Wells v Wells (Page v Sheerness Steel Co Plc, Thomas v Brighton Health Authority)

In assessing damages for future pecuniary loss in personal injury cases, the court should continue to apply the conventional discount rate rather than adopt a rate based on index-linked government securities merely because that investment would reduce risk or appear more precise. The claimant is not to be treated as a privileged investor. The court may assume prudent investment in a balanced portfolio, and must keep the compensatory principle in view for both parties.

The multiplier remains a broad evaluative tool, not a purely mathematical exercise. It must reflect accelerated receipt, contingencies of life, and the uncertainties inherent in future loss. Actuarial tables may assist as a check, but they do not displace the conventional approach or justify a general move to an ILGS-based discount rate.

The supplied text concerns three conjoined personal injury appeals on quantum: a road traffic claim, a medical negligence claim, and an industrial accident claim. Liability was admitted in each case. The common issue was whether future losses should be capitalised by reference to the conventional discount rate of 4 to 5 per cent or by reference to the return on index-linked government securities.

The trial judges in each case had adopted an ILGS-based approach, relying on expert evidence and on recommendations in the Ogden material and Law Commission report. The appellants challenged that departure and also disputed a number of individual heads of damage. The court therefore addressed both the general multiplier issue and the detailed quantification issues arising in each appeal.

The central question was whether full compensation required the award to be fixed on the basis that the claimant could invest with minimum risk, and whether the proper test was to choose the investment method that would achieve the closest possible matching of future loss.

Disposition

1. The appeals on the general multiplier issue were allowed. The court held that the conventional approach remained the correct guide and that the trial judges had been wrong to adopt an ILGS-based discount rate.

2. Per the judgment of the court delivered by Lord Justice Hirst, the basic principle is full compensation, but that principle does not entitle a claimant to be treated differently from an ordinary prudent investor. To assume that damages must be assessed on a minimum-risk basis would place the claimant in an unwarranted privileged position.

3. The court rejected the proposition that, once the multiplicand is fixed, the multiplier exercise becomes a matter of mechanical precision. The multiplier remains an evaluative judgment. It must reflect accelerated receipt, mortality, employment contingencies, and the many uncertainties inherent in future projections.

4. The court further held that prudent investment for substantial long-term awards could properly be assumed to involve a balanced portfolio with a substantial equity content, not exclusive investment in ILGS. On the expert evidence preferred by the court, long-term equity investment was sound, and the Court of Protection’s practice and trust investment rules supported that view.

5. The court accepted that ILGS reduced some forms of risk, but held that they were not risk-free in any complete sense and were inherently rigid. Their structure, market fluctuations, gaps in available maturities, and limits on long-dated stock meant that they did not justify displacing the established conventional guideline.

6. Accordingly, the court held that the present conventional discount rate of 4.5 per cent should continue to apply. The Ogden Tables were recognised as useful as a check, and the court favoured their admissibility under section 10 of the Civil Evidence Act 1995, but not those explanatory passages advocating ILGS as the general benchmark.

7. On the individual appeals, the court reworked the multipliers and adjusted several heads of loss. In Wells, it also allowed the claimant’s cross-appeal on future legal assistance connected with Court of Protection administration. The cross-appeals in Thomas and Page were dismissed.

• House of Lords: not stated in the supplied judgment text.
• Court of Appeal (Civil Division): the court allowed the three appeals on the general point of principle and varied or set aside the respective quantum orders. The claimant's cross-appeal in Wells was allowed only as to Court of Protection fees. The cross-appeals in Thomas and Page were dismissed: [1996] EWCA Civ 784.
• High Court / QBD: Wells was decided by His Honour Judge Wilcox; Thomas by Collins J; and Page by Dyson J, each of whom had assessed damages using an ILGS-based approach.