Accommodation Claims: Alternatives to Roberts v Johnstone?

Accommodation Claims: Alternatives to Roberts v Johnstone? INTRODUCTION 1. ROBERTS v. JOHNSTONE is an imperfect solution to the award of damages to meet the substantial accommodation needs of catastrophically injured claimants. It has been the subject of review by the Law Commission and the Civil Justice Council. It has received some judicial criticism 1. The majority of the working party appointed by the Civil Justice Council to consider the issue concluded 2, The Injury Committee is unanimously agreed that Roberts v Johnstone does result in injustice and that reform is both necessary and achievable. 2. The injustice created by ROBERTS v. JOHNSTONE is most acute in claims brought by those with very short life expectancies, most notably infant claimants injured shortly before, at or shortly after birth. 3. The purpose of this paper is to consider the application of ROBERTS v. JOHNSTONE in these cases and to explore possible alternative solutions. We must recognise, however, that these issues do not exist within a legal vacuum: claimants and their families will have priorities and preferences which may not sit comfortably or at all with a proposed alternative solution; further, defendants and their insurers/the NHSLA will have understandable practical, commercial and reputational concerns regarding the implementation of any of these alternatives; finally, there is the difficulty of sourcing and 1 See the observations of Mr Justice Tugendhat in OXBORROW v. WEST SUFFOLK HOSPITALS NHS TRUST [2010] EWHC 1010 (QB) @ 47 there is considerable force in Mr Spencer s submissions [criticising ROBERTS v. JOHNSTONE]. 2 Civil Justice Council: Injury Committee Accommodation Claims: Roberts v. Johnstone (2010) ( 4) (copy attached).

securing funding to purchase a property (see solution 1) or a suitable rental property (see solution 3). THE HYPOTHETICAL ACCOMMODATION CLAIM 4. X is now 6 years old. His life expectancy, according to the paediatric neurologists, is probably to age 11 although that is subject to review in the event that he lives to age 11 or is found to have hydrocephalus. 5. X has considerable accommodation needs. The accommodation experts are agreed that he requires an adapted property which provides suitable and sufficient accommodation for X, his parents, his sister (Y) and his carers together with a therapy/sensory room, appropriate bathroom facilities for X, his family and his carers, sufficient storage space for his specialist equipment and appropriate parking/garage facilities etc. The experts are agreed that the likely purchase price of a suitable property is in the order of 500,000. Adaptation costs are put at 300,000. This is a very substantial part of the claim; suitable and appropriate accommodation is essential for X s future care. The experts are agreed that the most suitable option is the purchase and adaptation of an existing property. THE ROBERTS v. JOHNSTONE CALCULATION 6. The principles of the ROBERTS v. JOHNSTONE [1989] QB 878 CA calculation are easily recited and the calculation itself is easily performed. In the above scenario, assuming no betterment to the property, on a ROBERTS v. JOHNSTONE calculation, X would recover 2½% of 500,000 per annum ( 12,500) using a multiplier of 4.70, producing a capital allowance of 58,750 plus the adaptation costs of 300,000. On the face of it he would have 58,750 to fund the purchase of an essential property costing 500,000; he would have a shortfall of 441,250. 2

7. If the adaptations result in any significant degree of betterment to the property then X s award will be further reduced. By way of example, betterment of 50,000 would increase the 2½% annual allowance by 1,250 producing a total award over the five years of 64,625. However, once the betterment [ 50,000] is deducted, as it has to be, X would be left with 14,625. 8. It is plain that X s accommodation needs cannot be met and he cannot be fairly compensated by a ROBERTS v. JOHNSTONE. Adopting a ROBERTS v. JOHNSTONE approach X will not be compensated at all for his significant accommodation needs which are wholly attributable to the Defendant s negligence. The reality is (and was) that X would not have sufficient damages from his other capital awards to fund the purchase of a property on a ROBERTS v. JOHNSTONE calculation. ROBERTS v. JOHNSTONE THE DECISION 9. A copy of the Court of Appeal decision in ROBERTS v. JOHNSTONE is attached together with a copy of the first instance decision. The facts of the case are instructive: 9.1 The plaintiff was injured in utero as a result of the defendants admitted negligence. She suffered profound brain injury and cerebral palsy. She was born in 1981. She was 4 ½ years old when her claim was tried at first instance and 6½ years old by the time of the appeal hearing. 9.2 The only evidence presented as to life expectancy was that the plaintiff would survive a further 30 years from the date of trial. The multiplier for future losses was 16. 9.3 No award was made for loss of earnings as no claim for loss of earnings was brought (!!!!). 3

9.4 Prior to the trial the Official Solicitor (as Litigation Friend) had purchased a bungalow for the plaintiff using an interim payment. The capital of the interim payment was used to fund the purchase; there was no borrowing to fund the purchase. 9.5 The PSLA award plus interest alone represented 90% of the cost of purchasing the property. 10. We have to be clear as to what was decided in ROBERTS v. JOHNSTONE. The issue which the Court addressed was as follows: to compensate a claimant for the increased annual expense incurred in order to meet his accommodation needs should the Court adopt a rate based on the loss of investment return or a rate based upon notional borrowing costs where the claimant has purchased/will purchase a property out of his damages? The Court of Appeal was deciding which was the appropriate rate following the earlier decision in GEORGE v. PINNOCK [1973] 1 WLR 118 CA in which the Court had concluded that claimant was entitled to the increased annual expense. 11. There are three key factors which underpin the decision in ROBERTS v. JOHNSTONE: (i) the claimant had already purchased the property which was required and which was intended to meet her disability-related accommodation needs; the claimant had therefore already tied up her capital in the property which was not funded by any actual borrowing; (ii) the claimant s award for pain, suffering and loss of amenity together with the proceeds of sale of the claimant s parents existing property were more than sufficient to fully fund the purchase; (iii) the claimant had purchased the property using a substantial interim payment provided by the defendant. 12. A proper understanding and application of the decision in ROBERTS v. JOHNSTONE requires careful consideration of the loss which was being compensated and the appropriate measure of that loss on the facts of the case. 4

13. In ROBERTS v. JOHNSTONE, the fundamental objection to requiring the defendant to compensate the claimant for the purchase of the property (in full or in part) was that the claimant would still retain the capital awarded in the form of the property which would result in a substantial windfall to the claimant and/or her estate on death. In effect it would result in substantial overcompensation to the claimant and/or profit to the beneficiaries of the claimant s estate. 14. At first instance, Alliott J confirmed,... with the interim payment made in April this year, the Official Solicitor (who has been the plaintiff s next friend since 27 th August 1985) has bought an extremely pleasant bungalow to which the family has moved from their sub-standard rented accommodation. (p.4) Further, at p.24 of the Court of Appeal decision, Stocker LJ referred to notional annual mortgage interest. It is plain therefore that the claimant in ROBERTS v. JOHNSTONE had purchased the bungalow using an interim payment provided by the defendant without any actual borrowing; the claimant had in fact tiedup capital from her claim; she was not incurring any mortgage charges; her actual (as opposed to notional) loss was therefore loss of income on tied-up capital. 15. In ROBERTS v. JOHNSTONE and in GEORGE v. PINNOCK, part of the ratio was that the claimant should not recover the full value of the purchased property as that would result in a windfall to the claimant or to the claimant s estate on the claimant s death. On the facts of ROBERTS v. JOHNSTONE, a lump sum award calculated on the basis of notional mortgage interest charges would have produced an award exceeding the net cost of purchasing the property. Such an approach would have resulted in the very windfall which the Court considered was a fundamental objection to an award based on the full purchase price, and therefore contrary to the decision in GEORGE v. PINNOCK. 16. In GEORGE v. PINNOCK, Orr LJ held that there was no difference between the loss of income on capital tied up in the property and the annual mortgage interest which would 5

have been payable if capital to buy the bungalow had not been available. In ROBERTS v. JOHNSTONE, the Court of Appeal s task was to determine the appropriate rate for a GEORGE v. PINNOCK calculation (see p.24). 17. In addressing that issue, the Court of Appeal relied upon the comments of Lord Diplock in WRIGHT v. BRITISH RAILWAYS BOARD [1983] 2 AC 773 HL, in particular, In times of stable currency the rate of interest obtainable on money invested in Government stocks includes very little risk element. In such times it is, accordingly, a fair indication of the going rate of the reward for temporarily foregoing the use of money. By way of reminder, the issue in WRIGHT was identifying the conventional rate of interest to be applied to awards for damages for non-economic loss, that loss of interest reflecting the deprivation of access to those damages which could have been invested to produce an investment/interest return. 18. In adopting the then conventional interest rate of 2% as applied to damages for noneconomic loss, the Court of Appeal in ROBERTS v. JOHNSTONE explained, We are reinforced in this view by the fact that in reality in this case the purchase was financed by a capital sum paid on account on behalf of the defendants by way of interim payment, and thus it may be appropriate to consider the annual cost in terms of lost income and investment, since the sum expanded on the house would not be available to produce income. (pp.26-27). 19. The decision in ROBERTS v. JOHNSTONE reflects two fundamental principles: (i) a claimant is to be compensated for his actual loss - on the facts of ROBERTS v. JOHNSTONE the loss of investment/interest return on tied up capital; (ii) the claimant should not be overcompensated so as to produce a windfall to his estate. 20. If we return to X s case, X does not have sufficient capital to fund the purchase of the property he requires. As matters stand, he does not have a loss of earnings or a lost years claim. The Court s preference will always be to put as much of the award for future losses into a periodical payments order. X will need a reasonable contingency fund. He simply cannot buy the property he needs with a PPO award. However, it is 6

highly improbable that a Court would impose a PPO award the effect of which would be to prevent the Claimant having sufficient capital to purchase a necessary property. SOLUTION 1: THE DEFENDANT TO FUND THE PURCHASE A PROPERTY SUBJECT TO A CHARGE IN ITS FAVOUR 3 21. One of the Court of Appeal s principal concerns in ROBERTS v. JOHNSTONE was to avoid a situation whereby the claimant or his estate enjoy a windfall property from the retention of a capita asset, the property, which will probably have increased in value over time. 22. If a property is purchased with the compensator providing 100% of the purchase price but with the claimant granting a 100% charge in favour of the compensator then any windfall to the claimant or his estate would be avoided. It would ensure that the claimant s accommodation needs are met throughout his lifetime without any degree of speculation as to life expectancy, and enable the Court to award damages for the claimant s other future losses on a periodical payments basis. The claimant would have control and unrestricted occupation of the property during his lifetime with the defendant retaining security for its outlay in the form of the property itself. 23. The question will arise as to whether the Court it has the jurisdiction to make such an award/order. It is suggested that it does on the following basis. 24. The Court awards damages on the basis of the full purchase price of the property. Such an award was rejected in ROBERTS v. JOHNSTONE and in GEORGE v. PINNOCK because the Claimant would retain the capital of the award in the form of the property as at his/her date of death. If the windfall argument is addressed then there is no reason in principle why an award of the full purchase price cannot or should not be made. 3 Or in favour of the Defendant s insurers/nhsla or such other appropriate body. 7

25. The claimant or his Deputy can give an undertaking to grant to the defendant a 100% charge in respect of the property together with an undertaking that the property is to be transferred to the defendant within a defined period following the Claimant s death. That undertaking can be given to the Court (QBD) and/or the Court of Protection and/or can be reflected in an agreement between the parties. 26. The consequence of such an undertaking/charge is that the Claimant s estate will not benefit from a windfall following the Claimant s death (the ROBERTS v. JOHNSTONE mischief). The property will be restored to the Defendant who will benefit from the proceeds of sale which will include any profit attributable to an increase in value. The Claimant s reasonable needs, caused by the Defendant s negligence, have been met (the primary objective of any award of compensation in tort). The Claimant s actual loss, the additional cost of meeting his accommodation needs, has been compensated (the true loss issue in ROBERTS V. JOHNSTONE). 27. In terms of transferring the risk of a fall in property value to the Defendant rather than the Claimant, I would suggest that, if faced with a choice as to whether the tortfeasor or the victim should bear that risk, it is only reasonable and fair for the tortfeasor to bear it if and insofar as that risk is to be borne by anybody. 28. With regard to the validity and/or viability of the suggested undertaking/agreement, I refer to the Court of Appeal decision in PETERS v. EAST MIDLANDS STRATGEIC HEALTH AUTHORITY [2009] EWCA Civ 945. In that case, the Court of Appeal considered the issue of double recovery where the claimant sought damages for a privately funded care package in circumstances where she had received and it was suggested that she would continue to receive a substantial amount of state funded care. It would suggest that this is analogous to the risk of a windfall to the claimant s estate in ROBERTS v. JOHNSTONE and in the type of case under consideration: the Court will be keen to avoid a windfall to the claimant and/or her estate, just as the Court 8

of Appeal was keen to eliminate the risk of double recovery in PETERS. The Court is not being invited to impose an arrangement upon the defendant, nor is it being invited to make an award of damages for which it has no jurisdiction; it is simply being invited to make an appropriate award of damages with the confidence that an appropriate and enforceable undertaking from the claimant or his Deputy will avoid any windfall to the claimant or his estate. When analysed in those terms no issue of jurisdiction arises. 29. The windfall argument was the only objection to compensating the claimant for the full cost of purchasing the property in ROBERTS v. JOHNSTONE and GEORGE v. PINNOCK. One can appreciate and understand the force of that argument. However, if that argument is neutralised by the provision of an appropriately worded undertaking and/or agreement then it is difficult to identify a reason of principle as to why the full purchase costs could not and should not be awarded. SOLUTION 2: THE ACTUAL (AS OPPOSED TO NOTIONAL) COST OF BORROWING TO FUND THE PURCHASE OF A PROPERTY TO BE MET BY A PERIODICAL PAYMENTS ORDER 30. Pursuant to the Damages Act 1996, the Court has the power to order that any component of a claimant s future pecuniary losses is to be met by a periodical payment. Whilst periodical payments orders ( PPO ) are most commonly used for awards for future care and case management, there is no statutory or other restriction on their use for other heads of future loss. 31. ROBERTS v. JOHNSTONE and GEORGE v. PINNOCK are not authorities for the proposition that a personal injury claimant cannot recover the actual cost of borrowing to fund a property purchase. As set out above, in both cases the claimant had used his/her capital to purchase the relevant property; the claim advanced in both cases was for the notional as opposed to actual cost of borrowing. For the reasons given in 9

both cases, where the true loss is the loss of investment return on tied up capital, it is inappropriate to award damages on the artificial basis of notional borrowing costs. That does not address the situation where the claimant has borrowed or will have to borrow in order to fund a purchase. 32. In GEORGE, Orr LJ, giving the judgment of the Court on the accommodation issue, held, An alternative argument advanced was, however, that as a result of the particular needs arising from her injuries, the plaintiff has been involved in greater annual expenses of accommodation than she would have incurred if the accident had not happened. In my judgment, this argument is well founded, and I do not think it makes any difference for this purpose whether the matter is considered in terms of a loss of income from the capital expended on the bungalow or in terms of annual mortgage interest which would have been payable if capital to buy the bungalow had not been available. (emphasis added) (@ 125A-C). The recoverable loss is the additional annual expense of accommodation. Where that expense is the loss of investment return on tied up capital, as in GEORGE v. PINNOCK and ROBERTS v. JOHNSTONE, the appropriate measure of the loss is the loss of investment return. Where that expense is in fact the actual cost of borrowing to fund the purchase then is not the appropriate measure of the loss is the actual annual cost of borrowing? 33. Further, when ROBERTS v. JOHNSTONE and GEORGE v. PINNOCK were decided there was no jurisdiction to award damages on a PPO basis. The Courts therefore did not have the option of a form of award which could be tailored to compensate the claimant for the cost of borrowing which would provide the certainty of appropriate accommodation during the claimant s lifetime and which would avoid a windfall to the claimant s estate. In any event, in both cases the Court of Appeal was presented with arguments as to the notional, as opposed to actual, cost of borrowing. 34. It is difficult to interpret the decisions in ROBERTS v. JOHNSTONE and GEORGE v. PINNOCK to preclude an award of compensation for the actual cost of 10

borrowing. Neither can those decisions be interpreted or extended to preclude a PPO for the actual cost of borrowing to fund a property purchase. 35. There are numerous advantages to a PPO which covers the actual cost of borrowing; most notably, it will ensure that the Claimant has secure funding to meet his accommodation needs across his actual lifetime rather than relying on a capital award which reflects an inherently speculative prediction of life expectancy which will invariably be wrong. 36. A specific funding package will need to be identified in order for the terms of the PPO, in particular the indexation element, to be determined. Factual and expert evidence on that issue will be required. Lenders are reluctant to commit to the substantial work involved in proposing a bespoke funding package without sufficient comfort that the claimant will be in a position to meet his repayments under such a package with a PPO. In those circumstances, the Court should determine the issue of principle, namely the availability of a PPO award for the future cost of borrowing to fund a property purchase, subject to future consideration of evidence as to the actual cost of borrowing in the Claimant s case together with the issue of reasonableness in the light of such evidence. If the issue of principle is resolved in the claimant s favour then the claimant s advisers and the intended lenders can embark on the process of negotiating and evidencing an appropriate funding package with far greater confidence. I am not aware of any case in which this issue of principle has been considered. OPTION 3: RENTAL 37. It is wholly understandable that claimants and their advisers are reluctant to move to a rental property as a short, medium or long term solution to their accommodation needs: insecurity; restriction on ability to make adaptations; cost of further adaptations if forced to move; it s not our home ; etc. Many claimants and advisers proceed on the assumption 11

that they will not be able to get a property which can be adapted or which can offer a sufficient or a sufficiently secure tenancy period. However, the reality is that, whilst it is very difficult to find a rental solution, a solution can occasionally be found although it usually proves to be extremely expensive. 38. Consider the facts of X s case. It is predicted that he will require a rental property for five years. Is it inconceivable that a landlord would not be prepared to offer a five year tenancy if the rental income was sufficient to make it worth his/her while? Is it inconceivable that he would refuse the tenant the opportunity to adapt the property provided that a substantial premium was paid (as part of the rent or by way of stand alone premium) for the option to do so and provided that a deposit was paid or an undertaking given for the property to be restored to its original state? Whilst this is not commonly available in the rental property market, a solution can occasionally be found. 39. If the defendant argues that the Court is bound by ROBERTS v. JOHNSTONE (as it did in X s case) then the reality is that the claimant will be unable to purchase a property and will not in fact purchase the property which he requires. He will be driven to rent a property which cannot therefore be an unreasonable option, subject to the reasonableness of the costs involved. In a limited market with limited choice and with no other option, it will be difficult for the defendant to argue that enhanced rental charges and a restoration contingency are unreasonable. 40. Consider X s case: 40.1 Monthly rent: 5,000 40.2 Annual rental costs: 12 x 5,000 = 60,000 40.3 Multiplier: 4.70 40.4 Rental costs as capital award: 282,000 40.5 Adaptation costs: 300,000 40.6 Restoration budget: (say) 150,000 12

40.7 Total award: 282,000 + 150,000 + 300,000 = 732,000 41. That award would provide X with 432,000 for rental and restoration costs when it is predicted that a property purchase would cost 500,000 (plus fees and expenses). It does not offend the ROBERTS v. JOHNSTONE objection that the award should not produce a figure which exceeds the cost of purchasing the property (although it would place X in a position where he would have over 85% of the purchase price as a capital award). 42. The Court might wish to place the rental charges within the PPO. However, there would be a reasonable argument that they should be paid as part of the capital award in the interests of flexibility. OPTION 4: AN AWARD OF LOSS OF EARNINGS OVER THE LOST YEARS 43. As set out above, in ROBERTS v. JOHNSTONE the claimant was able to secure an interim payment which enabled her to purchase and adapt an appropriate property. She had a significant loss of earnings claim which could be/was used to fund the purchase. 44. As the authorities stand at present, an infant claimant injured at birth does not have a lost years loss of earnings claim: see IQBAL v. WHIPPS CROSS UNIVERSITY NHS TRUST [2007] EWCA Civ 1190. An infant claimant who is likely to live into adulthood does have a loss of earnings claim but,where his life expectancy is significantly reduced, he does not have a lost years claim. 45. In IQBAL, the Court of Appeal expressly held that the House of Lords decisions in PICKETT v. BREL [1980] AC 136 HL and GAMMELL v. WILSON [1982] AC 27 HL did not preclude the making of a lost years award to an infant claimant (injured at or shortly after birth): 13

In my judgment, Gammell makes quite clear, what might be said to be less clear from Pickett, that the age of the victim is not as a matter of principle relevant to the issue of whether or not a claim can be made for the lost years. Further, the lack of dependants cannot be a factor which defeats a claim for damages for loss of earnings in the lost years. When it comes to the assessment of damages for the lost years the issues are evidential and not matters of principle, In my view Gammell assists, by way of further explanation, the speeches of the House on this topic in Pickett. (Gage LJ @ 36) 46. The Court of Appeal in IQBAL expressly held that the earlier decision of the Court of Appeal in CROKE v. WISEMAN [1982] 1 WLR 71 CA was inconsistent with the House of Lords decisions in PICKETT and GAMMELL. In CROKE v. WISEMAN, the Court of Appeal had rejected a lost years claim brought by a nine year old claimant at the date of the appeal hearing. The Court of Appeal in IQBAL held that it was bound to follow CROKE v. WISEMAN and therefore rejected the lost years claim. The Court in IQBAL was unable to conclude that the decision in CROKE v WISEMAN was manifestly wrong. The doctrine of stare decisis dictated that the Court in IQBAL was bound to follow the previous decision in CROKE. 47. Until the Supreme Court is given the opportunity to consider the lost years issue in claims brought by infant claimants, first instance judges will be bound to follow IQBAL and CROKE and reject these claims. However, if such a claim were to find its way to the Supreme Court, there must be a reasonable chance that IQBAL and CROKE will be overruled. 48. The value of a lost years claim is that it could/would create a substantial capital fund which could part fund a property purchase. Consider X s claim: 48.1 Average annual earning: 26,884 gross 48.2 Net average annual earnings: 21,235 48.3 50% discount for X s living expenses: 10,617.50 48.4 Multiplier from age 18 to age 70: 28.61 14

48.5 Ogden discount: (say) 0.90 48.6 Discount for accelerated receipt (12 years): 0.7436 48.7 Lost years claim: 0.7436 x 28.61 x 0.90 x 10,617.50 = 202,292.81 4 49. A lost years award does not address the fundamental objections to the ROBERTS v. JOHNSTONE approach in these difficult cases, however, it offers some compensation which could be mitigate the effect of a ROBERTS v. JOHNSTONE award. If your case is going to the Court of Appeal or beyond on the accommodation issues, there seems little reason not to include a challenge to IQBAL and CROKE. EXPERT FINANCIAL EVIDENCE 50. The Court will be assisted by expert evidence on the ROBERTS v. JOHNSTONE issue, the availability of loan funding to purchase a property (the PPO issue), the accommodation issue generally and the issue of form of award. The Court will have to consider the issue of form of award in tandem with/in the light of its findings on the various heads of loss, in particular the accommodation claim. 51. In order to consider form of award the Court will require expert evidence from an Independent Financial Adviser. The Court could not approve a settlement of a claim without a report from an Independent Financial Adviser [see CPR PD 21 6.4(2)]. Determination of the accommodation claim will impact upon the issue of appropriate form of award and therefore Court will require and will be greatly assisted by expert evidence on these issues. THE WAY FORWARD 52. This issue is likely to be litigated at some point in the next few years. The high probability must be that it would go to the Court of Appeal, if not compromised prior to 4 This does not include any employer s compulsory pension contribution or pension income in the lost retirement years. 15

an appeal hearing. In every case you need to consider whether a ROBERTS v. JOHNSTONE approach operates to effectively deny the claimant the accommodation which he needs. The most obvious cases in which it will are those of claimants with a short life expectancy. This is the single point of agreement between the majority and the dissenting minority of the working party tasked by the Civil Justice Council to consider the issue of damages for accommodation claims: an alternative approach to accommodation claims was required where the claimant had a short life expectancy, the majority of that life expectancy was not in working age and there was a lack of available capital to fund a property purchase. The majority of the CJC working party concluded (see Executive Summary), 7. In the view of the majority, it is wrong in principle that a claimant is deprived, wholly or in part, of the use of funds for the purposes for which they were awarded as damages. It is no answer to say that the claimant still has the general damages because they are invested. He no longer has the use of them. He is entitled to be awarded and to have available for use compensation for pain, suffering and loss of amenity and for the additional accommodation costs resulting from the tortious act. General damages are awarded, in part, to be available to make the suffering and loss of amenity more bearable and comfortable by, for example, the purchase of extra facilities or comforts for which there has not been specific compensation. In cases (which occur more frequently than the minority contend) where there is a shortfall making it necessary for the claimant to have recourse not only to general damages but also to damages awarded for other needs (such as income or care), there is obvious injustice, as the minority recognise, of a serious kind requiring reform. It is also desirable to move away from the need, present in the R V J approach, to make artificial and uncertain estimates of life expectancy; and the use of the discount rate is open to question. The majority consider that the present state of the law is wrong in principle, fails to provide proper compensation and can create significant hardship. 16

8. As to the solution, the majority recommend that the law be changed so that the Court in its discretion can award damages on the basis (separately or jointly) of (i) a periodical payments order; (ii) an interest free loan; (iii) an R v J award. ACCOMMODATION AND INTERIM PAYMENTS 53. We would all readily concede that a suitably adapted property is the foundation of a suitable and sustainable rehabilitation and care package in catastrophic injury cases. An application will almost always be made for a substantial interim payment to fund the purchase and adaptation of a suitable property. Where prognosis is uncertain and/or life expectancy is short, it can be difficult to justify a substantial interim payment on an EELES stage one analysis. The Court will be sympathetic to the argument that the claimant needs access to a suitably adapted property at the earliest possible opportunity; the Court will be sympathetic to an EELES stage two analysis if the Claimant cannot bring the claim within EELES stage one. Does it follow that the Court will simply have to order an interim payment to fund the purchase and adaptation of a property and potentially tie the trial Judge s hands on the issue of form of award? The answer is plainly no. 54. Before making any order under EELES stage two, the Court must be satisfied that there is a real and urgent need to spend the amount sought in the manner proposed (see 38 and 45 of EELES and 42-43 of KIRBY v. ASHFORD AND ST. PETERS HOSPITAL [2008] EWHC 1320 (QB) (Swift J.)]. If an alternative appropriate solution exists then the Court cannot be satisfied that there is a real and urgent need to spend the amount sought in the manner proposed. 55. What if the defendant or his insurer offer to purchase a property for the claimant, to permit the claimant to occupy the property as a secure tenant paying a peppercorn rent with appropriate proposals to fund and facilitate appropriate adaptations, guaranteeing 17

the claimant s occupation of the property until the trial or for some other specified period? Would that be an alternative appropriate solution eliminating the need to purchase a property? My own experience is that, if the proposed solution is properly investigated, sensibly proposed and fully evidenced then the Court can find that a property purchase is not required. The attraction from the Court s perspective is that such a solution would not unduly restrict the trial Judge s ability to make a PPO in respect of any or any of the major heads of future loss. Byrom Street Chambers DARRYL ALLEN QC Manchester 12 th June 2014 18