Law of Torts
Assessment of Damages: Restitutio in Integrum, the Once and For All Rule, and the Heads of Loss
Two principles govern the assessment of damages in tort. The substantive principle is restitutio in integrum: to place the plaintiff, so far as money can do it, in the position he would have occupied had the tort not been committed. The procedural principle is the once and for all rule: this must be done in a single action and a single lump sum, covering the past and the whole of the future. The first is a legal fiction in every case of personal injury, since no sum restores a lost leg; the second compels a court to predict a future it cannot know.
Restitutio in integrum, the once and for all rule, the heads of loss, and earning capacity
1. Restitutio in Integrum
- The measure is the plaintiff's loss, and not the defendant's gain, his degree of fault, or his means. A gross wrong causing little loss produces a small award; a trivial lapse causing catastrophic injury produces a large one.
- It works well for property. Where a thing has been damaged or destroyed the loss can be priced, and the principle produces a definite answer.
- It is a fiction for personal injury. No sum of money restores a lost limb, a lost faculty or a lost year, and pretending otherwise leads to false precision.
- There the principle means fair and reasonable compensation, assessed by reference to comparable awards so that like cases are treated alike, which is the only form of consistency available where exact restoration is impossible.
- The two exceptions to the loss based measure are exemplary damages, which look at the defendant, and the M.C. Mehta rule, which scales the award to the magnitude and capacity of the enterprise.
2. The Once and For All Rule
- All damages arising from a single cause of action must be recovered in one action. A plaintiff cannot bring a second suit because his condition later worsened, because his treatment cost more than expected, or because he underestimated his loss.
- The award is a lump sum covering past loss and prospective loss together.
- The exception is a continuing tort, where a fresh cause of action arises at every moment during which the tort continues: section 22 of the Limitation Act, 1963. A continuing nuisance or a continuing trespass may therefore be sued upon again.
- The distinction is from a tort complete when committed which leaves lasting damage. A wall demolished once gives one cause of action, however long the rubble remains and however the consequences unfold.
⚠ Why the lump sum rule is criticised, and why it survives The rule compels a court to predict the future. It must decide how long the plaintiff will live, whether and for how long he would have worked, whether his condition will deteriorate or improve, what treatment will cost in twenty years, and what a sum invested today will yield. Every one of those predictions is certain to be wrong in one direction or the other, and the plaintiff bears the risk both ways: if he lives longer or deteriorates further than the court assumed, he runs out of money and cannot return; if he recovers or dies early, he or his estate retains a windfall. A system of periodical payments, reviewable as circumstances change, would plainly be more accurate. The rule nevertheless survives, and for reasons that are practical rather than principled. It gives finality, so that a defendant and his insurer can close the file and provide for the liability. It allows a claim to be settled, which the great majority are, and a periodical liability cannot readily be compromised. And a system of periodical payments requires machinery for review, security against the payer's insolvency, and enforcement over decades, none of which exists. |
3. The Heads of Loss
Pecuniary, already suffered | Pecuniary, prospective |
Medical and nursing expenses to date, proved by the bills | Loss of future earning capacity, on the multiplier method |
Loss of earnings from the date of the tort to the date of the award | The cost of future care: attendants, nursing, equipment, modifications to house or vehicle |
The cost of repair or replacement of property | Future medical expenses, capitalised and with an allowance for inflation |
Incidental expenses: transport, special diet, an attendant's travel | Loss of chance, where the tort destroyed a prospect the plaintiff had |
Non pecuniary | Property |
Pain, suffering and trauma, for the injury and for the treatment | Diminution in value, or the reasonable cost of repair, whichever is the lower |
Loss of amenities: the inability to do what the plaintiff could do before | Loss of use for the period of repair, or the cost of hiring a substitute |
Disfigurement, and loss of marriage prospects where the disability has that effect | Consequential loss that is not too remote |
Loss of expectation of life, and loss of consortium | Betterment may be deducted where the repair has left the plaintiff better off |
4. Loss of Earnings and Loss of Earning Capacity
- Loss of earnings is what the plaintiff has actually failed to earn, and is proved by evidence of what he was earning and for how long he was unable to work.
- Loss of earning capacity is the lasting reduction in his ability to earn, and it is compensable even where he has returned to the same job at the same pay.
- The reason is that his position in the labour market has been weakened. He is now less able to find other work if he loses this employment, is less able to change occupations, and is more vulnerable to an economic downturn or to his employer's goodwill running out.
- The distinction matters most for a young claimant with a permanent disability whose present employer has kept him on, and a court that awards nothing under this head because his salary is unchanged has answered the wrong question.
- Computation is on the multiplier method, applied to the percentage by which the capacity to earn has been reduced, which is not the same as the certified percentage of physical disability: TORT 085.
5. Loss of Chance
- Where the tort has destroyed a prospect rather than a certainty, the loss is the value of the chance, discounted by the probability that it would have come to anything.
- The doctrine is well established for a lost commercial opportunity: a lost chance to bid, to sell, or to obtain a benefit from a third party, where what was lost was the chance itself.
- It is far more restricted in personal injury and medical negligence, where the courts have generally required the claimant to prove on the balance of probabilities that proper treatment would have produced a better outcome. A claimant who shows only that his chance of recovery fell from forty per cent to nothing ordinarily recovers nothing, because he cannot show that he would probably have recovered.
- The distinction is between a chance dependent on the conduct of a third party, where the doctrine applies, and one dependent on what would have happened to the claimant himself, where the ordinary balance of probabilities test governs.
6. Non Pecuniary Loss
- These heads cannot be computed, only assessed, and the object is consistency between comparable cases rather than arithmetical accuracy.
- Pain and suffering requires that the plaintiff be aware of it, so an unconscious plaintiff recovers little or nothing under this head.
- Loss of amenities is objective, and is compensated whether or not the plaintiff is aware of what he has lost, because the loss of the faculty is itself the injury.
- Loss of expectation of life is a conventional sum and is deliberately modest, the courts having declined to value a shortened life by any arithmetical method.
- The awards in India are considerably lower than in England, and the relevant comparison is with Indian awards in comparable cases rather than with foreign figures.
7. The Position Stated Shortly
1. Restitutio in integrum is the governing principle: to place the plaintiff, so far as money can, in the position he would have occupied had the tort not been committed.
2. The measure is the plaintiff's loss, and not the defendant's gain, fault or means, save for exemplary damages and the M.C. Mehta rule.
3. The principle works for property and is a fiction for personal injury, where it means fair and reasonable compensation assessed against comparable awards.
4. The once and for all rule requires all damages from a single cause of action to be recovered in one action and awarded as a lump sum.
5. The exception is a continuing tort, where section 22 of the Limitation Act, 1963 gives a fresh cause of action at every moment.
6. The lump sum rule is criticised because it compels prediction, and survives because it gives finality and allows settlement.
7. The heads are pecuniary loss already suffered, prospective pecuniary loss, non pecuniary loss, and property loss.
8. Loss of earning capacity is distinct from loss of earnings and is compensable even where the plaintiff has returned to the same job at the same pay.
9. Loss of chance is well established for a lost commercial opportunity and restricted in personal injury, where the balance of probabilities governs.
10. Pain and suffering requires awareness; loss of amenities is objective and is compensated whether or not the plaintiff is aware of it.