Date: Thu, 24 Jul 2003 16:32:39 +1000

From: Harold Luntz

Subject: New PC decision on Libel Awards

Jason's response to my brief comment calls, I fear, for a lengthy reply - one much longer than I can give here. It raises three questions:

1. Did Lord Hoffmann gratuitously bring in to this case issues relating to damages for non-pecuniary loss in personal injury cases?

2. Is it relevant to the measure of damages for non-pecuniary loss to consider who actually pays the damages?

3. What is meant by "compensation" for non-pecuniary loss?

Let me try to answer them as briefly as I can. By way of preliminary let me say that Lord Hoffmann was speaking on behalf of a unanimous PC (the days when dissenting judgments were not allowed in the PC ceased in 1965, I think it was). Presumably four other judges endorsed his remarks.

1. This is the easiest to answer. The argument before the PC was that, in assessing the damages for libel in this case, the Jamaican courts wrongly refused to consider the level of damages for personal injury. The PC held that the Jamaican courts were not wrong in so doing. It was clearly relevant to explain why this was so. One of the reasons given was that personal injury damages may be influenced by factors that may not have the same weight in libel cases. So it was relevant to consider what differences there are between the damages awarded in the two types of case. One answer given by Lord Hoffmann is that personal injury judgments are mostly paid by insurers, not the defendants themselves, and the premiums are not very sensitive to claims. Libel damages, on the other hand, may be paid by the defendants themselves or, if paid, by insurers, premiums are likely to be adjusted. This could account for differences between the types of judgment.

2. Jason says this is all irrelevant in "a judgment that purports to being about doing justice as between the joined parties". He invokes some authority against the use of distributive justice. That authority is found in a dissenting judgment. Be that as it may, let me also invoke authority, a much more concise statement: "The law should, so far as possible, avoid fictions" (Kirby J in Pyrenees SC v Day (1998) 192 CLR 330 at [231]). We all know that most personal injury damages are not paid by the named defendants. The damages are paid from insurance premiums or the prices of goods and services for which all of us pay. Leaving aside non-pecuniary damages, the tort system redistributes wealth from the poor to the rich because damages are largely earnings-related. When two people buy a defective product in the supermarket, they pay the same price, but the higher earner of the two receives larger damages if unable to work in consequence. I doubt that Lord Hoffmann was particularly concerned about his own car insurance premium (in any event, he was - maybe still is - a noted bicycle rider). He was probably more concerned about the poor motorist who may be unable to afford the premium to run a car at all if damages are not kept to a level that society can afford or the sick person who can't be treated in a NHS hospital because resources have been diverted to paying damages.

3. Even if one were concerned with pure corrective justice, what does compensation for non-pecuniary loss really mean? Years ago, Patrick Atiyah, in a remark recently quoted with approval by the Panel that reviewed the Law of Negligence in Australia, said:

There appears to be simply no way of working out any relationship between the value of money - what it will buy - and damages awarded for pain and suffering and disabilities. All such damages awards could be multiplied or divided by two overnight and they would be just as defensible or indefensible as they are today.

In other words, when the Supreme Court of Canada fixed the upper level of damages for non-pecuniary loss in Canada at $100,000 (since increased only for inflation), they could just as well have chosen $200,000 or $50,000 and no one could say they were definitely wrong. The English Law Commission tried valiantly to arrive at the "appropriate" level of compensation in their report in 1999, commissioning (non-armchair) empirical research, including Hazel Genn's "How Much is Enough?" They recommended that legislation should be avoided, but failed to completely convince the five experienced judges (not including Lord Hoffmann) in Heil v Rankin [2001] QB 272 (CA) to increase the level as much as they wanted it to be. Maybe we would all (or some of us - "armchair empiricism"?) like to see more damages paid to injured persons, but if the courts do it, that too is a political judgment, which can't be avoided. If the level of damages is increased by the judges, we must recognise it as a form of taxation without representation. We in Australia are presently seeing a democratic backlash against what is perceived to be over-generous compensation by judges. Much of it is misguided and due to false perceptions, but the parliaments are giving effect to the wishes of those who squeal loudest.

Harold Luntz.

At 02:17 PM 23/07/2003 -0400, Jason Neyers wrote:

Dear Colleagues,

Harold Luntz wrote:

If the full passages at para 51 ff referred to by Jason are 'armchair empiricism', I'm all for it. Can one seriously quarrel with para 51 itself?

It depends by what one means by quarrelling with the paragraph. Yes it is probably true (I don't know for sure) that those who suffered their injuries at the hands of a tortfeasor as a whole are "better off" than those who suffered their injuries through accident. It is also probably true that some (though not all) of us would hope that our societies were ones who treated those suffering the same as matter of the support they received from the government (i.e. as a matter of distributive justice based upon suffering). In fact, I also suppose that many of us would vote for a party that promised to repeal tort law (which is based on principles of fault and compensation) and replace it with some form of injury insurance that would treat all suffers the same. But the point is that we (Can, Aus, Jam, Eng etc) have not chosen to do so but rather to keep our current mix of tort law and social programs.

Given that this is the political choice we have made, I think that one can quarrel with the inclusion of such a paragraph in a judgment that purports to being about doing justice as between the joined parties. I would think that the judges job (what they swore to do) was to figure out what tort law demands, with its emphasis on fault and its search for compensation, rather than to figure out whether or not the answer that tort law demands would be considered fair to those who were not injured through the fault of another, what I elect politicians to do.

When looked at from this perspective, the entitlements that I get from the state for no fault suffering have no real bearing as to whether or not $X in general damages is in fact compensatory to the wrong that was committed against me. Nor does the issue of where the general damages come for (the tortfeasors pocket, private insurance, or public insurance) tell us whether or not they were truly compensatory and therefore correct as a matter of law. As Lord Goff noted in White dealing with a similar fairness claim by Lord Hoffmann:

I sense that the underlying concern, which has prompted a desire to introduce this new control mechanism, is that it is thought that, without it, the policemen who are plaintiffs in the present case would be "better off" than the relatives in the Alcock case who failed in their claims, and that such a result would be undesirable. To this, there are at least three answers. ... Third, however, it is in any event misleading to think in terms of one class of plaintiffs being "better off" than another. Tort liability is concerned not only with compensating plaintiffs, but with awarding such compensation against a defendant who is responsible in law for the plaintiff's injury. It may well be that one plaintiff will succeed on the basis that he can establish such responsibility, whereas another plaintiff who has suffered the same injury will not succeed because he is unable to do so. In such a case, the first plaintiff will be "better off" than the second, but it does not follow that the result is unjust or that an artificial barrier should be erected to prevent those in the position of the first plaintiff from succeeding in their claims. The true requirement is that the claim of each plaintiff should be judged by reference to the same legal principles.

Harold Luntz
Professorial Fellow
Law School
The University of Melbourne
Vic 3010

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