Cooke v Walsh

JurisdictionIreland
CourtSupreme Court
JudgeMcCARTHY J.,McCarthy J.,
Date01 January 1989
Docket Number(46/83),[1981 No. 1666P]
COOKE v WALSHE
MARK COOKE
v.
PATRICK WALSH

1984 WJSC-SC 1131

(46/83)

THE SUPREME COURT

Subject Headings:

DAMAGES: assessment

1

JUDGMENT delivered the 16th day of March 1984by GRIFFIN J. [O'HIGGINS C.J. HENCHY J. HEDERMAN J. CONCURRING]

2

In the accident in which he was involved in September 1980 the plaintiff suffered injuries which have had appalling consequences for him. He suffered a brain stem injury and in consequence he is and always will be both mentally and physically disabled. At the time of the trial in the High Court, he had varying degrees of spasticity and paralysis of all four limbs. He is incontinent of bowel and bladder, suffers from epilepsy, has the mentality of a child of one year old, and can say only a few words like dadda, mamma, cow - less than a dozen words in all. For all his ordinary activities such as eating, drinking, dressing, bathing, he is and will always be completely dependant on others.

3

In respect of the injuries sustained by him, the learned trial Judge assessed damages in the sum of £757,538.92p. This was madeup as follows -

4

1. Hospital expenses to-date of trial £68,998.92

5

2. Hospital expenses for the twelve months next after the trial£30,718

6

3. Cost of alteration to his father's house to suit his needs£18,722]

7

4. Loss of expectation of life (agreed) £2,000

8

5. Future loss of wages £110,400

9

6. Cost of future care £401,700

10

7. General damages to-date £25,000

11

8. General damages in the future £100,000

12

The hospital expenses, amounting in all to £99,716.92, are governed by the unanimous judgment of this Court delivered on the 16th of December 1983 by the Chief Justice. No dispute arises as to the third and fourth items.

Future loss of wages £110,400
13

At the time of the trial the plaintiff was aged 11 and the learned trial Judge accepted that, had he been uninjured, he would probably have secured employment in the semi-skilled area. There was evidence, which he accepted, that the average rate of wages in thisarea was £115 per week. He held that the plaintiff is entitled to be compensated at that rate from the year 1989 (when he would have reached 18 years of age) to the year 2022, as there was evidence that his expectation of life was probably forty years i.e., until he would reach fifty one years of age. Using a multiplier of 960, he capitalised this loss of wages at the sum of £110,400. Counsel for the defendant do not dispute that a semi-skilled worker would earn£115, but they claim that the wrong multiplier was used, and that the entire of the sum of £115 should not have beencapitalised.

14

Actuarial evidence was adduced on behalf of the plaintiff and of the defendant. In cases of this kind, the function of an actuary is to ascertain what is the capital sum, payable at the time of the hearing of the action, which is equivalent to a loss of each £1 per week for a specified period, taking into account that the capital sum can be invested and earn interest, the probabilities of the plaintiff surviving that period, and inflation. In taking interest rates into his calculations, he considers the relationship between the rate of interest available and the rate of inflation, i.e. the rate per cent by which the interest that can be earned exceeds the rate of inflation, or, as it is often called, the real rate ofreturn. His calculations are based on the assumption that both capital and interest will be exhausted at the end of the specified period.

15

There was a considerable body of evidence adduced at the trial on behalf of both the plaintiff and the defendant as to what the correct rate of interest should be. The plaintiff called as witnesses an economist who is also a university professor in that discipline, a member of one of the leading firms of accountants in the city of Dublin, a stock-broker, the investment manager of one of the leading Merchant Banks in the State, and an actuary. Evidence on behalf of the defendant was given by an accountant, by the investment director of another of the leading Merchant Banks, by an economist who is also a university lecturer in Economics, and by an actuary. The effect of the evidence called on behalf of the plaintiff was that the interest rate applicable should be between two and three per cent. The witnesses on behalf of the defendant contended that an interest rate of five per cent would be moreappropriate.

16

The learned trial Judge accepted the evidence given on behalf of the plaintiff, and fixed the rate of interest applicable at 2½ per cent. The rate of interest taken is of considerableimportance, as the multiplier in the case of 2½ per cent is substantially in excess of that in respect of 5 per cent. The capitalised value of each £1 per week, commencing at age 18 and ending at age 51, is £587 where the interest rate is 5 per cent, and is £960 if the interest rate is 2½ per cent. In respect of loss commencing one year after the trial and ending at age 51, the multiplier at 5 per cent is 837 and at 2½ per cent is 1,236.

17

Having heard all the evidence given in respect of the rate which should be accepted, the learned trial Judge was, in my opinion, entitled to accept and adopt the rate of 2½ per cent, and this Court is not entitled to interfere with that finding made by him. It may very well be that, in other cases, a different rate may be accepted on the evidence given in such cases.

18

In ascertaining the loss of wages, the learned trial Judge multiplied the sum of £115 by a multiplier of 960, resulting in the sum of£110,400. Counsel for the defendant submitted that this sum is excessive and should be set aside. They claim that, as the calculations made by the actuary at the appropriate rates of interest do not have any regard for illness, unemployment and all the other hazards connected with employment, they cannot properly be used without being abated, in particular since, on the evidence, with very little return on capital available, the predictions for industry and employment in general are gloomy in the extreme.

19

In my opinion, counsel for the defendant are justified in challenging this figure and how it is calculated. As I said in my judgment in Reddy v. Bates, (unreported, judgment delivered on the 29th July 1983), this figure does not

"take into account any risk of unemploymentredundancy, illness, accident or the like. It assumes that the plaintiff, if uninjured, would have continued to work, week in and week out, until retirement and would have in effect guaranteed employment, at a constantly increasing annual rate of wages, until retirement or priordeath."

20

When actuarial evidence first came into regular use in cases such as this in our Courts, employment was then and was for many years thereafter, reasonably stable and actuarial figures could be applied by juries with reasonable confidence, even though they have always been directed by the trial Judge that such figures are intended only for their assistance as a guideline and that they are not bound to accept them. Whilst the mathematical calculations made by the actuary are constant and correct, they should be applied in the particular circumstances of every case with due regard to reality and commonsense. There is now a high rate of unemployment, not only in this country but in Great Britain and in most of the member states of the E.E.C. The numbers of redundancies in and indeed closures of firms in recent years - firms which would have been regarded as of unshakeable financial soundness - must inevitably lead to the conclusion that there is no longer any safe, much less guaranteed, employment. This is a factor which in my view juries should be required to take into account in assessing future loss of earnings in any given case."

21

There should therefore in my view be a substantial discount from the multiplier for the risk factor where employment is concerned. Indeed, since that judgement was delivered (only 8 months ago) the numbers unemployed have considerably increased, and at the present time there are more persons unemployed than are employed in industrial employment, and all the forecasts are that there will be further deterioration in the position in the future. The learned trial Judge did not make the necessary discount from the multiplier. In fairness to him, his judgment was delivered before Reddy v. Bates.

22

In the instant case, the learned trial Judge multiplied the entire of the rate of wages (£115) by the full multiplier used by him. In my view this is not correct, as it is the "take home pay" and not the gross pay that should have been used as the multiplicand. Had the plaintiff been uninjured, he would have to pay income tax on the wages he would earn, and P.R.S.I. and other deductions would be made from his wages, and therefore the sum that would be available to him to spend would be considerably less than £115 per week. In my view therefore, the sum of £110,400 awarded for loss of wages should be set aside as excessive.

Cost of future care £401,700
23

The learned trial Judge was satisfied on the evidence that the plaintiff's expectation of life was forty years from the time of the trial. He therefore ascertained what would be the cost of his care and maintenance to commence one year from the date of the trial, as the doctors were satisfied that the plaintiff would require to be at least another year in hospital. The evidence given by Dr. Gregg and Dr. Halpenny, two eminent specialists in the field of injuries of the type suffered by the plaintiff, was to the effect that if the plaintiff's family are able to cope emotionally as well as physically with the plaintiff's particular problems, the home is the ideal place for him. If the family can cope, the plaintiff would attend a Day Centre, at which he would attend from approximately 10.00 a.m. to 4.00 p.m., and special transport to and from these Day Centres is available. In the plaintiff's case,...

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