Page v Plymouth Hospitals - Recovering Investment Costs
Page v Plymouth Hospitals - Recovering Investment Costs
Page v Plymouth Hospitals NHS Trust [2004] EWHC 1154
Davis J was determining a preliminary issue in this clinical negligence action:
“Whether the Claimant (who is seven years old and has cerebral palsy, but whose funds are not anticipated to be placed under the control of the Court of Protection on his obtaining majority) is entitled to recover, as part of his damages, the predicted costs of investment advice and fund management charges incurred in the management of his award, which will exceed £2m, or whether such a claim is inadmissible.”
The issue is inextricably linked with the discount rate of 2.5% set by the Lord Chancellor after Wells v Wells [1999] 1 AC 345. Davis J began by considering the “fundamental principle” of compensation: to award no more and no less than the loss the Claimant has suffered. After looking at Wells v Wells and the Lord Chancellor’s reasons for setting the rate at 2.5%, he turned his attention to two cases that, in his view, constituted a “frontal assault” and a “flank assault” respectively on the discount rate: Warriner v Warriner [2002] EWCA Civ 81 (where another discount rate was contended for) and Cooke v United Bristol Health Care [2003] EWCA Civ 1370 (where a revised multiplicand to reflect faster increasing costs of care was contended for).
Prior to the setting of the discount rate, the recoverability of the costs of investment advice was in issue. Davis J considered Francis v Bostock (8th November 1985) Routledge v McKenzie [1994] PIQR Q49, and Anderson v Davis [1993] PIQR Q87. In Francis v Bostock and Routledge v McKenzie, the costs were found to be too remote; in Anderson v Davies they were recoverable. Whilst he considered the arguments in Anderson v Davis to have “a good deal of force” and the contrary view on remoteness to be too narrow, Davis J ultimately found that Wells v Wells had overtaken these arguments.
Davis J made reference to three cases that were decided post Wells v Wells, in which it was found that the costs were not recoverable: Webster v Hammersmith Hospitals NHS Trust [2002] Med Lit Cases 082Q, Anderson v Blackpool NHS Trust (20th March 2003, Unreported), and Eagle v Chambers [2003] EWHC 3213 (although in the latter two cases a “one-off” award was made).
Counsel for the Claimant argued that those three cases were incorrectly decided because they did not have regard to Lord Chancellor’s reasons for setting the discount rate at 2.5%. The Claimant submitted, inter alia, that in reality, Claimants incur expense in investing their awards in a mixed portfolio, in order to achieve the full compensation. Further, that it is inherent in the Lord Chancellor’s reasons for setting the discount rate at 2.5% that he recognised that Claimants would require investment advice, and that he anticipated that the costs of this would be recoverable as a separate head of loss.
The Defendant argued that the claim, if granted, would be an attack upon the discount rate; it had been implicitly rejected in Wells v Wells; and in any event, there was no evidence to the effect that the Claimant would achieve a rate of return of 2.5% on his award, only if the costs of investment advice were awarded. The last, evidential, argument was framed as a “fatal flaw” in the Claimant’s case.
Davis J preferred the Defendant’s arguments. He found that whilst the Lord Chancellor was “further supported” in setting the rate at 2.5% by matters such as the Court of Protection’s practice of investing in multi-asset portfolios, Claimants are not required to invest in mixed portfolios. The rate was set by reference to ILGS and not by reference to a mixed portfolio. This claim was an “indirect attack” on the discount rate. He found the Defendant’s “fatal flaw” argument compelling:
“It therefore seems to me that claimants would in any event need to
adduce evidence to address that point if they are to establish loss”.
However, he did not feel able to decide the issue on the basis of that argument alone (he felt unable to do so because the expert may have thought the point was implicit or further evidence could be adduced on the point).
The nub of the judgment is in paragraph 56:
“I take the view that if claimants (such as the present claimant) consider that they have a grievance and that the prescribed discount rate will not, in the event, have operated to fulfil the fundamental principle of full compensation, the remedy is to seek to persuade the Lord Chancellor to prescribe a different (and lower) discount rate.”
In taking the point as a preliminary issue, the court was able to determine the point in isolation. The conclusion reached has the appeal of logic and certainty.