Tarlochan Singh Flora v Wakom (Heathrow) Limited

The Court of Appeal considered the construction of sections 2(8) and 2(9) of the Damages Act 1996 as substituted with effect from 1 April 2005. Section 2(1) obliges the court to consider whether to order periodical payments for future pecuniary loss. Section 2(8) establishes that, unless the order otherwise specifies, periodical payments are to vary by reference to the Retail Prices Index (RPI). Section 2(9) permits an order to disapply or modify the operation of section 2(8).

The court held that section 2(8) identifies a statutory default but that section 2(9) is not confined to exceptional cases; a court may depart from RPI where it is just and appropriate to do so. The court refused to admit Hansard as an aid to construction because the statutory language was not sufficiently ambiguous to satisfy the strict Pepper v Hart conditions. Explanatory Notes and other contextual material were used only to illuminate purpose and background, not to displace the enacted words.

On the facts, the defendants’ interlocutory application to strike out parts of the claimant’s pleading and to exclude expert evidence was dismissed: the claimant may pursue evidence (including that of Dr Victoria Wass) that a wage-related index such as the Average Earnings Index may better reflect future wage and care-cost inflation, and the matter should be determined at trial where the evidence can be tested.

Background and facts.

• The claimant was seriously injured in a workplace fall on 13 May 2002, suffering loss of earnings (about 12,000 per annum) and care needs (valued at 18,000- 27,000 per annum). Liability was admitted; only quantum and the form of compensation were in issue.
• The claimant pleaded reasons why a wage-related index (e.g. the Average Earnings Index) would better protect real compensation for future loss of earnings and care than the Retail Prices Index (RPI). He relied on expert evidence (Dr Victoria Wass). The defendant applied to strike out parts of the claimants statement of case and to exclude that expert evidence.

Procedural posture. This was an interlocutory appeal by the defendants from an order of Sir Michael Turner (Queen's Bench Division) dated 7 December 2005 dismissing the strike-out/exclusion application. Permission to appeal had been granted by Latham LJ (with May LJ agreeing).

Issues for decision.

1. How should sections 2(8) and 2(9) of the Damages Act 1996 be construed: does section 2(8) create an ordinary/near-automatic rule that RPI is to be used, with section 2(9) available only in exceptional cases, or does section 2(9) permit departure from RPI whenever it is just to do so?
2. Whether the court may use Parliamentary materials (Hansard) to resolve the construction issue.
3. Whether the claimants pleading and expert evidence should be struck out or excluded at the interlocutory stage.

Court's reasoning.

• The court read the statutory language literally: section 2(8) prescribes the default treatment where an order does not itself specify the method of variation; section 2(9) permits the order to disapply or modify that default. Nothing in the language or the accompanying Civil Procedure Rule (CPR 41.8(1)(d)) suggested that departure under section 2(9) is confined to exceptional circumstances.
• The strict conditions in Pepper v Hart and subsequent authorities limited resort to Hansard; the provisions were not sufficiently ambiguous to justify using Parliamentary debate to construe the statute here, and ministerial statements could not be attributed to the will of Parliament.
• Explanatory Notes were admissible only to illuminate context and purpose (they identify the objective of preserving the real value of periodical payments), but they cannot be treated as expressing Parliament's will. The overarching principle of full compensation (the "100% principle" from Wells v Wells and earlier authorities) informed the court's approach: the statutory scheme should not be interpreted so as to deny claimants effective compensation where a periodical payments order is properly made.
• Practical and policy arguments (including concerns about annuity markets, affordability and administrative burden) were recognised but the court considered them matters for trial evidence and for Parliament where appropriate. The interlocutory application was therefore procedurally misconceived and the matters raised should be examined at trial where expert evidence can be tested and factual findings made.

Disposition and wider implications. The Court of Appeal dismissed the appeal and allowed the claimant to rely on his pleaded case and expert evidence. The decision clarified that section 2(9) is not limited to exceptional circumstances and that courts may depart from an RPI linkage where fairness and the evidence justify doing so; the appropriate form of indexation is a matter for trial and judicial fact-finding.

This was an appeal by the defendant from an interlocutory order of Sir Michael Turner dismissing applications to strike out parts of the claimant's statement of case and to exclude expert evidence. The Court of Appeal dismissed the appeal. The court held that section 2(8) of the Damages Act 1996 provides a statutory default (linking periodical payments to RPI) but that section 2(9) permits the court to disapply or modify that default without being confined to "exceptional" cases. Hansard was not admissible because the statutory language was not ambiguous in the relevant sense. The claimant may adduce expert evidence on indexation and the issues should be resolved at trial where the evidence can be tested and factual findings made.

Appeal from the Queen's Bench Division (Sir Michael Turner) in respect of an order of 7 December 2005 refusing to strike out parts of the claimant's pleading and refusing to exclude an expert. Permission to appeal was granted by Latham LJ (with May LJ agreeing). A later application for permission to appeal to the House of Lords was refused (memorandum dated 2 December 2021).