Tort's Wrongs, Part 2: Damages and Loss

In the previous post I suggested that instinctive justice required a penal element to tort law, in the area of causation. Today I will argue the same thing in an area which actually has, in some ways, been modified in line with that - assessment of damages.

Assessment of tort damages was always going to be a difficult enterprise. For starters, it is inevitably incredibly difficult and fictionalised to put monetary amounts to certain kinds of loss, like pain, cuts and the loss of limbs. However, the problems I will be looking at are more about tension between different theories of what compensation should do. The two crucial theories are that objective loss (loss in comparison to an alternate world where the tort never happened) should be compensated, and that compensation should be required as far as it is in fact possible to cure someone (to the state in which they would be in the alternate world). Some cases will show why I think the first of these to be vastly superior.

Firstly, we have the West v Shephard situation of a tort putting someone into a permanent vegitative state. The costs of care for him were vastly less than the money he would have received for loss of amenity, loss of earnings etc. had he been awake to appreciate these losses. However compensation could not in fact do him any more good than compensating the cost of care. The Law Lords were split in the measure of damages. Lord Reid felt that damages must actually be able to help the person in some way, improving their position, and so would have limited them to the cost of care. However the majority went with Lord Devlin who thought that the compensation should reflect the actual loss, even if not appreciated. The reasoning behind his judgement is not quite clear, but the biggest concern was almost certainly that the tortfeasor should not have to pay less for causing more harm. This reflects the intuitive view that the damages should be proportionate to the harm done, and so the wrongdoing. Given that the victim could not actually benefit from the increased damages, the rationale looks suspiciously penal, ensuring that the tortfeasor is punished in line with his wrong.

A similar dilemma should in theory present itself when it comes to torts causing death. After all, surely there is even less chance of a cure? However, the Fatal Accident Act 1976 attempts to smoothe over the proposterous conclusion that there should be no damages for death by providing actions which can be used by dependents left behind. They are allowed to recover what the victim would have been able to collect had he lived, as well as a fixed sum for bereavement, and compensation for funeral charges. Of course, this means that if someone dies without dependents, then the tortfeasor is not liable. Only the rarety of this situation prevents this unsightly fact from having more influence.

For dependants, this solution is extremely helpful and often very necessary. However, it is slightly odd that they get the entirety of the compensation the victim would have received, because on the cost of cure approach this must rest on the fiction that had he lived, all of the damages would have been spent on them. It would seem that a healthy discount for the costs of living the victim himself would have had to expend during his lifetime would seem to make sense, if we were trying to put the family members in the position they would have been in without the death. Again, the fact that this has not been suggested (and it's not a problem of quantifying the discount, as will be shown below) suggests that really, the legislature is keen to ensure that tortfeasors don't have to pay any less because of causing death - a penal concern.

A closely related area is the 'lost years' problem - how to deal with compensating for loss of earnings where the number of years the person would be able to work has been cut short because their death will now be premature? On objective loss principles, it would be thought that they should still be paid exactly as much as if they hadn't lost years off their life. However on the cost of cure view, they only need as much as to keep them in the same lifestyle for those years they will in fact survive. Giving them more would be overcompensating. Happily, the objective loss model is once again generally applied - Picket v British Rail. Here, however, the logic appears to be to compensate for the loss of dependants in the lost years. This is shown in a couple of ways. Firstly, here a deduction *is* made for the amount during the lost years which the victim would have spent on himself. Secondly, Croke v Wiseman showed that if one was harmed so as to ensure that they never have dependants, then they cannot claim for the lost years. Given the objective approach in West and the FAA 1976, this is really surprising, and an example of more harm leading to fewer damages under the cost of cure rationale.

What is the heart of the difference between the objective loss and cost of cure approaches? It is the party on which the focus is laid. Objective loss looks at the actual harm done so as to determine the level of wrongdoing, and charges the tortfeasor accordingly. Cost of cure instead looks at what the victim should actually get, in terms of what will do the most justice for him - curing without providing over-compensation (lovingly referred to as a 'windfall' among lawyers). This dichotomy between claimant-centred compensation and defendant-centred compensation exposes the heart of the contradiction of tort law. For when we focus on the claimant, we ignore the very agent whose actions bring the scenario into the region of wrongs. If we are using the tort as the gatekeeper to decide whether to allow compensation, why should its seriousness not determine the level of compensation? On the defendant's side, this looks unjust. However when we take the objective approach the claimant can on his side appear overcompensated, with nothing useful to do with the money received. The tension between the two sides can only be solved by separating the amount taken from the one party from the amoutn received by the other. That is the theme I will be taking up when I come to draw my conclusions from this series.