The relevance of local living standards in the assessment of damages

News | Thu 29th Jun, 2017

What is the correct approach to the assessment of general damages in a case in which the Claimant resides abroad? Should the increased (or possibly lower) cost of living be taken into account and thereby result in an adjustment to the figures set out in the Judicial College Guidelines?

The decision of the Privy Council in Scott v Attorney General (2017) UKPC 15 provides some guidance. The Claimant was assaulted by officers of the Royal Bahamian Police Force. He brought proceedings for compensation for the injuries that he suffered as a result, which rendered him paraplegic because of a wedged compression fracture of his spine. He argued that because the cost of living in the Bahamas was higher than it was in England, the figures set out in the JC Guidelines should be increased by a fixed uplift.

The Privy Council held that there was no general principle that the guideline figures should be routinely increased to reflect different levels of the cost of living between England and the Bahamas. It considered that a prescriptive approach to the assessment of damages whereby they are determined by the rigid application of a scale which is then increased at a preordained rate is incompatible with the proper evaluation of general damages.

The court accepted and emphasised, however, that what is a reasonable sum in any given case must reflect local conditions and expectations. Accordingly, the Bahamian courts had to be responsive to the enhanced expectations of its citizens as economic conditions, cultural values and societal standards in that country change. However, the cost of living indices were not, it held, a reliable means of comparing the two jurisdictions even if one is attempting to achieve approximate parity of value in both. Cost of living varies geographically and may well do so between various sectors of the population. The incidence of tax, social benefits and health provision (among others) would be relevant to such a comparison. Furthermore, the court would require clear evidence of a difference in the cost of living between the Bahamas and England and would not take judicial notice of the same.

Although the case concerned the law of the Bahamas, it is useful reminder that in any case brought in England but involving a claimant resident abroad, the need for damages to be compensatory means that they should reflect local conditions so far as possible. However, clear evidence will be required in each case in order to demonstrate any differential cost.