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Thompstone (A Child by his Mother & Litigation Friend, Heather Brindley) v Tameside and Glossop Acute Services NHS Trust, Queen's Bench Division, 23 November 2006

1 February 2007
The issues

Whether periodical payments were to provide for annual increases in the cost of care in line with the retail price index (RPI) or whether the Court should make an order for periodical payments providing for annual increases to be referable to some other index.

The facts

The Claimant, Lee Karl Thompstone, was born on 15th March 1999. He suffers from spastic quadriplegic cerebral palsy as a result of anoxia at birth. He has, and will always have a high level of physical and intellectual disability. He requires adaptive accommodation, specialist aids, equipment and transport to therapy of various kinds. He will also require a high level of care for the rest of his life. The Claimant has a reduced life expectancy which the Claimant’s paediatric experts estimate to the age of 64, and the Defendant’s to the age of 60. At the hearing, the Court approved an agreement by the parties based on the life expectancy to 62 years as to the multiplier which would be appropriate.

At the time the matter was first referred to the Court in March 2006, settlement of all the heads of damage had been agreed in principle, save for loss of earnings and cost of care. There was an agreement in relation to the value of past gratuitous care at the 1st June 2005 but no agreement at that time had been reached as to the appropriate award for past gratuitous care after this time.

At the hearing, leading counsel for the Claimant stated it was the Claimant’s preference for the award for future care to be by way of periodical payments order. This had the advantage of guaranteeing to the Claimant annual payment for the whole of his life, however long he survived. The question was whether those annual payments would be sufficient to meet the costs of care. The Claimant’s leading counsel argued that on the basis of their expert evidence, if a periodical payment order were to provide for annual increases in the cost of care in line with the retail price index (RPI) it was likely that over time, the periodical payments would not be able to keep pace with the increased cost of care so that the Claimant would be unable in later life to meet his care needs. It was therefore submitted on behalf of the Claimant that the Court should make an order for periodical payments providing for annual increases to be referable to some other index which better reflected increases in the wages payable to carers. The Defendant opposed the use of an index other than the RPI.

The hearing on the issue of indexation was adjourned pending delivery of the Court of Appeal Judgment in the case of Flora v Wakom (Heathrow) [2006] EWCA CIV 1103. The Court of Appeal handed down its Judgment in the case of Flora v Wakom on 28th June 2006 and the present case came before the Court for hearing on the 30th October 2006.

The Claimant relied on the expert evidence of 3 witnesses, Dr Victoria Wass, an Academic Labour Economist based at the Cardiff Business School, Mr Richard Cropper, an Independent Financial Advisor specialising in providing advice to the recipients of personal injury and fatal accident damages, and Mr Anthony Carus, a Consulting Actuary. The Defendant relied on the evidence of Mr Hugh Gregory, an Accountant with considerable experience of forensic accountancy, Mr Raymond Storry, a principal researcher with Income Data Services and Mr Jo Monk, a member of the firm of Consulting Actuaries which advises the NHSLA.

Periodical payments avoid many of the problems caused by lump sum awards. They provide a guarantee for the Claimant that he will continue to receive a regular annual payment for the duration of his life so his damages will never be exhausted. The annual payments are free of tax which removes any uncertainties associated with possible future changes to the arrangements for taxation of investment income. The fact that the annual payments cease on death means that there is far less risk of large sums paid by the Defendant going to persons other than the injured person for whose benefit they were intended. All these factors represent considerable advantages over the lump sum award.

One important effect of a periodical payment order is to transfer the risk associated with the investment of damages away from the Claimant. The award will guarantee the Claimant annual payments for his lifetime. Furthermore, the amendments to the 1996 Act provides for uplift to the annual payment in accordance with the RPI. Provided that indexation to the RPI accurately reflects actual increases in the relevant annual costs, the Claimant will be protected against the effects of future increases in those costs.

Various alternatives to the RPI were put forward on behalf of the Claimant including AEI, ASHE and ASHE 6115. AEI, like the RPI, is an index and designed to measure growth in average earnings (as opposed to RPI, which is the growth in the costs of goods and services). ASHE measures earnings levels. The AEI measures growth in the simple average (i.e. mean) earnings of the sample weighted to the population proportions. Data is collected on a monthly basis from a survey of £8,400.00 each employing over 20 workers. The survey covers 9 million employees. The AEI is published on a monthly, quarterly and annual average.

The AEI is not designed to measure earnings levels. To ascertain the average earnings levels of an employee, included in the AEI, the ASHE mean was employed by the Claimant’s expert . It was regarded that this is appropriate as the ASHE survey contains data from a similar representative sample of employees. The Claimant’s expert viewed that the ASHE means earnings level of £12.50 per hour is a good indicator of the average earnings of employees contained in an AEI sample.

ASHE is an annual earnings survey. Earnings are reported as an actual level rather than as an index. Like the AEI, ASHE is an adequate measure which includes data from all occupations.

ASHE 6115 currently measures the earnings of care assistants and home carers. The occupational classifications are revised every 10 years to take into account changes in occupational composition of the population.

Submissions are made both on behalf of the Claimant and Defendant as to the appropriate index to apply.

After consideration of the evidence, the Court was satisfied in all the circumstances that indexation by reference to ASHE 6115 would provide a reasonable accurate indicator of the gross of the earnings of carers of the type to be employed by the Claimant and that it was therefore probably that it would fulfil the purpose of indexation.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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