The Law
The compensation game
David W. Williams
The rightful indignation that boiled up in press and Parliament over the plight of the thalidomide victims has caused renewed criticism of far wider and, in perspective, more important issues. These underlying issues concern the future of the tort system, the system of rules of law dealing with the civil liability of individuals for acts injuring others, and in particular the rules that deal with compensation to be paid where a person is injured by another's fault, or negligence. These rules are largely judge-made. Parliament has never fully dealt with the issue, nor considered the system as a whole. It has merely tacked on minor improvements from time to time, usual;y as a result of back-bench initiative, such as the rule enacted last year whereby, a widow's prospects of remarriage are to be ignored by a judge assessing her loss on her husband's death.
That the system is being criticised is not surprising. That it is so little criticised is. Throughout the rest of the AngloAmerican common law world, the system is being reviewed and frecuently replaced. And in the United Kingcom? Attempts by the Law Commission to review the situation were vetoed first by Lord Gardiner and then by Lord Hailsham. The Labour Government ailso refused an appeal for a Royal Commission made by leading academics in 1969. Indeed, apart from minor reforms introduced in 1969 and 1970 as a result of the Winn Committee Report, the matter has received little or no political -consideration. The system whereby the courts award damages in cases of legal negligence is basically a very simple one. Where a person can be proved to be responsible for an injury caused to another person, then the person injured can recover any loss that can be reasonably foreseen to arise from the accident (i.e. that the judge regards as legally connected with the accident) in one lump sum calculated to take full account of both past and future loss to the injured person. When the system was first introduced it worked well. With the absence of sophisticated medicine, legal aid, personal and liability insurance, social security, inflation, and the necessity to sive reasons for d‘ecisions, juries would merely choose what they thought to be an appropriate sum for the injury and award that. They did so in disregard of what any other jury might award, because it was against the law to give juries guidance as to suitable sums In personal injuries and death cases, however, juries have largely disappeared, and a slightly more organised system has taken its place. Nevertheless, the first problem is for the victim to find someone at fault for his injuries and prove this fault in court. This is of course the first major stumbling block. In many cases no one else is at fault. Thereby the system cannot come into effect. Judges can only decide to transfer a loss to another individual. Thus the major category of accidents in the United Kingdom, those in the home, rarely falls within the system. Again, the victim of an accident may not be able to prove the fault of any other individual, even if there was such fault, as anyone injured by a hit-and-run driver will know to his cost. Or again, the evidence may be so complicated that the result of an incident may be clear, but its true cause far from certain, which is of course sometimes the case in medical negligence.
Even where a person can be proved to be at fault in a factual or moral sense, he may not be liable at law. For instance the rule Caveat emptor prevents the vendor or lessor of a house from being liable for defects in the property.
The next step the plaintiff must surmount is to find a defendant that can pay a large award. If a defendant is uninsured, he usually cannot. Even if he is , insured, the insurance may not be adequate, or the company be able to pay. Nevertheless, these circumstances are rare and Parliament has interfered to impose legal obligations on drivers and employers to insure against the risks they create. But remember the trouble Winston Churchill had in getting compulsory insurance for passengers? Victims of crimes of violence are in practice left without remedy. To meet this obvious flaw, the Labour Government set up the Criminal Injuries Compensation Board under the royal prerogative to dispense compensation for injuries arising from crimes of violence. Last year this body gave over £1 million in compensation. This £1 million represents cases where the tort system failed.
Even then, the victim is not through the maze. To get the sum from the defendant is a process which may last years. A Which? report on personal injuries found that on average it was two years between accident and payment.
Once liability has been established or conceded in law, the system still has severe limitations. A judge has power only to award one lump sum by way of compensation, to cover both past and future loss. Such a sum can at best be a combination of informed guess and intuition, even with full actuarial and economic evidence as to life-expectancy, inflation and the like. In part, judges do not even guess, they just adopt a seemingly random figure and stick to it. For instance the current value on loss of expectation of life, where someone is killed or has his life expectancy cut, is £500. This may however be cut if the life was not likely to be a happy one. In one case a judge assumed that the life of a criminal was not happy, and reduced the sum to £200.
Elsewhere there is a rough tariff generally accepted by the judges informal ly. A lawyer will be able to give a range of sums within which, say, an eye will be valued. Here again, the figures are by necessity random. The one value in a tariff is certainty, and here, if anything, our laws had regressed from certainty to variability, benefiting some as against others. Over a thousand years ago, Welsh mediaeval law provided that "a person's finger is a cow and a score of silver in value . . . the worth of the extreme joint, twenty-six pence and a half-penny and a third of a penny." Again, in calculating the value of lost future earnings (the item which usually makes up the biggest item of the large awards), there is a random element. A judge arrives at his gross sum by valuing the yearly loss to the victim, and then grossing this up with the use of a "multiplier ", a figure which may be anything up tc 18 or 20, depending to an extent on precedent, and to an extent on what the judge thinks is a deserving case. Actuarial evidence to assist this judgement, and to give it such scientific basis as there can be, is lightly dismissed as giving the calculation "a false appearance of accuracy." On this point the judges have been taken to task by Mr J. H. Prevett, a leading actuary, who gave evidence in the thalidomide test cases in 1969. He maintains that their attitude to this sort of evidence contains several different misconceptions, including, in some cases, an element of double deduction for the vicissitudes of life.' In this, the Law Commission agrees with him that damages ought to be based on actuarial evidence.
In all these various areas there cannot be a ' right ' figure for the value of lost facilities, lost happiness, or lost earnings in any absolute sense. Judges cannot be criticised to that extent for picking on one sum rather than another. They are asked to decide questions which, in a modern democratic state, should be decided by the one body set up to deal with problems of priorities and Relative values. The value attaching to an injury should be a political decision, as it was in the code from mediaeval days quoted above. Such criticism as attaches to the faults of this part of the tort process should not be aimed at judges. They are forced to make arbitrary decisions on the basis of other arbitrary decisions and the legal arguments placed before them by counsel. It should be deflected towards Parliament, and, of course, governments.
Such criticism is, of course, totally negative. However, positive examples of alternative methods are not far away. The state runs various other compensation schemes already, besides running much of the tort system. It is only because of legal aid, state subsidy of the court's officials, legal obligations on likely defendants to insure, and, in the extreme case, the provision of the law enforcement agencies, that the system works at all. Yet it exists in parallel with the industrial injuries scheme, sickness, unemployment and supplementary benefits, the National Health Service and other welfare schemes of central and local government which in reality go a good way to meeting the real hardship caused by an accident. Judges are required to take only some of these benefits into account. Whether this multiplicity is an appropriate use of the nation's finances has not been subject to any searching political assessment for some time. While other rations are at least discussing the system at the political level to see whether it does represent the best method to deal with modern problems, in this country it lies unconsidered. It is clear that there is a refusal to allow the questions to be dealt with at this level. They must, and should be raised, and answered responsibly in the light of modern circumstances. They have lain ignored too long in Britain.
David W. W lliams is a West Country solicitor who has contributed to The Spectator on several previous occasions.
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