treating earning capacity as a present asset that is diminished by injury. This preserves the structure of compensatory damages but does so by conceptualising the claimant in economic terms that may be regarded as artificial, and in ways which might have significant, broader consequences. Finally, to recognise that lost years awards operate, in substance, as a mechanism for compensating others, even if formally expressed as compensating the claimant.

The Supreme Court has made it clear that it would gladly entertain a reconsideration of the conceptual basis of lost years awards. However, for it to have such an opportunity will clearly require an appropriate case and a defendant with sufficient appetite to take the matter all the way up.