Cooke v United Bristol Health Care

In assessing a lump-sum award for future pecuniary loss in a personal injury claim, future inflation is reflected through the multiplier and the prescribed discount rate. The multiplicand remains based on costs current at the date of trial. A claimant cannot introduce projected differential inflation into the multiplicand, because that would indirectly disapply the prescribed rate.

A court may use a different rate under section 1(2) of the Damages Act 1996 only where the case belongs to a category, or has material special features, which the Lord Chancellor did not take into account. High care costs and long life expectancy do not satisfy that requirement.

These conjoined appeals concerned three severely injured claimants whose damages included substantial future care costs. Liability was no longer in dispute. The claimants sought permission to rely at their quantum trials on evidence from a chartered accountant that care costs had historically risen faster than the retail prices index. His calculations would increase future multiplicands to reflect that differential inflation.

Senior Master Turner and two deputy High Court judges excluded the evidence. The claimants appealed, contending that it addressed the multiplicand rather than the discount rate prescribed under section 1(1) of the Damages Act 1996. Cooke also invoked section 1(2). The central issue was whether the evidence impermissibly circumvented the prescribed rate of 2.5%.

1. Appeals dismissed unanimously. Laws LJ delivered the leading judgment. Dyson and Carnwath LJJ agreed and gave supporting reasons. The proposed expert evidence was inadmissible because its use would indirectly subvert the discount rate prescribed under section 1(1) of the Damages Act 1996.

2. The conventional multiplier-and-multiplicand method assesses the multiplicand by reference to costs current at the date of trial. The multiplier reflects accelerated receipt, contingencies and future inflation through the discount rate. The decisions in Cookson v Knowles and Wells v Wells demonstrated that inflation was to be accommodated through the multiplier rather than by increasing the multiplicand.

3. The Lord Chancellor fixed a single rate of 2.5% against that established background. The rate was intended to allow for future inflation across all heads of loss. Increasing selected multiplicands by projected sector-specific inflation would count inflation both through the multiplier and through the multiplicand. It would therefore usurp the basis on which the prescribed rate had been fixed.

4. The full-compensation principle remained fundamental. A single rate could nevertheless achieve compensation only in a rough-and-ready way because inflation differs between economic sectors. The House of Lords and the Lord Chancellor accepted that limitation in favour of certainty, predictable settlements and reduced expense. While the prescribed rate remained in force, courts were constitutionally required to apply it rather than correct a perceived shortfall case by case.

5. Section 1(2) permitted departure only where the case fell within a category not considered by the Lord Chancellor, or possessed special features material to the rate which his reasons showed had not been considered. Applying Warriner v Warriner, Cooke's long life expectancy and very high future care costs were already within the Lord Chancellor's contemplation. The alleged shortfall was merely a consequence of those features and supplied no independent ground for exceptional treatment.

1. Court of Appeal (Civil Division): By [2003] EWCA Civ 1370, unanimously dismissed all three appeals and upheld the orders excluding the proposed expert evidence.

2. Queen’s Bench Division and Senior Master: Senior Master Turner in Sheppard, HH Judge Bursell QC sitting as a deputy High Court judge in Cooke, and HH Judge McKenna sitting as a deputy High Court judge in Page ordered that the expert evidence should not be admitted at the trials of quantum.