Hodgson v Trapp

Damages for personal injury are compensatory and ordinarily measure the claimant’s net consequential loss and expense. Receipts arising from the injury must therefore be deducted unless a clearly justified exception applies.

Attendance and mobility allowances which are payable as of right and meet the same care needs as the damages claimed must be deducted. They are not analogous to private benevolence.

Future taxation is ordinarily accommodated by the conventional multiplier. A court must not make a separate addition merely because investment income from a substantial award might attract higher-rate tax. Tax may, at most, influence the choice between otherwise appropriate multipliers in a very exceptional case supported by adequate evidence.

Following a road accident for which liability was admitted, the respondent suffered catastrophic physical and mental injuries and required permanent care. Taylor J awarded £431,840, including damages for past and future care and future loss of earnings.

The defendants appealed directly from the Queen’s Bench Division under section 12 of the Administration of Justice Act 1969. The judge had disregarded attendance and mobility allowances payable under the Social Security Act 1975. He had also increased conventional multipliers to reflect the anticipated incidence of higher-rate tax on investment income.

The issues were whether the statutory allowances should reduce the damages for care and whether anticipated taxation justified specific additions to the multipliers.

1. The appeal was allowed unanimously. Lord Bridge of Harwich and Lord Oliver of Aylmerton delivered the principal speeches. Lord Mackay of Clashfern and Lord Brandon of Oakbrook expressly agreed with both. Lord Goff of Chieveley also allowed the appeal on both grounds.

2. Per Lord Bridge, damages for financial loss caused by negligence are purely compensatory. The court ordinarily measures net consequential loss and expense. A receipt arising because of the injury is prima facie deductible unless it falls within a clearly justified exception, such as insurance purchased by the claimant or private benevolence.

   Attendance allowance under section 35 and mobility allowance under section 37A of the Social Security Act 1975 were payable to meet needs corresponding to the care expenses claimed as damages. They were funded compulsorily and payable as of right. They could not rationally be treated as private or public benevolence intended to provide a double recovery.

   The expression “enhanced facilities for locomotion” in section 37A(2)(b) was not confined to purchasing transport. It included outings and other facilities provided through the claimant’s care. The whole mobility allowance was therefore deductible from the cost-of-care damages. Bowker v Rose and Gohery v Durham County Council were wrongly decided and overruled.

3. Per Lord Oliver, a lump-sum award for future loss is necessarily approximate. Conventional multipliers assume a stable-currency interest rate and accommodate imponderables such as future inflation and taxation. Future taxation should ordinarily be regarded as satisfactorily reflected in the conventional multiplier.

   The court must assess the fund awarded for future earnings and care on its own. Other damages or independent resources must not be aggregated merely because their investment might place the claimant in a higher tax bracket. On the figures in this case, the relevant fund would not have produced income attracting higher-rate tax.

   The majority approach in Thomas v Wignall [1987] Q.B. 1098, permitting a specific addition to the multiplier for higher-rate tax, was incorrect. Lloyd L.J.’s dissenting approach was approved. Although taxation might conceivably tip a finely balanced choice between conventional multipliers, a separate tax addition would require a very exceptional and positively established case.

4. The award was varied. Past care was reduced to £44,180, future care to £119,704, future loss of earnings to £68,856, and Court of Protection costs to £11,050. Interest required consequential adjustment, and the cause was remitted to the Queen’s Bench Division.

1. House of Lords: The appeal was allowed unanimously on both grounds. Taylor J’s order was varied by reducing the damages and interest, and the cause was remitted to the Queen’s Bench Division.

2. Queen’s Bench Division: Taylor J awarded £431,840, inclusive of interest. He disregarded attendance and mobility allowances and increased three multipliers to reflect anticipated higher-rate taxation. He certified a direct appeal under section 12 of the Administration of Justice Act 1969.