Calculating Consequential Damages

[Elvisbarney]

Is there an agreed, standardised method of calculating consequential damages in a legal award?

I ask because,having recently secured a ruling in my favour against the actions of a firm of solicitors, I am in disagreement regarding the calculation of my claim for damages in respect of travel expenses and 'loss of investment.'

My travel sums are based on the HMRC, industry and legal-wide accepted figure of 45p per mile, which includes a calculated amount for fair,wear and tear for use of one's own vehicle.
The adjudicator has used a bizarre calculation based upon the average petrol price over the relevant six-month period, and the average mpg for the vehicle I made use of, with no depreciation allowance.

Similarly, my loss of investment was submitted on the basis of the accepted court award of 8%.
The adjudicator chose to search the investment market at the time and quoted on the basis of an available Savings Bond at the time of approx 1.5%.

If endorsed, then I am out of pocket due entirely to the rogue actions of a solicitor firm.

My question is: Can the adjudicator adopt their own criteria in deciding an amount, or should they endorse the accepted levels which I believe would be quoted in a formal court?

Any guidance greatly appreciated in advance.

[Dod101]

I have no idea about the answer to your question but I am intrigued by your claim for 'loss of investment'. I assume you are referring to the lost opportunity cost. If so that is as long as a piece of string and personally I think the adjudicator's calculation is as good as yours. It depends of course over what length of time you claim you were out of pocket and so on, but I assume you are both talking about per annum rates. I think you are lucky to get anything under that head because you could just as easily have lost 8% as gained it.

I hope some legal brain might be along shortly to give you an answer and I will be interested to read what they have to say.

Dod

[Elvisbarney]

Yes Dod101, I am referring to a 6 month delay when under normal circumstances I would have received proceeds of a property sale. The adjudicator has accepted the delay was due entirely to the solicitor's negligence. I have seen courts awarding costs as per the hypothetical 8% but not sure if the level is set in stone.

[Dod101]

You say that you 'have seen Courts'...........But you did not apparently submit the case to a Court; it was submitted for adjudication and presumably you agreed to that as a relatively inexpensive way of resolving your claim. I do not see, just because you do not like the result, why you should be able to challenge it. That is surely the point of adjudication; to resolve relatively small claims without too much expense.

BTW I can see your issue but I do not see that you can do much about it.

Dod

[pochisoldi]

Is there an agreed, standardised method of calculating consequential damages in a legal award?

I ask because,having recently secured a ruling in my favour against the actions of a firm of solicitors, I am in disagreement regarding the calculation of my claim for damages in respect of travel expenses and 'loss of investment.'

My travel sums are based on the HMRC, industry and legal-wide accepted figure of 45p per mile, which includes a calculated amount for fair,wear and tear for use of one's own vehicle.
The adjudicator has used a bizarre calculation based upon the average petrol price over the relevant six-month period, and the average mpg for the vehicle I made use of, with no depreciation allowance.

Similarly, my loss of investment was submitted on the basis of the accepted court award of 8%.
The adjudicator chose to search the investment market at the time and quoted on the basis of an available Savings Bond at the time of approx 1.5%.

If endorsed, then I am out of pocket due entirely to the rogue actions of a solicitor firm.

My question is: Can the adjudicator adopt their own criteria in deciding an amount, or should they endorse the accepted levels which I believe would be quoted in a formal court?

Any guidance greatly appreciated in advance.

I think you might have gone OTT with the mileage rate and loss of opportunity interest rate.

1) Mileage:
I know this is not a tax case, but using the HMRC figures and terminology helps cut to the chase...
There are three possible figures for "per mile" recompense

45p per mile: Represents a proportion of the financing costs, running costs, and fuel in the tank.
25p per mile (HMRC rate for miles over 10k): Represents running costs and fuel in the tank.
"Advisory fuel rate": Cost of fuel in the tank. (depends on fuel prices and engine size)

You've highballed at the 45p rate
You've been offered the "advisory fuel rate"

You should be getting the middle rate - you are being compensated for the additional running costs incurred.
You already own and carry the financing costs yourself, and any additional miles don't increase this.

Or put this another way - you are claiming a payment for additional costs incurred, not all the costs incurred.

2) Interest rate
Again you are looking for compensation for the loss of use of the money due to the money being tied up.
Once again, you've highballed it at 8%, and you are being lowballed at 1.45%.

Their lowball offer assumes that you would have stuck the money on deposit for 6 months. If this was the case, then take their offer

If the reality was that you could have got a higher cash savings rate and can prove it, wasted/unused pension allowances, wasted/unused stocks and shares ISA allowances, then push for more.

Don't run away with average stockmarket returns, because over a 6 month period you could have made a loss!

In short, IMHO 45p/mile and 8% are both too high, and would result in you making a consequential profit, rather than being compensated.

If I were in your shoes, a more realistic ask would be:
Mileage: 25p per mile because:
a) The offered amount does not take into consideration the full "per mile" running costs of the car (tyres, brakes, increased servicing frequency).
b) The HMRC "Mileage Allowance Relief" rate for >10000 miles per annum takes this into account and provides a convenient reference amount.

Interest claim - examples only
"3.25% AER compound for the period because, If I had the money, I would have paid down my residential mortgage which costs 3.25%"
"5% AER on £3000, 3% on £5000, and 2% on the remainder, because I had to clean out my savings accounts, and these were the rates I could have got"
"£1400 on the sum for the period, based on the difference in purchase prices for XYX UK Widget Managed fund, for the dates x and y"

Note that these examples all show a situation where you can actually measure the "quantum" of your loss - compared to the mileage rate which is an arbitary figure. If you can't prove how much you've lost on the money, then you need to come up with a more realistic arbitary figure and/or provide more evidence to show that you had a realistic expectation of achieving the rate you have claimed.As it stands the adjudicator can only make a decision based on someone who has no other assets, and has missed out on a cash deposit for 6 months.

PochiSoldi

[Elvisbarney]

Thanks PochiSoldi, will take time to digest your observations.

For your info the adjudicator is an alternative to clogging the courts, and is part of the legal process.
I believed that the legal system was to "make me whole" for losses suffered as a result of another's negligence. There appears therefore to be a lack of consistency if a court can award accepted rates of travel, but an adjudicator appears free to put their own take on it.
If I accept the rate offered then I have suffered a financial loss. Seems outwardly that the little person is penalised while the firm of solicitors (substantial) carries on regardless.

[Clitheroekid]

Could you give us some idea about the nature of your claim against the solicitors? This would make it a lot easier to assess the compensation to which you're entitled.

[Elvisbarney]

Clitheroekid,
I preferred to deal in general terms, you know how these lawyers tend to get twitchy about any acceptance of blame!
I don't wish to be evasive, but hope it is sufficient to say it concerned the loss/destruction of an important legal document, which then caused me considerable inconvenience and effort in writing the wrong.
Initial denial by the firm until confronted with evidence disproving their account, and then a time-frame of six months until the damage was repaired.
Complaint by me followed, which was not even acknowledged by them within the accepted 8-week period, followed by investigation and compensation award.
Hope this is sufficient to assist your thoughts, if not please get back.

[PinkDalek]

Could you give us some idea about the nature of your claim against the solicitors? This would make it a lot easier to assess the compensation to which you're entitled.

Clitheroekid,
I preferred to deal in general terms, you know how these lawyers tend to get twitchy about any acceptance of blame!
I don't wish to be evasive, but hope it is sufficient to say it concerned the loss/destruction of an important legal document, which then caused me considerable inconvenience and effort in writing the wrong.
Initial denial by the firm until confronted with evidence disproving their account, and then a time-frame of six months until the damage was repaired.
Complaint by me followed, which was not even acknowledged by them within the accepted 8-week period, followed by investigation and compensation award.
Hope this is sufficient to assist your thoughts, if not please get back.

Clitheroekid may well recall your prior threads on TLF, which may be helfpul in filling in the background in more detail, such that he knows what legal documents were lost:

viewtopic.php?f=2&t=4629#p46589
viewtopic.php?f=2&t=11492&p=136146#p136146

From speed reading those, I'm guessing your Consequential Damages claim relates to (delayed) sale of your Father's house.

[Elvisbarney]

Pinkdalek, I really am not sure what relevance the minutiae of the lost document has, but I stand to be corrected.
The question was worded purposefully in general terms: the document was lost, the firm initially denied knowledge and I then had to fight for them to take responsibility, simples.
Incidentally, don't these firms have indemnity insurance to cover any award against them so as not to upset their financial sensitivities?
Bottom line is, why should I be out of pocket?

[Elvisbarney]

Well, I must say I am surprised.
In spite of the combined wealth of legal knowledge which regularly presents itself here, it seems a little unusual that there is a shortage of such input when it comes to the touchy subject of ... extracting damages from a solicitor who -whisper it quietly- does wrong!
Not to worry, got a few quid out of it, and enjoyed the experience, not to mention the moral (and legal) victory.
Thanks anyway guys, no harm done.

[PaulBullet]

The legal minds wanted more information

you did not want to give it

conversation ends

simples

[Elvisbarney]

WIth respect, nonsense.
I asked a general question, as is often the case on this site.

[melonfool]

You don't have a *right* to have an answer/response.

But, following Pochisoldi's helpful post, using that calculation, how would you be out of pocket?

How much exactly does your car cost to run!?

Mel

[Elvisbarney]

Melonfool,
I have checked my posts, where did I expect a "right" to have a reply? I did say "any guidance greatly appreciated." Not quite the same.
I was really asking in general terms is there any set guidance set in stone for calculating mileage allowance and loss of income, you know, making me whole again? HMRC travel rate appears widely accepted ( note it does include a component part for depreciation), likewise courts appear to award 8% where a demonstrable loss is evident.

This appears to be a touchy subject for some legal beagles here. I thank contributors so far, but this topic would perhaps now be left alone. I continue the challenge solo.

[pochisoldi]

Melonfool,
I have checked my posts, where did I expect a "right" to have a reply? I did say "any guidance greatly appreciated." Not quite the same.
I was really asking in general terms is there any set guidance set in stone for calculating mileage allowance and loss of income, you know, making me whole again? HMRC travel rate appears widely accepted ( note it does include a component part for depreciation), likewise courts appear to award 8% where a demonstrable loss is evident.

This appears to be a touchy subject for some legal beagles here. I thank contributors so far, but this topic would perhaps now be left alone. I continue the challenge solo.

The "8% interest" is awarded on court settlements and is payable from when the matter in question should have been settled.

It is not a standard rate to be used for loss of use of money.

If you want an example of how interest is paid for "consequent loss of opportunity" look at the settlement for the Tesco Shareholder compensation scheme. (See under "Compensation Amount" at https://home.kpmg.com/uk/en/home/servic ... cheme.html ).

In that scheme, the loss was determined to be 24.5p per share, and under the scheme they paid interest at 4% pa to retail investors, and at 1.25% for institutional investors, neither of which were anywhere close to the 8% originally offered. (The interest rate was set at a realistic level - higher for retail investors because £250 to a granny is - in relative terms - more valuable than £250,000 to a bank)

You are also dealing with an adjudicator.
They aren't on any one side, they are on both parties sides. If they are successful, you get damages paid without the (uncompensable) stress of a court case, which if you lose or are partially successful will cost you more money.

My advice is to work out a reasonable level of damages.
As I've previously stated, 25p/mile is a realistic marginal cost figure for running a car, and is easily arguable using the principles I've stated.
The "loss of opportunity" cost on the money locked up, is more difficult. In the current financial climate, and my own circumstances I would ask for 5%, and accept somewhere between 3 and 4%.

Note that you won't get any compensation per se, only enough money to put you back in the same position that you might have been in if they hadn't cocked it up.

PochiSoldi

[Lootman]

Note that you won't get any compensation per se, only enough money to put you back in the same position that you might have been in if they hadn't cocked it up.

Yes, that's the part I've never understood. If someone wrongs me then I should not just be put back to where I was, but rather I should also be compensated for my hassle, discomfort, annoyance, delay and all the extra effort I had to go to in order to get a remedy. And they should be punished.

There is a concept of "emotional pain and suffering" which should be compensated for. And at least in US court there is the concept of punitive damages, where you get an extra lump sum by virtue of the other party acting in bad faith.

For the guilty party to only have to pay the money back is not really a deterrent at all. It's like if the only penalty for robbing a bank and getting caught was that you had to give back the money, I suspect a lot more banks would be robbed.

[melonfool]

Note that you won't get any compensation per se, only enough money to put you back in the same position that you might have been in if they hadn't cocked it up.

Yes, that's the part I've never understood. If someone wrongs me then I should not just be put back to where I was, but rather I should also be compensated for my hassle, discomfort, annoyance, delay and all the extra effort I had to go to in order to get a remedy. And they should be punished.

There is a concept of "emotional pain and suffering" which should be compensated for. And at least in US court there is the concept of punitive damages, where you get an extra lump sum by virtue of the other party acting in bad faith.

For the guilty party to only have to pay the money back is not really a deterrent at all. It's like if the only penalty for robbing a bank and getting caught was that you had to give back the money, I suspect a lot more banks would be robbed.

Yeah, but robbing banks is criminal law, the rest of this is civil law. The *state* can punish people. People (including the 'legal person' which may be a company) cannot punish people. I am happy with both of those principles.

Though there are some cases where hurt feelings are compensated, employment tribunals, for example, who use the Vento scale.

Mel

[Elvisbarney]

THanks very much for the further updates, PochiSoldi appreciate the explanation.
Lootman, I am in your camp. I was wronged from day one by incompetence, compounded by denial and nothing admitted until physical attendance at the lawyer's offices.
The really annoying part was it wasn't even my case, I fought for my seriously ill father who sadly didn't live to see victory day.
I expect also that the solicitor will be well covered by indemnity insurance so not likely to be touched financially.
I feel that the only time they sit up and take note is if they were to suffer reputational damage.
"Rip Off Britain" perhaps?....

[melonfool]

Surely insurance doesn't cover incompetence? They won't be insured for long if it does and they keep doing it.

I know my insurance has all these clauses about conduct and professionalism, training, applying standard etc. I mean, I vaguely recall them, I didn't actually read them, but I'm sure if I was just an idiot and got sued the insurer would say 'yeah, that's on you mate'.

Mel