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Injury Law - “Who cares?”: Who should foot the bill for injured Claimants’ care and accommodation in the light of

By : Charles Bagot

A consideration of the case of Sowden v. Lodge [2004] EWCA Civ 1370 and the debate about whether local authorities or insurance companies should fund care and accommodation for injured Claimants.

The debate as to whether local authorities or tortfeasors' insurers should pay for the care and accommodation needs of injured Claimants rages on. The recent case of Sowden v Lodge [2004] EWCA Civ 1370 highlights three competing legal principles in this area and the increasing tension in reconciling them:

  1. The principle of 'full compensation', i.e. that: 'a tortfeasor must meet the claimant's reasonable expenses in coping with the injury that he has caused…' Put differently, the Court must award damages so as to put the Claimant back into the position he would have been in, but for the Defendant's tort.
  2. The principle that a Claimant can normally only recover for actual losses and a Claimant has no claim where the loss will be made good from a source other than the tortfeasor.
  3. The extent to which the state should be able to recoup the cost of providing care from those in receipt of compensation or compensators themselves.

There are ever increasing legislative obligations on local authorities to provide care for those who cannot care for themselves. It is clear that those in need have become more aware of their rights and more prepared to enforce them against public bodies. However, Defendants and their insurance companies facing compensation claims are also alive to local authorities' obligations and are seeking to offset the often very substantial cost of ongoing private care and accommodation claims.

The decision in Sowden highlights the contradiction of principle between claims for medical expenses and claims for the cost of care. It is not open to a Defendant to argue that it was unreasonable for the Claimant to incur the private cost of medical treatment, as opposed to relying on the NHS (Section 2(4) of the Law Reform (Personal Injuries) Act 1948). However, Sowden confirms that it is open to a Defendant to challenge whether it is reasonable to incur the private cost of care and accommodation in view of local authorities' obligations to provide for these needs.

Whilst there are of course some circumstances in which public bodies can claim back sums expended on injured Claimants (state benefits and capped NHS charges via the Compensation Recovery Unit), they are not yet able to claim back the cost of care provided from tortfeasors' insurers. The Law Commission has pressed for the law to be changed to permit the recovery of full state provision from insurers (at least for medical expenses), but it has not happened yet. There was judicial support for this change in Sowden, although the Lords Justices made it clear that this is a matter for Parliament and not the appeal courts. However, for a long time local authorities had the power to require a Claimant to repay the value of care provided from his or her own resources or compensation award.

The position changed with the National Assistance (Assessment of Resources) (Amendment) Regulations 1998. Claimants are now able to ring fence damages awards which are administered via the Court of Protection (Patients or Children) or within a 'Personal Injury Trust' (any Claimant who chooses to set up a Trust) and avoid recoupment. However, Defendants have used this legislation to argue, successfully, that a Claimant cannot recover as damages, the cost of care provided by a local authority as the Claimant has not and will not in fact incur any loss. Whilst this argument was held to be sound in Sowden, the Judges did question whether this was the intention of those enacting the 1998 Regulations. Longmore LJ lamented:

'I did occasionally wonder during the hearing whether it was really the intention of the draftsman of the 1998 regulations not merely to ring-fence an award of damages, once made, so as to ensure that such award should be unavailable to local authorities providing or paying for care services to a claimant but also to achieve the result that, because no claim to recoup themselves from such an award could be made by local authorities, a defendant tortfeasor was to be under no liability to compensate a claimant for the cost of such services.'

It was for this reason that the Court of Appeal impliedly put its weight behind the Law Commission's original proposals for a change in the law, whilst noting that this was not a matter for the courts.

Hence, Sowden is on the face of it good news for Defendants. If local authority provision is held to be adequate and is found by the Court to equate to a Claimant's reasonable needs, a Defendant's argument that the Claimant has sustained no loss will defeat a claim for private care costs. Equally, even if a Claimant's needs are held to exceed local authority provision, a Defendant will only be required to pay the 'top-up' cost of augmenting the basic care provided out of public funds.

The Court reiterated in Sowden that the test for assessing damages is what the Claimant establishes that he 'reasonably needs'. It is not what is objectively 'in a Claimant's best interests' which is a different (often higher) test. One often sees experts, particularly care experts, referring to a Claimant's 'best interests' or even those of his or her family. It is suggested that it would be wise to set out the appropriate test in letters of instruction to even experienced experts.

Defendants cannot simply sit back and argue 'no loss' or a failure to mitigate if a Claimant does not investigate and enforce the local authority's obligations to provide care. Whilst Claimants must prove what their reasonable needs are, there is no legal burden on them first to disprove that statutory provision will be adequate. It is for a Defendant who says that local authority provision is sufficient (or only 'top-up' care is required) to set this out in clear terms prior to Trial and to argue the point. The parties will need to advance cogent evidence of how the respective regimes for care and accommodation proposed by them will operate. In most cases, positive evidence will be necessary to demonstrate what the local authority would provide (or could be required to provide) pursuant to Section 21 of the National Assistance Act 1948 as amended. Presumably this could be achieved either by requiring the local authority to carry out an assessment or by engaging a care expert to state what a reasonable Section 21 assessment would provide. Both are likely to be necessary and disputes will of course arise. Local policies and resources will need consideration. It is to be expected that local authorities will be swamped with requests for assessments in high-value cases, in the light of Sowden. Reliance upon expert opinion to give a guide to the likely assessment will be a good port of call as a starting point for both parties.

There is an additional point which the Courts must consider and that is whether local authority care alone, or in conjunction with 'top-up' care paid for by a tortfeasor is practical and feasible. In Crookdale v Drury, the conjoined appeal heard with Sowden, the Court of Appeal upheld the Trial Judge's finding that reliance upon local authority care was not appropriate, nor was 'top-up' care workable. The Judge noted that the Claimant in that case was 'particularly demanding' and that he had to be handled 'with great sensitivity'. This was one factor in the decision as to whether his reasonable needs required private care. The Claimant in that case stressed the practical difficulties of attempting to manage and co-ordinate a care regime in which two different sets of carers, employed by separate employers, are expected to operate together. However, Claimant advisers should not assume that in the case of a 'particularly demanding' Claimant, private care will routinely be recovered. The Claimant in Crookdale was assisted by the failure of the Defendant to advance evidence of what the local authority would have provided and had this been done it might have undermined the Claimant's case. Equally, those advising Defendants would be wise in future to marshal evidence of statutory provision well before trial and set out a positive case, at the latest in the final counterschedule.

The present uncertainty will not benefit either side. It is not in the interests of either party to be forced into an expensive and difficult evidential tussle about how to value local authority care and the 'top-up' in a particular case. Litigation will be delayed by a back-log of local authority assessments. Claimants will be exposed to greater risk and will find it more difficult to value cases accurately and within a reasonable timescale. It is not in insurers' interests to have to pay for the costs of adding significant complexity to the task of valuing care and accommodation claims. Neither is it in their interests for less cases to be compromised by reason of these difficulties. Legal costs per case will increase. Longmore LJ in Sowden referred to the views expressed by Harvey McGregor QC in his Law of Damages:

'this is an area of law where it is doubtful whether there is any real utility in unravelling the intricacies which need to be resolved.'

The law is not just in a state of flux, it is in a mess. Sowden will not be the last word in the ongoing debate about the relative merits of the competing and frankly contradictory legal principles in this area. The issue is whether society wishes to pay for injured Claimants' care through taxation or via increased insurance premiums. The Courts have made it clear that they are struggling do justice between Claimants and compensators whilst these conflicting principles remain and that Parliament should intervene:

'It seems to me that only by legislation can any rationality be brought to this problem. Meanwhile the courts have to do their best to keep the anomalies to a minimum' (Scott Baker LJ in Sowden).

Longmore LJ indicated that he thought it unlikely that Parliament intended for the financial burden of paying for care to shift from tortfeasors' insurers to local authorities. He went on:

'It might be thought that it would be more appropriate for legislation to provide that both NHS Trusts and local authorities could recover the costs of medical expenses and care respectively from the tortfeasor as the Law Commission recommended (at any rate in relation to medical expenses) in 1999.'

There is likely to be an outcry by local authorities overwhelmed by requests for 'Section 21' assessments and facing the prospect of paying for care and accommodation in many more cases. This, more than any amount of judicial comment, is likely to prompt further legislation to clarify this area. Expect insurance premiums to rise!