O'Brien and others v. Independent Assessor

The House considered two discrete legal issues arising from awards of compensation under section 133 of the Criminal Justice Act 1988 (as amended): whether an assessor may deduct an allowance for "saved living expenses" from notional lost earnings, and whether an assessor may apply a percentage reduction to non-pecuniary awards to reflect the claimant's previous convictions and punishments under section 133(4A)(c).

The majority held that an assessor may, when assessing pecuniary loss by reference to notional earnings the claimant would have received if at liberty, deduct a realistic allowance for basic living expenses in order to measure the claimant's actual net loss; the deduction is not to be characterised as charging the claimant for his imprisonment. The majority also held that an assessor has a broad judgmental discretion when applying any reduction under section 133(4A)(c) and is not bound to follow the precise percentage used by a predecessor; departures from prior awards do not of themselves amount to Wednesbury irrationality absent other objectionable features.

There were significant judicial observations (and a dissent on one point) about the proper scope and operation of section 133(4A)(c), including the view that paragraph (c) should not be used to make blanket deductions from sums awarded to reflect misconduct by authorities.

Background and parties:

• The appellants, Vincent Hickey and Michael Hickey, were wrongly convicted of murder and later had their convictions quashed; the Secretary of State accepted they were entitled to compensation under section 133 of the Criminal Justice Act 1988 and an independent assessor (Lord Brennan QC) fixed the amounts.
• The assessor deducted 25% and 20% respectively from calculated lost earnings to reflect "saved living expenses" and applied percentage reductions (25% and 20%) to most of the non-pecuniary awards for past convictions; these differed from a 10% deduction applied by a previous assessor in a related case (Robinson).

Procedural posture:

• The appellants obtained judicial review in the Administrative Court (Maurice Kay J); the judge ruled partially in their favour on one issue. The Court of Appeal ([2004] EWCA Civ 1035) reversed in part and upheld the assessor on both points. The appellants appealed to the House of Lords.

Relief sought and issues framed:

• (i) Relief sought: quashing of the assessor's deductions and remit of assessments for reconsideration.
• (ii) Issues for the House: (A) whether deduction for saved living expenses from notional earnings is lawful and consistent with principles of compensatory awards; (B) whether the assessor was obliged to follow or explain departure from his predecessor's percentage reduction under section 133(4A)(c) and whether the blanket percentage reduction was lawful.

Reasoning and outcome:

• On issue (A) the majority reasoned that compensation for pecuniary loss should reflect the claimant's real, net loss. Notional gross earnings must be reduced for tax and other amounts that would have had to be expended to live; a modest deduction for basic living expenses avoids over-compensation. This approach aligns with established authorities on assessing net loss and with the policy underpinning section 5 of the Administration of Justice Act 1982 on savings attributable to institutional maintenance.
• On issue (B) the majority held that an assessor has a broadly defined remit and judgmental discretion in assessing non-pecuniary loss and any deduction for prior convictions under section 133(4A)(c). An assessor need not follow a predecessor's percentage where he reasonably considers that figure wrong, and disparity alone with a prior award does not make the decision irrational. However, some law lords dissented on principle and queried the permissibility of indiscriminate percentage deductions applying across all non-pecuniary heads (notably Sir Scott would have remitted the non-pecuniary awards for reconsideration as to the criminality deduction and other Lords expressed concerns that paragraph (c) should not reduce awards for governmental misconduct).

Wider comment:

• The House emphasised the assessor's remit is broad and fact-sensitive; the judges voiced reservations about the method of a blanket percentage deduction under section 133(4A)(c) and recommended further consideration of that practice, though that reservation did not determine the outcome.

Appeal dismissed. The majority held that (1) an assessor may deduct a reasonable allowance for basic living expenses from notional lost earnings to reflect the claimant's actual net loss, and (2) an assessor has a wide judgmental discretion in applying reductions under section 133(4A)(c) and is not obliged to adopt the same percentage as a predecessor; disparity with prior assessments does not of itself render the decision irrational. The court nonetheless recorded significant judicial reservations about the scope and form of percentage deductions under section 133(4A)(c).

Divisional Court (Administrative Court) (Maurice Kay J) [2003] EWHC 855 (Admin) (judicial review); Court of Appeal [2004] EWCA Civ 1035 (Auld, Longmore LJJ and Gage J); House of Lords [2007] UKHL 10 (appeal dismissed).