Overseas Claimants – Cross-border Quantum 

Quantum is rarely straightforward where a seriously injured claimant lives abroad. Assumptions which may apply in a domestic personal injury claim (about taxation, earnings, care, treatment, accommodation, benefits and periodical payments) can quickly become unreliable once the claimant’s life and losses are based in another country. The result is that apparently familiar heads of loss may require foreign law, employment, immigration, actuarial, economic or local expert evidence. This Insight highlights the main cross-border issues to spot early.

Where would the Claimant have lived, but for the injury?  And where will the Claimant live now?

These are factual issues which will be relevant to the assessment of losses such as loss of earnings.  If the claimant was injured when in England for work or study, would she have continued living in England?  If the claimant is currently living in another country, will she continue to live there for the duration of her losses?  There may be a role for expert evidence in respect of these factual issues.  For example, an employment expert might be required to assist on whether temporary work in England would have continued to be available.  Or an immigration expert may be required to help the court on whether the claimant could have remained living in England, or will be able to stay where she is currently living.

Should loss of earnings earned abroad be calculated gross or net of taxation?

If there is a claim for loss of earnings abroad, the impact of taxation needs to be considered. Self-evidently, income earned abroad may be taxed differently from the UK tax regime or even not taxed at all.

The rule in British Transport Commission v Gourley [1956] AC 185 is that calculation of personal injury damages for loss of earnings must take into account the tax which would have been payable on them, i.e. be net of tax.  Two factors are required for the rule to apply:

1. the sums lost being compensated would have been subject to tax; and
2. the damages awarded would not themselves be subject to tax.

Both factors need to be present to avoid double recovery or under-compensation.  Note that the burden of proof is on the defendant to show that the factors are present so the damages should be net of tax: Stoke-on-Trent County Council v Wood Mitchell [1980] 1 WLR 254 CA.

In order to prove the foreign taxation position, foreign law expert evidence will be required.  In Mathieu v Hinds [2022] EWHC 924, the parties could not agree on where the burden of proof lay in respect of proving what the foreign tax law was.  It was held that the lack of evidence on the complex issues of foreign (Canadian) tax law meant it could not be said that it was clear beyond peradventure that the damages would not be taxed.  The loss of earnings in Canada was therefore assessed gross of tax.

Are there special features to justify a different discount rate?

The factors which are fed into the decision on a discount rate for future losses may be significantly different if the award is to be received abroad e.g. investment rate of return, allowance for tax, real earnings growth, price inflation.  Under s.A1(2) of the Damages Act 1996, the court has the power to take into account a different rate of return if any party shows it is more appropriate.

The test for the application of this power was considered in Harries v Stevenson [2012] EWHC 3447.  A party needs to show that the claim falls into a category which the Lord Chancellor did not take into account or has special features which are material to the choice of the rate of return and are shown from an examination of the Lord Chancellor’s reasons not to have been taken into account.

There is not yet any reported case in which the court has been persuaded to exercise that power.  In order to mount the argument that the foreign country has materially different special features, it is likely that actuarial and economist expert evidence will be needed.  The cost of such evidence will be high and proportionality will undoubtedly need to be taken into account at the case management stage.

How should foreign social security benefits be dealt with?

This is a complex area which will be the subject of a more detailed Insight.  The general rule is that, under the common law, there should be deduction of such benefits from damages (Hodgson v Trapp [1989] AC 807 HL).

However, in some circumstances, the claimant will be legally obliged to repay the benefits to the funder, in the event of recovering damages.  In those circumstances, the benefits will not be deducted (Berriello v Felixstowe Dock [1989] 1 WLR 695).

Further, the benefits may be directly recoupable from the defendant by the foreign funder.  This will depend on the relevant social security legislation, and the issue may well require expert foreign law evidence.

Will the availability of non-private medical care be disregarded?

If the claimant has access to overseas state-funded or state-subsidised medical treatment, that availability is generally not to be disregarded, but is to be taken into account, in considering whether private medical expenses are or will be reasonable.  This is because the statutory disregard of state care under s.2(4) of the Law Reform (Personal Injuries) Act 1948 only applies to facilities available under the National Health Service Act 2006 (and corresponding NHS legislation for Wales, Scotland and Northern Ireland).  This can have a substantial impact on the assessment of costs of treatment and care.

Should UK-based non-medical experts be instructed?

For many quantum issues, such as care, accommodation and deputyship costs, careful attention will need to be paid to the reality on the ground in the foreign state where the claimant lives, and whether it differs from the assumed position in domestic personal injury cases.   For example, local working regulations may preclude UK shift patterns for carers; case managers may be unknown; bungalows may not be readily available housing stock; professional deputies may not be permitted.  In such cases, consideration should be given as to whether UK experts can genuinely assist the court with expert evidence, or whether foreign-based experts ought to be instructed instead.

Is a suitable wage-related index available for a PPO?

Finally, where the claimant lives may affect whether a PPO is suitable.  In A v Powys Health Board [2007] EWHC 2996, a lump sum award was made rather than a PPO, because an appropriate wage-related index was not (then) available for Ireland, where the claimant and her family had moved soon after her birth injuries.  If the question of whether a suitable wage-related index is available is likely to be in issue, then expert evidence will be required (as was recognised in Mealing v Chelsea & Westminster Healthcare NHS Trust [2008] EWHC 1664, where there was an intention to move to France).

The common thread is that cross-border quantum issues should be identified early. Where the claimant’s life, losses or future needs are based abroad, domestic assumptions may not hold, and targeted local or specialist evidence may be needed to avoid over- or under-compensation.