Manny Helmot a former Commonwealth Games track cyclist was awarded £13.7 million in personal injury compensation by Guernsey’s Court of Appeal last month. This is the largest personal injury award in the UK. Mr Helmot suffered serious injuries after he was hit by a speeding car as he rode his bike in Guernsey. As a result of the accident he has lost the use of his right arm and has been rendered partially blind. He is unable to walk, cycle or work and needs 24 hour care for the rest of his life.
He was originally awarded £9 million which was increased by the Guernsey Court of Appeal to £13.7 million , the bulk of which is to cover for his future care costs. This award is so high because of the special circumstances applying in Guernsey. Normally the Guernsey Courts would follow the approach taken by the English and Welsh Courts in the way they assess amounts of compensation to be awarded for catastrophic injury cases. However in Mr Helmot’s case the Guernsey Court of Appeal departed from the English approach for several reasons.
Firstly it felt that the cost of care in Guernsey was likely to be higher than in mainland UK so Mr Helmot would need more money to fund the care package he needed for the rest of his life.
Secondly it took into account the fact that since the credit crunch the interest and returns on investments have fallen, particularly in Guernsey. Normally personal injury victims with a lump sum of money will be expected to invest that money and use the investment returns to fund their needs along with the original capital.
Accident victims in this situation are not expected to invest in risky investments but in England they are expected to be able to make a return of around 2.5% and that is factored into the amount awarded. The Guernsey Court of Appeal felt that this was too high and that the investment returns are likely to be lower meaning that a larger lump sum was needed to off set against the fact that there will be lower investment returns to fund Mr Helmot’s care needs.
The Guernsey Court also needed to award a higher amount than English Courts would normally do because in Guernsey there is no provision for periodical payments. In catastrophic cases in England and Wales the Court can make periodical payment awards, that is to say annual payments by the Defendant’s insurer, which can increase with inflation, in order to fund care packages. Such an arrangement means that the lump sum which is awarded will be lower when the care is being funded by periodical payments. That device was not available to the Guernsey Court so a larger lump sum was required.
All of this means that Mr Helmot’s award was considerably higher than it may have been in England or Wales and the English Courts are not required to follow the Guernsey approach which was very much influenced by the special circumstances in Guernsey. However it may be open to English Lawyers to argue that investment returns available to English or Welsh Claimants are reducing in the wake of the credit crunch so their lump sum awards should be increased to reflect this.
If awards in the UK in these types of cases did go up generally then insurers would probably have to raise their premium levels but it remains to be seen whether the English and Welsh Courts do adopt any of the Guernsey approach because they are not bound to do so.