Wells v Wells
Damages for future losses in personal injury cases should be calculated on the assumption that the claimant will invest the money in index linked government stock, so the discount rate should be lower.
Facts
The House of Lords heard three appeals by claimants who had suffered serious injuries and would need care for the rest of their lives, including Mrs Wells, a nurse who suffered brain damage in a road accident. The question was how their damages for future losses should be calculated, and in particular what discount rate should be used to reflect the fact that the claimants would receive their damages as a lump sum, which they could invest.
Legal principle
The House of Lords held that the discount rate should be based on the return from index linked government stock, which was about 3 per cent, rather than the 4 to 5 per cent assumed for investment in equities. Lord Lloyd said that claimants are not ordinary investors, because they need to be certain that their damages will meet their needs, and that the purpose of damages is to put the claimant in the same position as if he had not been injured, so the claimant should not be expected to take investment risks. The discount rate is now set by the Lord Chancellor under the Damages Act 1996.
Related cases on defences and damages
- Baker v TE Hopkins & Son Ltd [1959] 1 WLR 966
- Dann v Hamilton [1939] 1 KB 509
- Froom v Butcher [1976] QB 286
- Gray v Thames Trains Ltd [2009] UKHL 33, [2009] 1 AC 1339
- H West & Son Ltd v Shephard [1964] AC 326
- Haynes v Harwood [1935] 1 KB 146
- Henderson v Dorset Healthcare University NHS Foundation Trust [2020] UKSC 43, [2021] AC 563
- Imperial Chemical Industries Ltd v Shatwell [1965] AC 656
Studying tort law? Our tutors help you understand and apply cases like this in essays, problem questions and exams. Request a quote or browse our law notes.
This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
