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Published : August 28, 2010 | Author : modhura.roy
Category : Torts Law | Total Views : 17210 | Rating :

Modhura Roy, IInd Year, Rajiv Gandhi School of Intellectual Property Law, Indian Institute of Technology, Kharagpur

Quantum of damages in Tort Law

The word “tort” in law means a wrong or injury, which has certain characters, the most important of which is that is it redressable in an action for damages at the instance of the person wronged or injured. We can consider assault, libel, trespass and nuisance as few examples. A tort, precisely, is the violation of a right of a person or a breach of duty of another towards him/her.

In tort law, a remedy in the form of monetary compensation is given to the aggrieved party. Damages, in a legal sense, is the sum of money, the law impose for a breach of duty or violation of some right. More appropriately, damages are money claimed by, or ordered to be paid to, a person as compensation for loss or injury[1]. Generally there are two categories of damages:

a) Compensatory
b) Punitive

The term “damages” typically includes both categories, but the term “actual damages” is synonymous with compensatory damages and excludes punitive damages. Compensatory damages are intended to relieve the injured party for his loss or injury.

There are other modifying terms placed in front of the word damages like “liquidated damages” (contractually established damages) and “nominal damages” (where the court awards a nominal amount).

The aim of tortious damages is to put the claimant back into the position he/she was in, pre-tort. The claimant will, therefore, be able to recover reliance loss. Damages in tort are subjected to the principles of remoteness, causation ad mitigation. The basic principle is that it should be tried that the claimant be fully compensated for loss as far as this can be done by an award of money.

Efficient damages awards are critical to the optimal functioning of the tort system. Though a number of rules exist for damage calculation, none are “the” rule in every situation. Optimal damage award depends on:

a) The nature of the injury

b) The relationship of the parties and the type of risk

c) The liability rule

d) Whether liability is individual or vicarious

e) Any existing imperfections

Damages are the most important remedy which the plaintiff can avail of after the tort is committed. They are of various kinds:

Nominal damages:
Nominal damages awarded to an individual in an action where the person has not suffered any substantial injury or loss for which he or she must be compensated.

This kind of damages reflects a legal recognition that a plaintiff's rights have been violated through a defendant's breach of duty or wrongful conduct. The amount awarded is ordinarily a trifling sum, such as a dollar, which varies according to the circumstances of each case. In certain jurisdictions, the amount of the award might include the costs of the lawsuit.

In general, nominal damages may be recovered by a plaintiff who is successful in establishing that he or she has suffered a loss or injury as a result of the defendant's wrongful conduct but is unable to adequately set forth proof of the nature and extent of the injury.

For example, an injured plaintiff who proves that a defendant's actions caused the injury but fails to submit medical records to show the extent of the injury may be awarded only nominal damages.

The amount awarded is generally a small, symbolic sum, although in some jurisdictions it may equal the costs of bringing the lawsuit.

The most famous case of nominal damages was when Prime Minister Winston Churchill was awarded a shilling (about 25 cents) in a libel lawsuit he had brought against author Louis Adamic for writing that Churchill had been drunk during a dinner at the White House. The Prime Minister was vindicated, but the jury could not find that his towering reputation had been damaged.

In another case of Constantine v. Imperial London Hotels Ltd.[2], a West Indian cricketer was refused accommodation at a London hotel because of his nationality. He stayed at another hotel arranged by the defendants and he suffered no loss. It was held by Birkett, J. that nominal damages of five guineas be awarded in respect of defendants’ breach of their common law duty as innkeepers to provide accommodation for any traveler.

When a wrong is actionable per se, as for example, in the case of trespass, damage to the plaintiff is presumed and an action lies even though in fact the plaintiff may not have suffered any loss[3]. To justify the concept the nominal damages, Holt, C. J. said, “If a man another cuff on the ear, though it costs him nothing, not so much as a little diachylon, yet he shall have his action against another for riding over his ground, though it did him no damage; for it is an invasion of his property and the other has no right to come here”.[4]

Contemptuous Damages:
Contemptuous damages are awarded when the level of harm caused to the claimant is low and the court feels that the claimant was wrong to bring a claim. They are the mirror image of nominal damages, in that the successful plaintiff is made to pay damages for bringing the lawsuit.

Let us consider the example: Green and Brown are next-door neighbors who have never gotten along. Green’s dog wanders onto Brown’s property one day and relieves himself. Brown steps in the dog’s faeces, is disgusted, and sues Green for trespass and for failing to control his dog. The court finds that Brown was technically legally correct and thus he must win the lawsuit, but that the lawsuit was rather ridiculous and wasted everybody’s time. The court will award damages in the amount of the smallest monetary amount, to make this statement to Brown.

Contemptuous damages are a derisory amount awarded to show disapproval at the bringing of a claim. This is where a court awards a very small amount of damages to indicate the court’s disapproval of the court action having been brought at all. This might be relevant in a defamation action, where the court considers that the person bringing the action already has a poor reputation, and that the false statement made about the person is unlikely to damage their reputation much further.

It is to be distinguished from nominal damages because nominal damages are awarded when the plaintiff has suffered no loss, whereas contemptuous damages are awarded when the plaintiff has suffered some loss but he does not deserve to be fully compensated.

Compensatory Damages:
Compensatory damages are recovered in payment for actual injury, which does not include punitive damages (to be discussed later). It is a sum of money awarded in a civil action by a court to indemnify a person for the particular loss, detriment or injury suffered as a result of the unlawful conduct of another. These damages provide a plaintiff with the monetary amount necessary to replace what was lost and nothing more.

One of the more heated issues facing the U.S. legal system during the past quarter century has been the call for reform of states’ Tort Laws. Some Health Care providers and other organizations have sought to limit the amount of damages a plaintiff can receive for pain and suffering because they claim that large jury awards in Medical Malpractice cases cause premiums on medical insurance policies to rise, thus raising the overall costs of medical services. California took the lead in addressing concerns with rising medical costs when it enacted the Medical Injury Compensation Reform Act, California Civil Code § 3333.2 (1997). The act limits the recoverable amount for non-economic loss, such as pain and suffering, to $250,000 in actions based on professional Negligence against certain health care providers. Although the statute has been the subject of numerous court challenges, it remains the primary example of a state's efforts to curb medical costs through tort reform.

Other states have sought to follow California's lead, though efforts to limit compensatory damages have met with considerable resistance. Opponents claim that because these limitations greatly restrict the ability of juries and courts to analyze the true damage that plaintiffs have suffered, defendants avoid paying an amount equal to the harm inflicted upon the plaintiffs. Medical organizations, such as the American Medical Association continue to advocate for limitations on damages, however, and they have sought to encourage state legislatures to enact such provisions.

Aggravated Damages:
Damages awarded by a court to reflect the exceptional harm done to a plaintiff of a tort action. When insult or injury to the plaintiff’s feelings has been caused, the court may take into account the motive for the wrong and award an increased amount of damages.

“Aggravated damages are an award, or an augmentation of an award, of compensatory damages for non-pecuniary losses. They are designed to compensate the plaintiff, and they are measured by the plaintiff's suffering. Such intangible elements as pain, anguish, grief, humiliation, wounded pride, damaged self-confidence or self-esteem, loss of faith in friends or colleagues, and similar matters that are caused by the conduct of the defendant; that are of the type that the defendant should reasonably have foreseen in tort cases or had in contemplation in contract cases; that cannot be said to be fully compensated for in an award for pecuniary losses; and that are sufficiently significant in depth, or duration, or both, that they represent a significant influence on the plaintiff's life, can properly be the basis for the making of an award for non-pecuniary losses or for the augmentation of such an award.”[5].

Aggravated damages are an augmentation of general damages to compensate for aggravated injury.

Punitive Damages:
Punitive damages are triggered by conduct that may be described by such epithets as high-handed, malicious, vindictive, and oppressive. They are awarded where the court feels that the award of compensatory damages will not achieve sufficient deterrence and that the defendant's actions must be further punished. Punitive damages bear no relation to what the plaintiff should receive by way of compensation. Their aim is not to compensate the plaintiff, but rather to punish the defendant. ...They are in the nature of a fine which is meant to act as a deterrent to the defendant and to others from acting in this manner. It is important to emphasize that punitive damages should only be awarded in those circumstances where the combined award of general and aggravated damages would be insufficient to achieve the goal of punishment and deterrence.

As explained by McIntyre. J., "Punitive damages, as the name would indicate, are designed to punish. In this, they constitute an exception to the general common law rule that damages are designed to compensate the injured, not to punish the wrongdoer”[6].

Rules To Quantify Damages
Damages in case of Negligence (Hand Rule or Hand Formula):
Courts should develop theory and practice of damages for incompensable losses based on the response of reasonable people to daily risks. Specifically, courts should compute damages based on the reasonable person’s point of indifference between less risk and more expenditure on precaution. The Hand Rule describes this point of indifference[7]. In its original notation, the Hand Rule is based on the equation B=pxL, where “B” is the burden of precaution, “p” is the reduction in probability of harm caused by precaution, “x” is the multiplication sign, and L is “liability”. The equation describes the tipping point between negligent and non-negligent behavior. If B equals or exceeds pxL, then behavior is non-negligent. If pxL exceeds B, then behavior is negligent.

Hand Rule Damages have some normatively desirable properties, which are:-

· Hand Rule Damages cause a potential injurer to internalize the value of the reduction in risk from his precaution. Consequently, Hand Rule Damages provide incentives for efficient precaution. This fact may be decisive for legal scholars committed to economic or utilitarian theories, but not to others.

· “Internalization” means that potential injurers treat risks to others like their own risks.

· Hand Rule Damages ideally satisfy the principle of restorative justice, which requires people to compensate others for harming them, including exposing them to the risk of in compensable losses.

Hand Rule Damages are reasonable, although they are also too difficult conceptually for common sense to encompass. Without this theory, however, the instruction to award reasonable compensation is hardly better than the instruction to follow common sense. This rule should be applied to damages rather that to standards. Computation of Hand Rule Damages begins by identifying reasonable precaution against the loss that materialized. To illustrate, if the loss in question is the wrongful death of a child, then the court must begin by identifying a reasonable standard of care towards children. If the legal rule at issue is negligence, determining liability requires the court to determine a reasonable standard of precaution. Consequently, the court must identify a reasonable standard of precaution before turning to damages. If the legal rule at issue is strict liability, then determining liability does not require the court to determine a reasonable standard of precaution. Nevertheless, the court must determine a reasonable standard of precaution in order to compute Hand Rule Damages. Having identified a reasonable standard of care, the court can then plug its values into the Hand Rule to find damages. Econometric estimates concern the average subjective cost of a risk among actual people who face it, whereas Hand Rule Damages concern the reasonable person’s subjective cost of a risk.

Commentators sometimes ask whether this approach should be used to set damages. Landes and Posner discussed this possibility briefly in their 1987 book on tort law and tentatively conclude in favor of courts adopting this approach. The book read, “… this may be a feasible as well as theoretically correct method of estimating tort damages. The tort system shows, as yet, no signs of moving in this direction; it continues to be wedded to the pecuniary-loss measure, which bears no necessary relationship to the economically correct measure.”[8]

Damages in case of shortening of expectation of life:

The House of Lords laid down certain rules to determine the quantum of damages, in situations where a person’s normal span of life is shortened due to the wrongs done by the defendant[9]:

· The test to determine compensation is not the length of time of life of which a person has been deprived, but it should be the prospect of a predominantly happy life.

· The test of happiness of life is not to be subjective, i.e., how the deceased thought about the chances of his own happiness, the test is an objective one.

· Very moderate damages should be should be allowed for an action under this head

· The economic and social position of a deceased has to be ignored in assessing such damages as the happiness of life does not necessarily depend on such things.

Damages in case of death of a person:
Interest Theory: Here the dependants are paid such lump sum the interest from which would be equivalent to the loss suffered by them.[10] It has to be seen as to how much interest a certain amount will bring if invested in a fixed deposit. Thus if the loss to any dependant is assessed at “x”, such sum could be awarded by way of compensation, which will fetch that much interest every month to such dependant.

Multiplier Theory: According to this theory, the likely further loss is assessed by multiplying the likely loss due to occur every year with a multiplier which indicates the number of years for which the loss is likely to continue[11]. Certain factors like the age of the deceased and of the dependant may have to be taken into consideration to determine the multiplier to be used for assessing compensation payable. So, the value of the multiplier is decided on a case-by-case basis.

We can consider the case of State Farm Mutual Automobile Insurance Co. v. Campbell[12], where the Utah Supreme Court decided on the quantum of damages to be paid using the multiplier theory.

Other instances of damage calculation:
a) In some cases, the courts deduct a percentage of the capitalized amount in view of the fact of uncertainties like the deceased or dependant’s chance of dying before the expiry of the years for which the multiplier has been used.

b) While deciding on the quantum of damage under the (Indian) Fatal Accidents Act, 1855, factors such as if the plaintiff was being supported by the deceased or had a legal claim to be supported or if the plaintiff can claim damages when the deceased was not an employed person, needs to be kept in mind.

Justification Of The Existing Rules
Hand’s Rule:
The general form of the efficiency justification for Hand Rule damages is that they are determined by the reasonable person’s valuation of the risk of loss. Liability for Hand Rule Damages generally causes potential injurers to internalize the reasonable person’s valuation of the risk they impose on others. Internalization of social costs typically provides incentives for efficient behavior. A rule of strict liability causes a rationally self-interested person to balance the cost of precaution and the resulting reduction in expected liability. With Hand Rule Damages, expected liability equals the reasonable person’s subjective value of the risk[13]. Consequently, a rationally self-interested person balances the cost of precaution and the resulting reduction in the reasonable value of the risk. Since a reasonable person values risk accurately according to its social cost, Hand Rule Damages cause a rationally self-interested person to balance the social cost and benefits of precaution as required for efficiency.

This analysis extends to liability for losses under a negligence rule. If the legal standard is clear and courts apply it without error, then an injurer can avoid liability by satisfying the legal standard. Thus the rationally self-interested injurer never exceeds the legal standard. The incentive for negligence depends on the level of liability. “If liability for deficient precaution equals Hand Rule Damages, then the potential injurer whose precaution falls short of the legal standard internalizes its social costs and benefits. Thus Hand Rule Damages cause the injurer to fall short of the legal standard to the exact extend required by social efficiency, and no further”[14].

Interest Theory:
The Interest Theory has been generally considered to be unjust and irrelevant for making a proper assessment of the compensation payable. The theory is subject to two flaws:

· It does not take into account the erosion in the value of money due to inflation.

· The theory is based on the assumption that the claimant will make a sound investment in long term fixed deposits, but because of the prevailing ignorance and illiteracy in India at large, that is highly unlikely to happen.

These views were supported with additional factors by the Bombay High Court in Padmadevi Shankarrao Jadhav and Ors. V. Kabalsing Garmilsing Sardarji and Ors.[15]:

“Deciding the compensation wholly on the basis of the interest the lump sum will receive or derive is an unscientific method. There is a good interest rate only for long term investments. Meanwhile there is increase in prices and cost of living and consequent fall in the value of rupee. This outweighs the rate of interest, even on long term investment. Further, because of illiteracy and ignorance, prudent investment itself is an exception and not normality. Therefore, it is not possible to lay down a general rule that while fixing just and fair compensation, it should always be based on the basis of the interest which will be derived or received if the lump sum is prudently invested. Therefore, in our view, the principle applied by the learned Member for arriving at the figure of the compensation was wholly unjustified having regard to the facts and circumstances of the case”.

Multiplier Theory:
For calculating pecuniary loss or loss of dependency, this Court has repeatedly held that it is the multiplier method which should be applied. The said method is based upon the principle that the claimant must be paid a capital sum, which would yield sufficient interest to provide material benefits of the same standard and duration as the deceased would have provided for the dependents, if the deceased had lived and earned. The multiplier method is based upon the assessment that yearly loss of dependency should be equal to interest that could be earned in normal course on the capital sum invested. The capital sum would be the compensation for loss of dependency or the pecuniary loss suffered by the dependents. Needless to say, uniform application of the multiplier method ensures consistency and certainty and prevents different amounts being awarded in different cases[16]. The same value of multiplier is used for various cases in which the facts can only be similar but never same. This is a major drawback of the multiplier theory as in most cases the multiplier is decided with correspondence to previously decided cases.

Moreover, multiplier theory of punitive damages, which was propounded by Dr. Gore requires especially close choice of law scrutiny. “First, this procedure for asserting liability for out-of-state transactions--in which the plaintiff's use of out-of-state transactions may emerge only at trial or, indeed, in his closing argument-- creates grave difficulties for the defendant in attempting to establish the existence of a conflict of laws. In the context of this procedure, fundamental fairness requires at least that the burden of establishing that a constitutionally appropriate law would grant the relief sought be on the plaintiff. Second, punitive claims employing Dr. Gore's multiplier theory may strain the capacity of reviewing courts to detect unconstitutional applications of the lex fori. Dr. Gore's multiplier theory is especially problematic, and cannot, in practice, be administered in accordance with the basic constitutional requirements of fairness.”[17]

Future Enhancements In The Rules, If Possible
Hand Rule:
A pervasive problem in law concerns the extent to which rules should be particularized. To illustrate, a highway might have a uniform speed limit for all cars and almost all driving conditions. Alternatively, a highway might have a variable limit depending on the weather, type of car, driver’s skill, etc. Similarly, a method for setting damages can prescribe the same damages for wrongful death of anyone, as in the Code of Hammurabi which prescribes the same damages for wrongful death of any free man or woman (but lower, uniform damages for men or women slaves).

Alternatively, the common law prescribes different damages for wrongful death of people who differ in their earning power and other characteristics. Similarly, Hand Rule Damages could be uniform or particularized. To illustrate, uniform damages could be awarded in wrongful death cases equal to the average social cost of a traffic fatality as currently specified by the Highway Traffic and Safety Administration. Uniformity increases by pegging damages to the risk behavior of a “reasonable person” who is generalized rather than particularized.

Alternatively, Hand Rule Damages might depend on particular precaution of an individual against risk. With particularized damages, for example, wealthy people who spend more on safety might receive higher damages for a child’s death than poor people who spend less on safety. This outcome is consistent with the fact that courts award the heirs higher damages for the death of a high wage earner than a low wage earner. Similarly, the heirs of a young man who dies in an automobile might receive less than the heirs of a young woman, because young men drive much more recklessly than young women as proved by insurance rates. And perhaps the lower compensation for a young male driver could be a presumption overcome by the proof that the young victim was a very careful driver.

Hence a more relatively uniform standard of Hand Rule Damages should be devised, but I will not defend uniformity here.

Interest Theory:
The Interest Theory is not a very practical approach towards the attainment of damage calculation.

· Different organizations have different rates of interest for fixed deposits. The Courts have not specified an organization which could be taken as a standard for the determination of quantum of damage through this rule. Standardization of the entire process is very necessary.

· In the long run, the cost of living changes and so does the value of money. What might be a lump sum today will certainly be so tomorrow. So the impact of the interest today will change tomorrow.

· Moreover, every person might not have sufficient prudence to make the perfect investment plans. Hence in the long run, it is highly possible that a person losses out on the total compensation because of the reason that he/she had not invested in the best and the perfect possible manner.

· Standardization of this rule is highly recommended.

· There must be a fixed rate of interest with respect to cases which are decided as per this theory.

· The rate must be flexible, keeping parity with the economy of the time.

Multiplier Theory:
The Multiplier Theory is a more balanced theory with respect to the others as discussed previously. Here too, there are possibilities of future enhancements. While deciding on the multiplier, two factors are considered:

· The number of years the deceased could have lived

· Amount of money that the deceased was/would be earning had he been living

It is recommended that more number of factors need to be incorporated while deciding on the value of the multiplier. One such factor can be the consideration of the economic status of the dependants of the deceased.

Relevance & Applicability of the Rules in India
Hand’s Rule:
Kautilya on Tort Law during the Fourth Century BCE[18]:
“Kautilya’s Arthashastra has been considered as the most important treatises on the civil and criminal laws in ancient India. Kautilya wanted to build a prosperous, secure, safe, secular and fairness-based empire. He considered both ethical and economic perspectives on creating laws. His proposal on tort law contained many noteworthy elements.

· He introduced monetary fines to complement the existing expiation measures for preventing losses caused due to negligence.

· Liabilities were based on negligence since that was considered as preserving and promoting ethical values.

· Deterrence being the primary goal, tort law was designed to minimize the probability of a loss caused by negligence or intention. That is, wealth maximization was the overriding concern.

· Punitive damages particularly if intent was involved were large and all the receipts went to the treasury.

· In addition to the punitive damages, the injurer was required to compensate the victim for serious physical injuries and for all financial losses and government was responsible for taking care of the disabled individuals out of the general revenue. It appears that, to some extent, corrective justice was a part of distributive justice.

Kautilya wrote, “No one shall cause injury to others by: [the collapse of] a rickety dwelling or cart; an unsupported pillar [or beam]; an unsheathed weapon; an uncovered or concealed pit or well; or allowing his horned or tusked animal to hurt someone, particularly by failing to come to the rescue when entreated to do so. A person shall not be held guilty of assault by causing injury, if he gives suitable warning (such as ‘get out of the way!’) when: felling a tree; leading by the rope an animal being trained; driving or riding an untrained animal.” He added, “One who injures another by driving his cart [recklessly] shall be punished except [in cases of unforeseen accidents as] when: the nose string of a bullock or the yoke of the cart breaks [accidentally]; the draught animals move [suddenly] backwards or sideways; or there is a large throng of animals and men.” He recommended a fine of 200-500 panas plus the cost of treatment for ‘injuring the thigh, neck or eye; any injury affecting speech, movement or eating’. A few remarks are in order. First, an injurer was not liable if sufficient warning, such as ‘get out of the way!’ was provided. Second, a defendant was not liable for unforeseen or unpreventable injuries. Third, the cost of precautions, such as shouting ‘get out of the way!’ was next to nothing. He recommended a fine of 48-96 panas for negligence causing less serious physical injury due to negligence. Thus Kautilya implicitly adopted the Hand rule that an injurer is liable only if his cost of taking precautions, z is less than the expected value of an avoidable loss, πL, (where π is the reduction in probability of a loss due to precautions and L is its magnitude) caused to the victim.”

Thus the existence of the practice of Hand rule dates back to a very long time, even before Judge Learned Hand formulated and described the rule[19].

Interest theory:
In the case of Joki Ram v. Smt. Naresh Kanta[20], the Tribunal Court had held that

a) that Om Parkash Sharma (deceased) was employed as a Line Superintendent in the Haryana State Electricity Board and was drawing a salary of Rs. 390 per month; and

b) that the wife of Om Parkash Sharma (deceased) got pension on the death of her husband at the rate of Rs. 120 per mensem.

c) After deducting Rs. 70 per mensem on account of rent of the house, Rs. 37 per mensem as share of the deceased and Rs. 60 per mensem as expenditure on himself out of his salary of Rs. 390 per mensem, in addition to Rs. 120 on account of the monthly pension, the loss to the applicants was assessed at Rs. 103 per mensem.

d) Om Parkash Sharma (deceased) was found to be 37 years old at the time of the accident and calculating his life expectancy at 60 years, damages for 23 years at the rate of Rs. 103 per mensem were calculated at Rs. 28,428.

e) Om Parkash Sharma (deceased) was insured for Rs. 2,000 which amount was received by the applicants after his death. After excluding one-third of this amount, Rs. 666 was deducted from the amount of damages. Besides, the gratuity amounting to Rs. 2,200 was also deducted. After making all these deductions, the Tribunal awarded an amount of Rs. 25,562 to the applicants and the insurance company was directed to pay this amount within two months,

f) Jokhi Ram, the owner of the truck, Sher Singh, its driver, and the Vanguard Insurance Company have filed these three separate appeals challenging the award. Mr. Surj, the learned counsel for the appellants, in F.A.O. No. 114 of 1972, raised the following contention:

The amount of compensation as awarded by the Tribunal is excessive. The same should not have exceeded the amount which if deposited in the Bank would yield a monthly interest equivalent to the monthly pecuniary loss to the applicants on account of the demise of Om Parkash Sharma. Thus we find the application of the Interest Theory in determining the compensation to be paid.

Though the Supreme Court later held that “It is correct that in the above-mentioned cases compensation has been awarded keeping in view the interest which may be earned by making a deposit in the Bank. However, this interest theory cannot be adopted as an inflexible principle for the purpose of assessing the compensation especially in these days when the purchasing power in, terms of money is being eroded after: short intervals on account of runaway inflation”.

Multiplier Theory:
In United India Insruance Co. Ltd. V. Bindu and Ors.[21], the Supreme Court applied the multiplier of 13 where the age of the deceased was 32 years. The Court referring to Mallett v. Mc Mongle[22] and other decisions preceding the same opined:

“In both General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas (Mrs.) and Ors.[23] and U.P. State Road Transport Corporation and Ors. v. Trilok Chandra and Ors.[24], the multiplier appears to have been adopted by the Supreme Court taking note of the prevalent banking rate of interest. In fact in Trilok Chand's case after reference to Second Schedule to the Act, it was noticed that the same suffers from many defects. It was pointed out that the same is to serve as a guide, but cannot be said to be invariable ready beckoner. However, the appropriate highest multiplier was held to be 18. The highest multiplier has to be for the age group of 21 years to 25 years when an ordinary Indian Citizen starts independently earning and the lowest would be in respect of a person in the age group of 60 to 70, which is the normal retirement age. Keeping in view the parameters indicated above it would be appropriate to fix the multiplier at 13 and the rate of interest at 6% p.a.”

Thus, it can be seen that computation of damages through the Multiplier Rule is a common parlance in India. There are several other cases which support the same.

Economic analysis has greatly enriched our understanding of damage rules. It reveals that damages serve a complex and multi-faceted role: deterring risk takers, helping victims spread risks and compensating them for their losses. This has also helped us to design tort liability and design rules, which can guide legislators and courts as they design tort liability and damage rules.

It is suggested that at present damage awards for serious personal injury and death generally are not sufficiently large to induce potential injurers to take due care and engage in optimal activity levels. Yet economic analysis also shows that victims of physical injuries may be receiving too much compensation. This suggests decoupling of defendants’ liability from victims’ compensation should be considered.

While considering the situation in India, it can be seen that all the rules for the purpose of damage calculation are not predominantly utilized. The Multiplier Rule is extensively used to decide on damages in cases of death due to tort.

The Law of Torts is not well developed in India as in countries like the United States of America and the United Kingdom. Hence applicability of its various aspects is also limited in the country.

Damages form a very integral part of Tort Law. The Legislature should come up with sufficient and practical rules and theories for computation of quantum of damages. This will lead to a decrease in ambiguities that we come across in various cases regarding the calculation of compensation.
[1] Black’s Law Dictionary
[2] (1944) K.B. 693
[3] Dr. R. K. Bangia, The Law of Torts, (Allahabad Law Agency, 21st edition)
[4] Ashby v. White, (1703) 2 Lord Rayam, 938, at 955
[5] Huff v. Price 51 BCLR 2d 282 (BCCA, 1990), at 299
[6] Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085, at 1098-99
[7] U.S. v. Carroll Towing Co. 159 F.2d 169 (2d Cir. 1947)
[8] W. M. Landes and R. Posner, The Economic Structure of Tort Law, (Harvard University Press, 1987).
[9] Benham v. Gambling, (1941) A.C. 157
[10] Dr. R. K. Bangia, The Law of Torts, (Allahabad Law Agency, 21st edition), at 483.
[11] Ibid.
[12] 538 U.S. 408 (2003)
[13] Robert D. Cooter, Hand Rule Damages for Incompensable Losses, Berkeley Program in Law & Economics, Working Paper Series (University of California, Berkeley), Paper 83, Year 2003
[14] Ibid.
[15] A.I.R. 1985 Bom. 357 at 361
[16] R. K. Malik and Anr. V. Kiran Pal and Ors., 2009 (8) SCALE 451
[17] BMW of North America, Inc., v. Ira Gore, Jr., 517 US 559 (1996)
[18] Balbir S. Sihag, Kautilya on Tort Law during the Fourth Century BCE, University of Massachusetts, Revised Draft, April 16, 2008
[19] U.S. v. Carroll Towing Co. 159 F.2d 169 (2d Cir. 1947)
[20] A.I.R 1977 P. & H. 214, at 219
[21] (2009) 3 SCC 705
[22] 1969 (2) All ER 178
[23] AIR 1994 SC 1631
[24] (1996) 4 SCC 362

Authors contact info - articles The  author can be reached at: modhuraroy@legalserviceindia.com

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