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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Crofton v National Health Service Litigation Authority [2007] EWCA Civ 71 (08 February 2007) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2007/71.html Cite as: [2007] 1 WLR 923, [2007] PIQR Q3, [2007] LS Law Medical 254, [2007] BLGR 507, (2007) 10 CCL Rep 123, [2007] EWCA Civ 71, [2007] WLR 923

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
His Honour Judge Reid QC

		Royal Courts of Justice Strand, London, WC2A 2LL
		8th February 2007

This is the judgment of the Court, written by Lord Justice Dyson.

1. The appellant was born on 10 July 1979. A few days later, it was suspected that he had a condition known as coarctation of the aorta. He was referred to the Royal Brompton Hospital (the institution now represented by the defendant) for cardiological advice and, if necessary, treatment. Staff at the hospital failed to deal with his condition speedily with the result that he suffered serious brain injury. In brief, he suffered diffuse brain damage with the result that he now has the mental age of a young child. He has very limited mobility and speech, and his vision is poor. He can do very little for himself and requires the attendance of a carer throughout the day and a second carer for certain purposes. Attendance by carers is required throughout the night. His life expectancy is to about the age of 66.
2. The claimant started proceedings alleging negligence. Liability was compromised on the basis that the claimant would be paid 67.5% of damages assessed on the basis of full liability. At the date of the trial of the issues of damages, he was 26 years of age. Accordingly, the questions relating to future funding of his care needs had to be considered against the background that he was likely to live for about another 40 years.
3. The issues of damages were decided by His Honour Judge Reid QC in a reserved judgment on 19 January 2006. They were in many respects typical of those that arise in large personal injury cases. Many of them were compromised by the parties. These agreements were referred to in the judgment and were approved by the judge.
4. One important issue that the judge had to determine concerned the accommodation in which the claimant should live. At the date of trial, the claimant was living in supervised accommodation in Meadowbank, Eastleigh where carers were being provided by SeeAbility (the Royal School for the Blind) and paid for by Hampshire County Council ("the Council"). The judge accepted the claimant's case that damages for future care should be assessed on the basis that it was reasonable for him to purchase his own accommodation and employ carers.
5. A major issue (and the only one that has given rise to this appeal) was the extent to which, if at all, the damages should be reduced to reflect payments (known as "direct payments") that the Council would or might make to the claimant towards his care costs. The judge assessed the claimant's total yearly care costs at £122,602. He then decided that the Council would make yearly direct payments of £68,018 which should be offset against the total care costs so as to produce an annual figure of £54,584. To this figure he applied the agreed whole-life multiplier of 25.42 to arrive at an award for future care of £1,387,525 on the basis of full liability.
6. Whether the judge was entitled to take direct payments into account depends, at least in part, on whether he interpreted the relevant legislation and ministerial guidance correctly. Mr Simon Taylor QC submits that the Council will not be obliged to, and will not, make direct payments to the claimant in respect of his care costs. This is because the damages awarded in this case will allow a private care package to be established for the claimant, so that it will not be necessary for the Council to make arrangements and pay for his care. In order to resolve the questions that arise on this appeal, it is necessary to start with the statutory framework.

The statutory framework

The duty to provide accommodation and domiciliary care

7. Section 21(1) of the National Assistance Act 1948 ("NAA") deals with the provision by local authorities of accommodation. It provides:

"(1) Subject to and in accordance with the provisions of this Act, a local authority may with the approval of the Secretary of State, and to such extent as he may direct shall, make arrangements for providing –

a) residential accommodation for persons aged eighteen or over who by reason of age, illness, disability or any other circumstances are in need of care and attention which is not otherwise in available to them;…."

8. Section 21(2A) provides that in determining for the purposes of section 21(1)(a) whether care and attention are otherwise available to a person, a local authority shall disregard so much of the person's resources as may be specified in, or determined in accordance with, regulations made by the Secretary of State for the purpose.
9. Section 22 gives power to make charges for accommodation provided by a local authority. Subsection (5) provides that, in assessing a person's ability to pay, a local authority shall give effect to regulations made by the Secretary of State. The National Assistance (Assessment of Resources) Regulations 1992 (as amended) ("the Assessment of Resources Regulations") provide that capital and income deriving from compensation for personal injuries administered by the court shall be disregarded in assessing resources.
10. Sections 21 and 22 are of no direct relevance to the present case, since there is no appeal against the decision of the judge that damages should be assessed on the basis that it is reasonable for the claimant to live in private accommodation. In these circumstances, it is necessary to examine the statutory provisions applicable to the provision of home care.

Welfare arrangements

11. Section 29 of NAA provides so far as material:

"(1) A local authority may, with the approval of the Secretary of State and to such extent as he may direct in relation to persons ordinarily resident in the area of the local authority shall make arrangements for promoting the welfare of persons to whom this section applies…"

12. Directions were given by the Secretary of State on 17 March 1993 in Appendix 2 to LAC (93) 10. Paragraph 2 provides:

"The Secretary of State hereby approves the making by local authorities of arrangements under section 29(1) of the Act for all persons to whom that subsection applies and directs local authorities to make arrangements under section 29(1) of the Act in relation to persons who are ordinarily resident in their area for all or any of the following purposes – (a) to provide a social work service and such advice and support as may be needed for people in their own homes or elsewhere;…."

13. Section 2 of the Chronically Sick and Disabled Person Act 1970 ("CSDPA") provides:

"(1) Where a local authority having functions under section 29 of the National Assistance Act 1948 are satisfied in the case of any person to whom that section applies who is ordinarily resident in their area that it is necessary in order to meet the needs of that person for that authority to make arrangements for all or any of the following matters, namely –

(a) the provision of practical assistance for that person in his home……

then, subject to the provisions of section 7(1) of the Local Authority Social Services Act 1970 (which requires local authorities in the exercise of certain functions, including functions under the said section 29, to act under the general guidance of the Secretary of State)…. it shall be the duty of the authority to make those arrangements in exercise for their functions under the said section 29…"

The duty to assess needs

14. Local authorities have a duty to assess a disabled person's needs under section 47 of the National Health Service and Community Care Act 1990 ("NHSCCA"), which provides:

"47 Assessment of needs for community care services

(1) Subject to subsection (5) and (6) below, where it appears to a local authority that any person for whom they may provide or arrange for the provision of community care services may be in need of any such services, the authority –

(a) shall carry out an assessment of his needs for those services; and

(b) having regard to the results of that assessment, shall then decide whether his needs call for the provision by them of any such services."

15. They also have a duty to assess a disabled person's needs under section 4 of the Disabled Persons (Services and Consultation and Representation) Act 1986, which provides:

"When requested to do so by-

(a) a disabled person

(b) his authorised representative, or

(c) any person who provides care for him in the circumstances mentioned in section 8,

a local authority shall decide whether the needs of the disabled person call for the provision by the authority of any services in accordance with section 2(1) of the 1970 Act (provision of welfare services)."

Relevant guidance as to the provision of services

16. When local authorities are making such assessments and providing such services, they have to act under the directions of and the general guidance issued by the Secretary of State. Section 7(1) of the Local Authority Social Services Act 1970 ("LASSA") provides:

"Local authorities shall, in the exercise of their social services functions, including the exercise of any discretion conferred by any relevant enactment, act under the general guidance of the Secretary of State."

17. A local authority circular entitled "Fair Access to Care Services Guidance on Eligibility Criteria for Adult Social Care" (LAC (2002) 13) contains guidance issued under section 7 of LASSA as to eligibility for care services provided by local authorities. It provides 4 bands according to which each eligible person's needs should be assessed. It is common ground that the claimant's condition is such that he falls into the most serious band, the "critical" band.

The funding of care services

18. Section 17 of the Health and Social Services and Social Security Adjudications Act 1983 ("HASSASSAA") confers on the local authority a discretion to recover charges from persons to whom services are provided inter alia under section 29 of NAA. It provides:

"(1) Subject to subsection (3) below, an authority providing a service to which this section applies may recover such charge (if any) for it as they consider reasonable.

(3) If a person -

(a) avails himself of a service to which this section applies, and

(b) satisfies the authority providing the service that his means are insufficient for it to be reasonably practicable for him to pay for the service the amount which he would otherwise be obliged to pay for it,

the authority shall not require him to pay more for it than it appears to them that it is reasonably practicable for him to pay."

19. Guidance was issued by the Department of Health in September 2003 under section 7 of LASSA as to the exercise of the discretion given by section 17 of HASSASSAA. The guidance is contained in a document entitled "Fairer Charging Policies for Home Care and other non-residential Social Services" ("Fairer Charging Policy"). Paragraph 4 states that "there is no presumption by the Government that all councils will charge for the various kinds of non-residential social services and councils retain the discretion not to do so". Paragraph 5 states:

"5. Where they do decide to charge for services, councils also retain substantial discretion in the design of charging policies. This guidance sets out a broad framework to help councils ensure that their charging policies are designed to be fair and to operate consistently with their overall social care objectives. The guidance provides clear objectives which all councils operating charging policies should aim to achieve. The Government's view is that these are minimum requirements to ensure that charges are reasonable in the terms of the HASSASSA Act 1983. In considering what are reasonable charges in their local circumstances, some councils may need to go beyond the minimum requirements in this guidance. Nothing in this guidance requires councils to make existing charging policies, which go beyond the requirements set out here, less generous to users than they are currently."

20. The document contains much detailed guidance as to which of a person's resources should be taken into account and which should be disregarded in determining whether and, if so, how much to charge for the services provided. Savings and capital are dealt with in section VIII as follows:

"57. Councils may take account of a user's savings or other capital in assessing their resources, but are not obliged to do so. This section includes minimum requirements for treatment of savings. Councils need to consider and consult specifically on their policy in relation to savings, including circumstances where individual users may have particular needs for savings (paragraph 94).

58. Savings may be taken into account to calculate a tariff income on the same basis as set out in the Charges for Residential Accommodation Guidance (CRAG) in LAC(99)9. Users with savings of more than the upper limit may be asked to pay a full charge for the service. These savings levels will be updated automatically in line with any uplifts in CRAG. Councils may wish to set higher savings limits or more generous charging policies for users with savings, but should not set lower limits.

59. The value of the main residence occupied by the user should not be taken into account for charges for non-residential social services, but other forms of capital may be taken into account, as set out in CRAG.

60. Consistent with the guidance in CRAG, ex gratia payments made to former Far Eastern prisoners of war and payments made under the Vaccine Damage Payment scheme should be disregarded entirely.

61. Provision should be made for charges to be reviewed at regular intervals, where savings are being used up by charges."

21. The Charges for Residential Accommodation Guidance ("CRAG") contains even more detailed guidance as to how charges should be calculated, and which resources should be taken into account and which should be disregarded for the purposes of the means-testing exercise: see further paragraphs 77-80 below.

Direct payments

22. Section 57 of the Health and Social Care Act 2001 ("HSCA") makes provision for persons assessed as needing community care services by assessment under section 47 of NHSCCA (which includes services provided pursuant to section 29 of NAA) to receive direct payments from the local authority (referred to for this purpose as "the responsible authority") in order to secure the provision of the relevant services, instead of receiving the services directly from the authority. Section 57(1) of HSCA provides:

"regulations may make provision for and in connection with requiring or authorising the responsible authority in the case of a person of a prescribed description who falls within subsection (2) to make, with that person's consent, such payments to him as they may determine … in respect of his securing the provision of the service…"

23. Section 57(3)(e) of HSCA provides that regulations may be made in relation to the making of direct payments and, inter alia, for the determination by the responsible authority of the amount (if any) which it would be reasonably practicable for the payee to pay to the authority by way of reimbursement or contribution (subsection (3)(c)(ii)); and specifying the circumstances in which the authority may require repayment of the whole or part of the direct payments (subsection (3)(e)(ii)). Subsections (4) and (5) allow for the actual payments made to the recipient to be made gross of any reimbursement the recipient will have to make or net of any contribution assessed.
24. The Community Care, Services for Carers and Children's Services (Direct Payments) (England) Regulations 2003 ("the Direct Payments Regulations") were made under section 57(3) of the HSCA. Regulation 4 provides that if the conditions in paragraph (3) are satisfied, a responsible authority must make in respect of a person who falls within section 57(2) of HSCA such direct payments as are determined in accordance with regulation 5. Paragraph (3) provides that the conditions referred to in paragraph (1) include "(a) that the responsible authority are satisfied that the person's needs for the relevant service can be met by securing the provision of it by means of a direct payment" A "relevant service" includes the provision of care services within the meaning of section 29 of NAA. Regulation 5 provides that for the purpose of making a direct payment:

"the responsible authority shall determine, having regard to the prescribed person's means, what amount or amounts (if any) it is reasonably practicable for him to pay towards securing the provision of the relevant service (whether by way of reimbursement as mentioned in s57(4) of the 2001 Act or by way of a contribution mentioned in section 57(5) of that Act)."

25. The Department of Health has issued guidance in relation to direct payments in a document entitled "Direct Payments Guidance Community Care Services for Carers and Children's Services (Direct Payments) Guidance England 2003". Paragraph 88 of this document states:

"In considering whether to ask recipients of direct payments to make a financial contribution to the cost of their care package, the Regulations provide that the local council shall determine, having regard to the recipient's means, what amount or amounts (if any) it is reasonably practicable to pay towards the cost. For people assessed as needing community care services or carer services, the relevant guidance is Fairer Charging Policies for Home Care and Other Non-residential Social Services."

26. We have already referred to the Fairer Charging Policy at para 19 above. Section XV is entitled "Direct payments". It states:

86. In considering whether, and if so how, to ask an individual to make a financial contribution to the cost of their care package, councils should treat people receiving direct payments as they would have treated them under the council's charging policy, if those people were receiving the equivalent services. Charges should be assessed and made in all respects in accordance with this guidance.

87. Councils should refer to the Community Care (Direct Payments) Policy and Practice Guidance for specific guidance on direct payments including making direct payments net or gross of any financial contributions".

The issues

27. We can now identify the issues that arise on this appeal. They all arise from the fact that the judge held that the damages awarded to the claimant should be reduced to reflect the fact that the Council would make direct payments to the claimant if he were to live in his own home and arrange for his care needs to be met privately.
28. The first issue is whether the judge should have allowed the defendant to raise the direct payments issue at all. The second issue is whether the Council will make direct payments to the claimant to meet his care needs. There are two parts to this issue. First, there is a question whether, in a case such as this where a person is awarded substantial personal injury damages a local authority can be satisfied that it is necessary to make welfare arrangements, in order to meet a person's care needs at all (section 2 of CSDPA). This was referred to as "the threshold question". If a local authority can be so satisfied in such a case, then the second question is whether at the means testing stage it can have regard to the damages in deciding what direct payments (if any) to make in order to meet the person's care needs. The third issue is whether, if the Council will make direct payments to the claimant, this fact was properly taken into account by the judge in his assessment of damages.

The first issue: should the court have considered the direct payments issue at all?

29. It is submitted on behalf of the appellant that the judge should not have considered the direct payments issue at all, because it was not properly presented and was raised too late for the appellant to be able to deal with it adequately. The position at the start of the trial was that the claimant was claiming the full cost of a private care package on the basis of (a) the claimant employing the carers directly or (b) his being cared for by an outreach package from SeeAbility, for which he would pay. The defendant was contending that the care at Meadowbank was reasonable and that state or state-funded care would remain reasonable; alternatively, the defendant asserted that the claimant's costings on his alternative (a) were excessive. It was no part of the defendant's case that the claimant would receive direct payments and that these could and should be taken into account in the assessment of damages.
30. The first reference to direct payments was made during the course of the trial in the evidence in chief of Ian Cross. He was an employee of the Council based in its Adult Services Department and was called as a witness on behalf of the defendant. He was asked about the schemes under which direct payments could be made and whether, if direct payments were made to the claimant, the amount paid would be different from what it was currently costing the Council to meet the claimant's care needs. He said that the amount might be different: it would depend on which direct payments scheme was adopted. At the close of the evidence in chief, Mr Taylor protested that it was too late for the defendant to introduce a new case based on direct payments.
31. He did not cross-examine Mr Cross on his evidence about direct payments. Mr Taylor submits that he had no material on which to conduct such a cross-examination and the direct payments issue had not been raised.
32. Ms Sargent was the claimant's care expert. She was cross-examined by Mr John Grace QC. He did not explore with her the question of what direct payments the claimant was likely to receive from the Council in this case, although he did elicit from her that, as a care manager, she would consider it to be her duty to encourage an application to be made for direct payments. Nor did he ask the defendant's care expert (Ms Douglas) about the possibility of direct payments.
33. The defendant's closing submissions contained the following new elements. First, an offer of an indemnity against any future withdrawal of funding. Secondly, costed calculations of direct payments that the defendant asserted the claimant would receive. This was the first direct intimation that the defendant was going to pursue this line.
34. In his closing submissions, Mr Taylor submitted that the defendant should not be permitted to pursue this line at all. This was a case of the defendant making up its case as it went along. There was no reference in any document before the court to direct payments having to be brought into the calculation and no calculations had been put by the defendant to any witness for comment.
35. The judge dealt with the claimant's objection in his judgment as follows:

"70. The Claimant submitted that the Defendant's assertion that if the Claimant is to be in independent accommodation, his care costs will be met in substantial part by direct payments from the local authority was not properly evidenced. It was submitted that this was something dreamed up by the Defendant as the case proceeded. Neither the Defendant's counter-schedule nor the Defendant's opening skeleton mentioned it. There was no reference to it by any of the Defendant's witnesses in their witness statements, and Mr Cross of the Adult Services Department of the Hampshire County Council did not mention it in his witness summary. No calculations were put to any witness for comment. It was suggested that in those circumstances I should have no regard to this belated suggestion.

71. In my judgment this is not the proper approach. Ms Sargent accepted that a case manager should look for all available forms of funding. Mr Cross, who was a frank and extremely helpful witness, dealt with this topic fully in his oral evidence. There was no suggestion that he should not be allowed to give evidence on the topic, nor was any suggestion made that the Claimant wished to have an adjournment to obtain further evidence to deal with the point. The issue initially gained significance in the context of Ms Sargent's belated attempt to introduce the suggestion of care to be provided by SeeAbility on an outreach basis. In my judgment once the genie had been let out of the bottle it was not possible to re-insert it. It is not unjust to the Claimant to take the prospect of obtaining local authority assistance into account in assessing damages. To omit to do so would be unjust to the Defendant and would give rise to the possibility of double recovery."

36. Mr Taylor submits that this passage contains a number of errors. First, the judge was wrong to say that Mr Cross had dealt with the topic fully in his evidence. The claimant had not conducted any investigation of the topic and was therefore not in a position to cross-examine Mr Cross let alone advance a case of his own on this point. There were in any event a number of gaping holes in the inquiry.
37. Secondly, the judge mischaracterised the claimant's response to the late introduction of the point. Mr Taylor had protested about the introduction of the evidence by Mr Cross at the end of the evidence in chief and at the stage of final submissions. It is true that an adjournment was not sought. Mr Taylor submits, however, that the claimant cannot reasonably be criticised for not having sought an adjournment to meet evidence that went to an issue that had not been part of the defendant's case.
38. Thirdly, the judge was wrong to say that the direct payments issue "gained significance" as a result of Ms Sargent's belated attempt to introduce the suggestion of care by SeeAbililty on an outreach basis. The issue was just as relevant to any private care package, whatever the source of the carers.
39. Fourthly, the judge's assessment of where the justice of the matter lay was flawed. It was unjust to the claimant on little evidence, and with no prior notice, to make findings that deprived the claimant of the yearly sum of £68,018 in funding that the court had determined the claimant needed to fund the care. It is not unjust to the defendant to require it to comply with the applicable procedure rules. Mr Taylor submits that the defendant did not comply with CPR 32.9 in relation to the service of its witness statements. Nor did it comply with CPR PD16 paragraph 12.2 in that its counter-schedule failed to reflect its case on the direct payments issue.
40. Mr Taylor relies on what was said in this court in Sowden v Lodge; Crookdake v Drury [2004] EWCA Civ 1370, [2005] 1 WLR 2129. In the case of Sowden, the claimant had claimed the cost of private care and accommodation. The defendant contended for local authority care and accommodation. In its counter-schedule, it conceded that some modest increase in care or top-up would be required and allowed a modest sum under that head. At the hearing, the defendant made a substantial additional offer under this head. Pill LJ said (paragraph 66) that he was troubled by the paucity of evidence as to how the augmented portion of the residential provision would work and by the absence of a detailed care scheme on behalf of the defendant incorporating the augmented portion. This court remitted the case to the trial judge for further consideration. Pill LJ emphasised the "importance…of placing before the court cogent evidence as to how the regimes proposed by the parties for the care and accommodation of claimants will operate…..Whatever is proposed should be particularised and costed in the schedule, or counter-schedule, of damages" (paragraph 85). Longmore LJ said (paragraph 99) that, because top-up arrangements in general may present problems, "judges should normally be reluctant to let defendants raise possible candidates for top-up in the course of the hearing". See also the observations of Scott-Baker LJ at paragraph 102.
41. Mr Taylor submits that the considerations that led to the statements made in Sowden apply with at least equal force in the present case. He makes the point that in Sowden, the defendant did raise the top-up issue before trial, whereas in the present case, the direct payments issue was not raised until well after the start of the trial.
42. Mr Grace's starting point is that the claimant's challenge to paragraphs 70 and 71 of the judgment is to a case management decision. Such a challenge will only succeed if the decision has exceeded the generous ambit within which a reasonable disagreement is possible: G v G [1985] 1 WLR 647, 652.
43. He accepts that, until Mr Cross gave evidence, there was no evidence that funding would continue to be made by the Council even if the claimant left Meadowbank and moved into his own home. In its closing submissions, the defendant made a detailed analysis of the funding that would be available to the claimant if he were in his own home. The claimant's closing submissions objected to the defendant's reliance on the evidence of Mr Cross. But Mr Grace points out that the claimant did not identify any difficulties in dealing with the direct payments issue. Nor did the claimant submit that there should be an adjournment to allow the claimant to carry out any necessary further investigations. Far from identifying any such difficulties, the claimant responded in detail to the defendant's closing submissions with an analysis of the relevant statutory material, submitting that the defendant's position was "entirely wrong". The defendant sought and was granted further time to enable it to respond to these submissions.
44. It is most unfortunate that the direct payments issue arose in the way that it did. In our view, having regard to the importance of the issue and its potential impact on the amount of the award for damages, the judge was right to allow the defendant to take the point. However, in our view, allowing the point to be taken there and then rather than following an adjournment and the proper service of evidence and a schedule of loss has resulted in unfairness and, as we shall demonstrate, an important lacuna in the evidence necessary for the judge's decision.
45. We do not criticize the judge. Mr Taylor did not apply for an adjournment; he appears to have been willing to carry on so long as he was given extra time for the preparation of his closing submissions. It is perhaps asking a lot of a judge to decide, of his own motion, that there must be an adjournment, when leading counsel does not specifically ask for it. Nor would we criticize Mr Taylor for not applying for an adjournment. He was placed in a very difficult position. He did not know that any new point was going to be taken until he heard Mr Cross's evidence. Even then, he thought that the evidence was directed to an argument about the defendant 'topping-up' the claimant's damages with something for extra care in the event that he were to remain in Meadowbank. When he 'put down a marker' as to the lateness of the introduction of a new point, it is clear from the transcript that neither he nor the judge understood what point was in fact going to be taken. It seems that Mr Taylor thought that he could deal with a top-up argument. It is unfortunate that neither Mr Taylor nor the judge insisted on being told exactly what point was being taken. Had he known, Mr Taylor might have asked for an adjournment and the judge might well have granted it. As it was, the case went on without Mr Taylor knowing on what basis he should challenge Mr Cross's evidence or whether he needed to seek evidence of his own to rebut it. It can now be seen that he did not have sufficient time to unravel the complexities of the legislation and guidance, or consider properly whether further evidence was needed to deal with the point. We shall return to this later.
46. What occurred in this case proves the wisdom of the remarks made by all three members of this court in Sowden. The springing of surprises is anathema to modern case-management. That is what happened in this case. To raise an important and difficult issue in the way that the direct payments issue was raised was an unacceptable way to conduct litigation. We do not criticize either Mr Taylor or the Judge but it can now be seen that the right course would have been to adjourn the issue to enable Mr Grace to formulate it properly and for Mr Taylor to consider it fully.
47. The second issue: will the Council make direct payments in this case?

The threshold question: can the Council be satisfied that it is necessary for it to meet the care needs of the claimant?

Discussion

48. This issue was not raised at all before the judge. The argument below, introduced late in the day as it was, was directed solely to whether the means testing of the claimant would take account of his damages and result in the Council not making direct payments on that account. The judge dealt with that question fairly summarily. At paragraphs 72-76 of his judgment, he referred to some of the statutory material that we have set out earlier. At paragraph 77, he said:

"I conclude therefore that the local authority will therefore not look to any damages awarded in determining what contribution to make to the Claimant's care or what contribution to levy from him for providing such a contribution. This seems to me to be in accordance with what was said by Longmore LJ in Sowden at paragraphs 87 to 89."

49. As regards the threshold question, Mr Taylor submits that in a case such as the present, where the claimant has received a substantial award of damages, the local authority will not provide practical assistance for the claimant in his home (section 2(1)(a) of CSDPA), and therefore will not make direct payments, because it will not be necessary for it to do so in order to meet his needs. He relies on the observations of Lord Lloyd of Berwick in R v Gloucestershire County Council ex parte Barry [1997] AC 585, 597H

"The section contemplates three separate stages. The council must first assess the individual needs of each person to whom section 29 of the Act of 1948 applies. Having identified those needs, the council must then decide whether it is necessary to make arrangements to meet those needs. There might be any number of reasons why, in the circumstances of a particular case, it might not be necessary for the local authority to make arrangements, for example, if the person's needs were being adequately met by a friend or relation. Or he might be wealthy enough to meet his needs out of his own pocket. But if there is no other way of meeting the individual's needs, as assessed, and the council is therefore satisfied that it is necessary for them to make arrangements to meet those needs, then the council is under a duty to make those arrangements. It is essential to a proper understanding of section 2 of the Act of 1970 to keep the three stages separate. Confusion arises if the stages are telescoped."

50. The judge awarded damages on a full liability basis of £3,494,882. This total sum included the following elements: general damages (£200,000); past losses including interest (£330,460); cost of purchasing a house and technological support (£602,980); future losses (£957,500) including loss of earnings (£500,000) and damages for the cost of transport, various types of therapy and Court of Protection expenses; and future care costs after deducting an amount for direct payments by the Council (£1,387,525). On any view, even if the care costs are completely disregarded, the claimant has been awarded a very large sum of money which is more than enough to enable his care provider to set up a suitable care package in his own home and meet his care needs well into the future. It is submitted that, in these circumstances, the Council cannot reasonably decide to make direct payments to the claimant because it cannot be satisfied that it will be necessary for it to do so in order to meet the claimant's care needs. Those needs will be sufficiently met by the claimant without any assistance from the Council. Accordingly, the means testing stage will not be reached.
51. A similar issue arose in relation to section 21 of NAA in R v Sefton Metropolitan Borough Council, ex parte Help the Aged [1997] 4 All ER 532. Mrs Blanchard needed residential care. She was in a nursing home and paying for this herself from her savings. Under section 22 of NAA and the Assessment of Resources Regulations, in determining a person's ability to pay for accommodation provided under section 21, capital under £10,000 was disregarded, and once her capital fell below £16,000 the authority became under an obligation to provide financial assistance. The local authority had its own scheme whereby elderly applicants were not considered to be eligible for financial assistance unless their capital fell below £1500.
52. When her capital fell below £16,000, she sought assistance from the local authority pursuant to section 21. This was refused on the grounds that Mrs Blanchard could pay for accommodation with her funds above £1500. When her capital fell below £1500, the local authority funded her accommodation. At no stage was she without the care that she needed.
53. Lord Woolf MR said at page 543H that the authority was not entitled to provide its own scale. By doing so, it defeated the intent of section 22: "the statutory scheme rests on the assumption that care and attention is not to be regarded as "otherwise available" if the person concerned is unable to pay for according to the means test regime provided for in section 22".
54. Sections 21(2A) and (2B) were inserted into NAA by the Community Care (Residential Accommodation) Act 1998 to give statutory confirmation to the decision in Sefton. In Bell v Todd and others [2002] Lloyds LR Med 12, following the amendment to section 21, the threshold question was argued again in the context of a section 21 case. A proposed structured settlement was agreed subject to the agreement of the court. The local authority was joined as a party to the litigation. It argued that its obligation to provide the claimant with care and accommodation under section 21 would be extinguished by the settlement since such care would be "otherwise available". Stanley Burnton J held that he was not strictly bound by Sefton in view of the subsequent amendments to section 21. He pointed out that the subsections inserted into section 21 are restricted to a person's capital. He nevertheless decided that an applicant's income is not to be taken into account by a local authority in determining whether care and attention are "otherwise available" under section 21 unless it may be taken into account in determining his ability to pay under section 22; and if it is to be taken into account, its assessment is similarly subject to the means test regime enacted under section 22. He reasoned that the decision in Sefton was not restricted to capital: both the judgment and its rationale were equally applicable to income. Moreover, the judge said that Parliament could not have intended to have introduced an anomalous and illogical distinction between capital and income.
55. The decision in Sefton is not binding on us in the present case, since it was a decision under section 21. Mr Taylor points out that the statutory provisions of section 21 and 22 do not apply to section 29 of NAA or section 2 of CSDPA. It follows, he submits, that the decision in Sefton does not require this court to hold that a local authority is bound to provide care for a person who clearly has sufficient resources to provide care for himself.
56. As we have said, Parliament has confirmed the decision in Sefton. Section 21(2A) of NAA states that in determining whether "care and attention are otherwise available to a person", a local authority shall disregard so much of a person's resources as may be specified in, or determined in accordance with, regulations made for the purpose. The relevant regulations are the National Assistance (Residential Accommodation) (Disregarding of Resources) (England) Regulations 2001, 2001 No 3067 ("the 2001 Regulations"). Regulation 2(1) provides that for the purposes of section 21(2A) of NAA, a local authority shall disregard so much of the person's capital as does not exceed the capital limit for the purposes of section 22 of NAA. Regulation 2(2) provides that a person's capital shall be calculated in accordance with the Assessment of Resources Regulations "in the same way as if he were a person for whom accommodation is proposed to be provided as mentioned in subsection (3) of section 22 of the Act and whose ability to pay for the accommodation falls to be assessed for the purposes of that subsection". In other words, in relation to capital, the Assessment of Resources Regulations, whose purpose is to prescribe the way in which the means testing process should be conducted, has been pressed into service for the different purpose of determining the section 21 threshold question of whether care and attention are otherwise available.
57. For the purposes of deciding the threshold question under section 21, therefore, the capital sum represented by an award of damages for personal injury is disregarded. That is the effect of regulation 21(2) and paragraph 19 of Schedule 4 to the Assessment of Resources Regulations. Regulation 21(2) provides that there shall be disregarded in the calculation of a resident's capital any capital specified in Schedule 4. Schedule 4 contains a list of items of capital to be disregarded and paragraph 19 is "any amount which would be disregarded under paragraph 44(a) or 45(a) of Schedule 10 to the Income Support Regulations (compensation for personal injuries which is administered by the Court)".
58. So far as is material, the position with regard to income deriving from capital is governed by regulation 22(4) of the Assessment of Resources Regulations which provides: "Except any income derived from capital disregarded under paragraph 1,2,5,10,16 or 18 of Schedule 4, any income of a resident which is derived from capital shall be treated as capital but only from the date on which it is normally due to be paid to him". Since paragraph 19 of Schedule 4 is not excluded, the effect of regulation 22(4) is that the income derived from an award of damages for personal injury which is being administered by the Court of Protection is treated as capital for the purposes of determining whether care and attention would otherwise be available within the meaning of section 21. The interpretation of these provisions is not free from difficulty where, as was the case in Bell v Todd and Ryan v Liverpool Health Authority [2002] Lloyds LR Med 23, both paragraphs 10 and 19 of Schedule 4 apply to the income. But where only paragraph 19 applies, it seems to us that the position is as we have just outlined it.
59. The position with regard to section 21, therefore, is that where a claimant is awarded damages for personal injury that are administered by the Court of Protection, the sum awarded and any income that might derive from that sum are disregarded at the threshold stage. They cannot be taken into account for the purposes of deciding whether the claimant is in need of care and attention which is not otherwise available.
60. Is the position the same in relation to the threshold question that arises under section 29 of NAA and section 2 of CSDPA? Mr Taylor submits that, as Parliament did not extend section 21(2A) and the 2001 Regulations to section 29 of NAA and section 2 of CSDPA, it must be assumed that it did not intend that section 21(2A) and the 2001 Regulations should apply to these statutory provisions. Accordingly, it should be inferred that the local authority may take all resources into account at the threshold stage. He submits that the inference is a strong one because Parliament has legislated on this issue twice in a short space of time.
61. In Sefton, at page 540A Lord Woolf drew attention to some differences in language between sections 21(1) and 29. But in our judgment, those differences are not material. The words "necessary in order to meet the needs of that person" and "in need of care and attention" both raise the same threshold question: is intervention by the local authority by the provision of accommodation or the making of arrangements for the provision of practical assistance for that person in his home necessary, or are there resources otherwise available to the person such that intervention is not necessary?
62. It is striking that there is no provision in NAA or CSDPA which corresponds with section 21(2A) or 22(5), both of which are firmly anchored to the duty to provide accommodation in section 21. There is no power to make regulations directing or guiding a local authority as to how it should determine whether it is necessary to provide practical assistance for the person in his or her home or any of the other welfare services mentioned in section 2(1) of CSDPA. But we cannot accept that it is necessary to infer from this difference and the legislative history that Parliament intended that an award of damages for personal injury should be disregarded at the threshold stage in relation to section 21 of NAA, but taken into account in relation to section 29 of NAA and section 2 of CSDPA.
63. If the statutory rules for means testing contained in section 22 and the Assessment of Resources Regulations made under section 22(5) had applied to both the section 21 and the section 29 functions, then the failure to introduce into section 29 a provision corresponding with section 21(2A) and the failure to make regulations corresponding with the 2001 Regulations would have been significant, and might well have given rise to the necessary inference for which Mr Taylor contends. But it is not surprising that legislation was not introduced to apply the reasoning of Sefton to section 29 cases, since historically the treatment of these cases has been dealt with by way of ministerial guidance.
64. As we have stated earlier, section 7(1) of LASSA requires local authorities, in the exercise of their social services functions, to act under the general guidance of the Secretary of State. These functions include those under section 29 of NAA. The guidance given in relation to charging for care services provided under section 29 and for direct payments made in lieu is in the Fairer Charging Policy. For reasons that we explain at paragraphs 66-67 below when we examine the means testing question, we consider that the Fairer Charging Policy provides that the capital sum represented by an award of damages for personal injuries which is administered by the Court of Protection should not be taken into account by a local authority when a person is means tested. That seems to us to be the clear effect of paragraph 59 of the Fairer Charging Policy and paragraph 6.028 of CRAG. The position with regard to income deriving from such an award is unclear. We shall express our conclusion on the threshold question on the assumption that an award of damages administered by the Court of Protection and any income deriving from such an award are to be left out of account at the means testing stage.

Conclusion on the threshold question

65. We would hold that, when addressing the threshold question, a local authority cannot take account of resources which it may not take into account at the means testing stage. Our reasons are as follows.
66. First, it is difficult to see why personal injury damages should be left out of account for the purposes of deciding whether care and attention is to be regarded as "otherwise available" (the section 21 question), but that they should be taken into account when deciding whether it is necessary to provide welfare services to meet a person's care needs (the section 29/section 2 question). There are obvious policy reasons for ring-fencing a person's personal injury damages where he is under a disability (and his funds have to be administered by the Court of Protection). No policy reason has been suggested to justify ring-fencing such a person's personal injury damages in relation to the cost of care and attention in accommodation provided by a local authority, but not ring-fencing the damages in relation to the cost of meeting such a person's care needs in his own home.
67. Secondly, a system which requires personal injury damages to be taken into account at the threshold stage, but disregarded at the means test stage makes little sense. Unless the threshold is crossed, no question of applying the means test can arise. On Mr Taylor's argument, there will in practice be little scope in such a system for the application of the disregard rules provided in the means testing provisions. Where, as will often be the case, the only resources available to a person are his or her personal injury damages, if Mr Taylor is right it will only be when the money runs out that the threshold is crossed, and by that time, ex hypothesi, the person will have no resources to which the means testing can be applied. So far as we can see, the only circumstances in which, on Mr Taylor's argument, the threshold can be crossed are where the damages are too small to enable a privately funded care regime to be established (even for a short period). But it is a strange policy which requires the whole of a person's personal injury damages to be expended on his care needs if the award is large enough to enable a privately-funded scheme to be set up; but does not require any part of it to be so expended if they are too small to set up a scheme.
68. Thirdly, the Fairer Charging Policy (for the purposes of section 29 of NAA) and the Assessment of Resources Regulations (for the purposes of section 21 of NAA) contain complex and detailed rules for determining which resources are, and which are not, to be taken into account by the local authority when it decides whether to charge for a service or make a direct payment in lieu. The treatment of a person's resources in this context raises difficult policy issues. It is clear that the policy embodied in the Assessment of Resources Regulations and the Fairer Charging Policy is that personal injury damages administered by the Court of Protection should be ring-fenced. That policy would be completely undermined if a local authority could require that such damages be exhausted before it may be satisfied that it is necessary for services to be provided. So too would be the policy (which finds expression in paragraph 60 of the Fairer Charging Policy) that ex gratia payments made to former Far-Eastern prisoners of war and payments made under the Vaccine Damage Payment scheme should be disregarded entirely. Although the approach in relation to section 29 NAA (and section 2 CSDPA) is intended by the Fairer Charging Policy to be discretionary, the guidance sets out minimum requirements: see paragraph 5. The effect of section 7 of LASSA is that it is guidance which local authorities are required to follow. They are, therefore, expected to comply with the minimum requirements and have a true discretion to be more generous.
69. Fourthly, if personal injury damages are to be taken into account at the threshold stage, undesirable distinctions can arise. Suppose A and B both recover substantial damages for their personal injuries. Neither of them has any other resources and both have significant care needs and live at home. A decides to use his damages to fund the purchase of care services to meet his needs, but B refuses to do the same. On Mr Taylor's argument, it would seem that the local authority is required to fund B's care needs. This is because B needs the care that he is not getting: the authority cannot say that it is not necessary for him to have care, because he can afford to pay for it himself. At the means testing stage, the local authority would not require B to use his damages to pay for the care, because that is the effect of the Fairer Charging Policy. On the other hand A, who has behaved sensibly and responsibly, will never reach the means testing stage, at any rate not until he has exhausted his damages.
70. Fifthly, although Sefton is not technically binding on us, its reasoning is persuasive. That is to say that the statutory scheme rests on the assumption that it is "necessary in order to meet the needs" to provide or pay directly for care services if the person is unable to provide them himself; and in deciding whether he is able to provide them himself, his ability to pay is to be judged by reference to the relevant means testing regime.
71. Sixthly, the observations of Lord Lloyd in his dissenting speech in Barry do not assist. They did not form part of his decision or of that of any other member of the House. More importantly, as Mr Grace points out, they merely beg the question as to whether, in deciding whether a person has resources, an award of damages for personal injury may or may not be taken into account.
72. During the course of argument, it was suggested that there was a distinction between (i) the case where the damages could be used to provide necessary services and (ii) the case where the damages are in fact being so used. The point made was that, whatever the position might be in (i), there can be no doubt that in (ii) a local authority cannot be satisfied that services are necessary because the need is in fact being met at the time when the local authority is being called upon to make its decision. We do not consider that this is a relevant distinction. It was not considered to be relevant in Sefton where Mrs Blanchard was being cared for privately, although we accept that there is no indication that this point was raised. But such a distinction does not meet any of the objections to which we have referred at paragraphs 65-68 above. The local authority should not be concerned with the facts on the ground at the precise point in time when it has to make its decision. It should be concerned with what is necessary for the applicant at the time of decision regardless of whether the care package has been finally put together at that point in time.
73. We conclude, therefore, that a local authority is obliged to disregard personal injury damages administered by the Court of Protection in deciding the threshold question.

Can the Council have regard to the claimant's damages at the means testing stage?

74. This is a question that the judge did decide: see paragraph 47 above. As we have said, his reasoning which is encapsulated in paragraph 77 of his judgment is brief. It was suggested by Mr Taylor that it was based, at least in part, on a misinterpretation of paragraph 86 of the Fairer Charging Policy. It is unclear to us whether the judge did rely on this paragraph in support of his conclusion. It is common ground (and we agree) that paragraph 86 sheds no light on the question whether, in carrying out the means testing exercise, the Council can take account of the claimant's damages and the income that will be derived from them.
75. In his summary of the legislation and Ministerial Guidance, the judge referred to paragraph 58 of the Fairer Charging Policy and paragraph 6.028 of CRAG. It would seem, therefore, that he relied on these provisions to reach his conclusion that the Council would not take account of the claimant's damages in determining what contribution to make to his care or what contribution to levy from him for providing such a contribution. He also seems to have been influenced by what Longmore LJ said at paras 87-89 in Sowden. Sowden was a section 21 NAA case, to which, therefore, the Assessment of Resources Regulations would apply. At paragraph 88, Longmore LJ said that

"…..Moreover, if a claimant availed himself (or herself) of local authority care, the local authority was, pursuant to sections 22 and 29 of the National Assistance Act 1948 and section 17 of the Health and Social Services and Social Security Adjudication Act 1983, entitled to look to any of the claimant's resources (including any claim he might have for damages in negligence) in order to recoup the cost of the care provided: see Avon County Council v Hooper [1997] I WLR 1605. In 1998 however it was for the first time enacted by the National Assistance (Assessment of Resources) (Amendment) Regulations 1998 (SI 1998/497) that a local authority could not look to any award of damages for the purposes of such recoupment. Any such award was henceforth to be ring-fenced from such claims….."

76. The judge may have been misled by this passage into thinking that the Assessment of Resources Regulations apply to the cost of services provided under section 29 of NAA as well as section 21. But as we have already said, those regulations were made under section 22(5) and are linked only to the provision of accommodation under section 21. The section 21 and section 29 regimes are quite different. In relation to the assessment of means for the purposes of making a contribution to the cost of accommodation and care provided pursuant to section 21, the ring-fencing of damages and income arising from damages is provided for by statute and statutory instrument. The section 29 framework is different: the local authority is given a discretion to decide what to charge by section 17 of HASSASSA. There are no provisions corresponding with the Assessment of Resources Regulations. The discretion is asserted and guidance is given as to how it should be exercised in the Fairer Charging Policy.
77. So what does the Fairer Charging Policy provide? In our view, it provides that the capital value of personal injury damages that are administered by the Court of Protection is to be disregarded in the means testing exercise. Section VIII "includes the minimum requirements for treatment of savings" (paragraph 57). There is no difference between "savings" and "capital". That is clear from the first sentence of paragraph 57 viz: "Councils may take account of a user's savings or other capital" (emphasis added). Paragraph 59 states unequivocally that the main residence occupied by the user should not be taken into account. The sentence continues: "but other forms of capital may be taken into account, as set out in CRAG". This wording is not happily expressed. But in our view it means that the CRAG rules for determining what capital should be taken into account are imported in their entirety, on the footing that local authorities have a discretion to treat a person's capital more generously. It follows that, if CRAG stipulates that certain items of capital are to be disregarded, then the Fairer Charging Policy requires the local authority to exercise its discretion in the same way.
78. Paragraph 6.028 of CRAG provides that the value of funds held in trust or administered by a court which derive from a payment for personal injury is a capital asset that is disregarded indefinitely. It follows that the Fairer Charging Policy provides that in the means testing of the claimant's resources, the capital sum represented by the damages awarded in this case would be left out of account.
79. The treatment of income deriving from an award of damages for personal injury is more problematic. Mr Taylor submits that it is impossible to spell out of the Fairer Charging Policy an intention that such income is to be disregarded and the judge was wrong to hold that income would be disregarded in the assessment of means. He rightly points out that section VIII deals only with savings and capital. Section V deals with "income" and provides that as a minimum, users' incomes should not be reduced by charges below "basic" levels of Income Support, as defined, plus a buffer of not less than 25% (paragraph 15). This section does not expressly import CRAG. On the other hand, CRAG is expressly imported for the purpose of defining "earnings" in relation to paragraph 72 of the Fairer Charging Policy. This paragraph states that the Government believes it is right that councils should disregard all earnings in charge assessments for non-residential social services, including charge assessments for carers.
80. There is no express reference in the Fairer Charging Policy to income derived from investments of whatever nature. This is surprising in view of the fact that such income is expressly dealt with in CRAG. Section 8 of CRAG is headed "income other than earnings". Paragraph 8.05 lists the types of income that are taken into account in full in the assessment of means. They include "income from certain disregarded capital (8.015)". Paragraph 8.015 provides:

"Income from capital will generally not be treated as income (see 6.043). However, income which comes from certain forms of disregarded capital is taken fully into account for so long as the capital is disregarded. This will be the case where the capital is …..any capital held in trust which is as a result of a personal injury".

81. Section 10 is headed "trust funds". Paragraph 10.26 of the 1999 version of CRAG referred to in paragraph 58 of the Fairer Charging Policy provided that: "Payments of income from capital held in trust which is in consequence of personal injury is taken into account in full in the assessment for as long as the capital continues to be disregarded". In substance, this reflects paragraphs 8.05 and 8.015. The revised version of CRAG issued in April 2005 and which was current at the date of trial provides:

"10.026. The following periodical payments are disregarded

• Payments from a trust whose funds are derived from a payment made in consequence of any personal injury.

• Payments under an annuity purchased pursuant to any agreement or court order to make payments, or from funds derived from such a payment in consequence of any personal injury.

• Payments received by virtue of any agreement or court order to make payments to the resident in consequence of any personal injury.

(The agreements mentioned above include out-of-court settlements.)

The payments in 10.026 are fully disregarded if intended and used to pay for any item which was not taken into account when the standard rate was fixed for the accommodation provided. Otherwise, £20 is disregarded."

82. In Freeman v Lockett [2006] EWHC 102 (QB), Tomlinson J examined the Fairer Charging Policy and CRAG in a case which bore some similarities to the present case. He concluded at paragraph 22 of his judgment that "it is a moot point whether the provisions in CRAG which deal with income are intended to be applicable by incorporation into the domiciliary care regime." He was left in doubt as to the position concerning income accruing on capital sums deriving from a personal injury award, whether the sums are held in trust or otherwise.
83. The position with regard to income deriving from capital is far from clear. The CRAG rules for dealing with such income are not expressly imported into the Fairer Charging Policy. In this respect, the contrast with the treatment of capital is striking. In view of the express incorporation of some CRAG rules for certain purposes, it is difficult to see how other CRAG rules may be said to be incorporated by implication. It may be that there is a lacuna in the Fairer Charging Policy. Alternatively, it may be argued that the position is covered by section V of the Policy. Paragraph 22 provides

"22. For users who receive other income in addition to Income Support or the Guarantee Credit of Pension Credit or JSA-IB, taking them above the basic levels, (usually disability-related benefits such as Attendance Allowance (AA) or Disability Living Allowance (DLA), but also including SDP for Income Support or the additional amount for severe disability for Pension Credit), councils may choose: either to exempt such users from charges regardless of their additional income, or to include the user's overall income within a charge assessment. Where councils choose the latter, the aim should be to ensure that any charge levied does not reduce the user's net income below basic levels of Income Support or the Guarantee Credit of Pension Credit, plus 25%. This is explained further in the next section."

84. But it seems to us unlikely that the phrase "other income" is intended to include investment income. The words in brackets "usually disability-related benefits" and the reference to the explanation in the next section (which is headed "Treatment of disability-related benefits") strongly suggest that paragraph 22 is not intended to apply to investment income. But whether there is a lacuna or paragraph 22 does apply, the treatment of investment income is a matter for the discretion of the local authority, untrammelled by any guidance in the Fairer Charging Policy as to how it should be exercised. The question arises, therefore, how in the exercise of its discretion the Council would treat income derived from the claimant's damages.
85. It is at this point that we need to revert to the evidence of Mr Cross. During his evidence in chief, he was asked what obligation the Council would have towards the claimant to make payments or provide for his care if he were to move from Meadowbank to his own accommodation. He answered: "His assessed needs would not change in that situation. We would still have a responsibility to provide for his assessed needs". He said that this could be done by directly purchasing care or by direct payments. A little later, he was asked whether the current annual cost of meeting the claimant's needs at Meadowbank was relevant to how the Council would assess its obligations. Mr Cross replied: "Yes. Andre's assessed needs would not change because of a change of setting. The needs remain the same and they are to provide personal care and support for him as a result of his disabilities".
86. At no stage during his evidence did Mr Cross suggest that the capital sum represented by his damages or the income deriving from it would or might be taken into account in determining the level of charges or direct payments. The impact (if any) of a substantial award of personal injury damages on the way in which the Council would conduct the means testing exercise was not discussed in the evidence at all. This is probably because the direct payments issue first surfaced during the evidence of Mr Cross. It is particularly unfortunate that there was no exploration of the Council's policy in relation to the treatment of income deriving from an award of damages. No further information about these issues has been produced to this court. In these circumstances, we have regretfully come to the conclusion that the judge did not have sufficient material to enable him to decide whether the income would be taken into account by the Council, and this court is in no better position to do so than was the judge.

Overall conclusion on the second issue

Capital

87. To summarise, the judge was right to hold that the Council could and would make direct payments to meet the claimant's care needs despite the award of damages, and that these payments should be taken into account in the assessment of damages.
88. Once the judge decided that the Council would make such direct payments, it seems to us that he was bound to hold that they should be taken into account in the assessment of damages. This point needs to be made because there is much to be said for the view that the tortfeasor should pay, and that the state should be relieved of the burden of funding the care of the victims of torts and that its hard-pressed resources should be concentrated on the care of those who are not the victims of torts. We refer, for example, to Sowden v Lodge per Longmore LJ at para 92, Tinsley v Sarkar [2005] EWHC 192 (QB) per Leveson J at para 129 and Freeman v Lockett per Tomlinson J at para 6. It does not seem right, particularly where the care costs are very large, that they should be met from the public purse rather than borne by the tortfeasor.
89. Longmore LJ referred to the "instinctive feeling that, if no award for care is made because it will be provided free by the local authority, the defendant and his insurers will have received an undeserved windfall". The counter-argument is that, if the claimant does not have to give credit for benefits that he will receive from the state as a result of his personal injury, then on the law as it currently stands, he will make double recovery. To satisfy the "instinctive feeling", a change in the law would be necessary.
90. Such a change raises what is essentially a political question and, therefore, a matter for Parliament. Historically, the state provided many services to the victims of tortious accidents without charge and made no attempt to recoup the cost of those services from the tortfeasors. Recently, there has been an important change in respect of NHS hospital and ambulances services. Part 3 of the Health and Social Care (Community Health and Standards ) Act 2003 (which came into force in January 2007) provides that any person who has made a compensation payment in respect of an injury to another person will be liable to pay relevant NHS charges for treatment and ambulance services provided to that person. This legislation does not affect the assessment of damages as between the claimant and the tortfeasor. We do not know whether this legislation signals a general change in the attitude of the legislature to the responsibilities of tortfeasors to pay for the costs presently imposed upon the public purse. We say only that we can see no good policy reason why the care costs in a case such as this should fall upon the public purse. We can see no good policy reason why damages which are about to be awarded specifically for the provision of care to the claimant, needed only as a result of the tort, should be reduced, thereby shifting the burden from the tortfeasor to the public purse. We recognise that the mechanism by which these ends could be achieved with justice might be complex and difficult. But, as we say these are policy issues and are a matter for Parliament.
91. It is trite law that a claimant is entitled to recover the full extent of his loss. That involves asking what the claimant would have received but for the event which gave rise to the claim and which he can no longer get; and what he has received and will receive as a result of the event which he would not have received but for the event. The question then arises whether the latter sums must be deducted from the former in assessing the damages: Parry v Cleaver [1970] AC 1, 13. In Hodgson v Trapp [1989] 1 AC 807, 891 Lord Bridge said that it was "elementary" that if in consequence of the injuries he has sustained a claimant enjoys receipts to which he would not otherwise have been entitled, then prima facie those receipts are to be set against the aggregate of his loss and expenses in arriving at the measure of damages. To this basic rule there are certain well established exceptions, none of which is of application in the present case.
92. In principle, payments by third parties which a claimant would not have received but for his injuries have to be taken into account in carrying out the assessment of damages unless they come within one of the established exceptions. It is not suggested that direct payments made by a local authority in the exercise of its statutory functions to make care arrangements under section 29 NAA and section 2 CSDPA may not in principle be taken into account. If the court is satisfied that a claimant will seek and obtain payments which will enable him to pay for some or all of the services for which he needs care, there can be no doubt that those payments must be taken into account in the assessment of his loss. Otherwise, the claimant will enjoy a double recovery.
93. In Freeman v Lockett, Tomlinson J decided that there should be no reduction in the claimant's damages to reflect the possibility of direct payments by the local authority. A sufficient basis for his decision was his finding that, provided that no deduction on account of the possible receipt of state or local authority funding was made from her award of damages, the claimant would withdraw her application for funding; she wanted to rely exclusively on private funding for her care.
94. But he would in any event have refused to make any reduction in the claimant's damages on account of direct payments for other reasons. He said that there was no principled basis on which the court could estimate what funding the claimant could reliably expect to receive from the local authority for the rest of her life. The court "does not speculate unnecessarily or in an unprincipled manner….I cannot understand how it can be appropriate to impose upon the Claimant the unnecessary risk that funding from an alternative source may cease or be reduced rather than simply to order the provision of the fund in its entirety" (paragraph 35).
95. In making these observations, Tomlinson J was influenced by the fragility of the policy from which the right to receive direct payments derived. He said that "in the ordinary way, the regime pursuant to which direct payments are made for domiciliary care is very much more vulnerable to adjustment in order to save costs than is the direct provision of residential care" (paragraph 38).
96. We would accept that there may be cases where the possibility of a claimant receiving direct payments is so uncertain that they should be disregarded altogether in the assessment of damages. It will depend on the facts of the particular case. But if the court finds that a claimant will receive direct payments for at least a certain period of time and possibly for much longer, it seems to us that this finding must be taken into account in the assessment. In such a case, the correct way to reflect the uncertainties to which Tomlinson J referred is to discount the multiplier. We did not understand Mr Taylor to contend otherwise.

Income

97. For the reasons that we have given, it is not possible to decide on the evidence that has been produced whether the income that may be derived from the award of damages will affect the amount of direct payments that the Council will make to the claimant.

The third issue: the judge's decision as to the amount of direct payments

98. The judge dealt with this at paras 78-84 of his judgment. He referred to the evidence of Mr Cross that the claimant's assessed needs would not alter by reason of his leaving Meadowbank. He said that the Council would make direct payments to the claimant and that the amount of the direct payments might be different from the current budgeted cost of his care at Meadowbank. He said that the reason for this was that there were two schemes for direct payments. Option 1 was an amount given to a person to purchase or to employ carers to meet his or her needs. Under option 2, the person was given funding to purchase the necessary services from an agency. Option 1 was under review and was likely to cease. The rate of payment under option 1 was lower than that under option 2.
99. The judge found that the Council would regard the care package provided for the claimant at Meadowbank as the appropriate and adequate package, rather than the more extensive package envisaged by those advising the claimant. He said:

"82. Mr Cross gave evidence that direct payment was at present made under one of two different schemes. Under Option 1 payment is made at a gross rate of £8.72 per hour. Under Option 2 payment is made at the rate charged by an agency for the provision of carers, a substantially greater rate (assumed, at least by the Defendant, to be £14.65 per hour. Mr Cross's evidence was that Option 1 was under review and was likely to cease to be provided).

83. On the basis of this evidence the Defendant submitted that it should be assumed that the Claimant would receive assistance from the local authority at a rate midway between Option 1 and Option 2. In my judgment that is not the appropriate assumption to make. Given that Option 2 is considerably more expensive than Option 1 and that local authorities are under constant financial pressure, it seems to me that the balance of probabilities is that payment will continue to be made only at the Option 1 rate. It is immaterial whether this will [be] achieved by re-vivifying Option 1 or by capping payment under option 2 to the level of payments actually incurred. It would on any view be illogical for a local authority to be paying out to assist in the provision of carers at such a rate as to give the recipient a profit and the balance of probabilities must be that local authorities will not allow that situation to arise.

84. It follows that in my view the appropriate conclusion is that the local authority will provide assistance by direct payment to the Claimant at the rate of £8.72 for 107 hours per week for 52 weeks in each year and in addition will provide £375 per week for night care for 52 weeks in each year: a total of £68,018. This amount should be set against the annual care figure already set out above. The agreed multiplier of 25.42 must then be applied to the resulting figure of £54,584 to reach the appropriate figure to be awarded for future care: £1,387,525."

100. It is submitted on behalf of the claimant that the judge's decision was flawed in three respects: (i) the number of hours to be covered by the direct payments; (ii) the hourly rate that would be paid; and (iii) the period over which it would be paid (as reflected in the multiplier). In each case, it is said that there was insufficient evidence for the judge to make the findings that he made.
101. As regards the number of hours, Mr Taylor submits that the judge was wrong to assess the direct payments on the basis of the same number of hours of care as the claimant currently receives at Meadowbank. The process by which the number of hours' care would be assessed for the purposes of direct payments would start with an assessment of needs. This could and would only be done when the claimant was in his own home. The claimant would not be placed in his own home without a full care package in place. Thus, when the assessment takes place, he will be assessed as someone with critical presenting needs; but he will not be assessed as having any, or any major, "eligible" needs, ie needs that are eligible for the provision of services by the Council. The evidence of Mr Cross was not specifically directed to the number of hours of care that the claimant will need when he is living in his own home.
102. Next, Mr Taylor submits that the judge did not have sufficient material to enable him to determine the hourly rate for direct payments. The burden was on the defendant to show what the hourly rate would be. At the very least, the defendant should have led evidence to show what hourly rates the Council was currently paying.
103. If these two issues had stood alone, we would have held that the judge was entitled to reach the conclusion that he reached for the reasons that he gave. But since for the reasons given at paragraphs 82-95, 96 and 103-109, we have decided to remit the direct payments issue to the judge for further consideration, it seems to us that the question of the number of hours and the hourly rate should be included in the reconsideration.
104. As regards the period over which direct payments would be made, the judge accepted without any supporting reasoning that the agreed lifetime multiplier of 25.42 should be applied in full to the multiplicand. In other words, he accepted that the annual direct payments would be made for the claimant's entire life without any alteration.
105. Mr Taylor submits that there was an issue in this case as to how secure the claimant's funding from the Council would be over the next 40 years if he had to stay in state-funded accommodation. The judge dealt with that issue at paragraph 17 of his judgment:

"The precise way in which funding is currently being made remained obscure….it is clear that funding for the carers for the claimant has been cut….the extent to which further cuts may be made and the effect those cuts will have on Meadowbank and on the claimant is obscure."

106. Although the judge decided that the claimant should not remain at Meadowbank, Mr Taylor submits that the same concerns about security of funding apply in relation to direct payments. He relies on what Mitting J said in Godbold v Mahmood [2005] EWHC 1002 (QB), admittedly in relation to a section 21 NAA case, as having equal force in relation to the provision of care (or direct payments in lieu) under section 29 NAA/section 2 CSDPA. Mitting J said at paragraph 26:

"I have no confidence that the duty currently imposed by ministerial direction will exist at a time relevant to this claimant's needs. The duty is imposed not by primary legislation or even by secondary legislation, but by a combination of primary legislation and ministerial direction. The ministerial direction can be changed or withdrawn at any time without recourse to Parliament. It is notorious that the burden of providing for the elderly and disabled, which since 1990 has fallen on local authorities, has increased and is increasing. It is not beyond question that local authorities will persuade a future Secretary of State that the burden is insupportable and should be modified, reduced or withdrawn."

107. Mr Taylor rightly makes the point that there was no examination in the evidence of material that would have enabled the judge to decide whether and to what extent any payments could be regarded as being secure for the next 40 years, how much care/direct payments in lieu would be provided and how much the claimant would have to contribute. The uncertainties that might surround the making of direct payments would have required an exploration of the history of the availability of such payments; of the categories of people to whom such payments have been available; what problems there have been in obtaining and retaining them; any budgetary constraints that authorities act under and are entitled to take into account; how the assessment process which might lead to direct payments works in practice when someone is living in their own home with care that they have purchased; and the means testing process and how it works in practice.
108. In our view, the judge was wrong to apply the agreed whole-life multiplier to the direct payments. The uncertainties to which he referred at paragraph 17 of his judgment and to which Tomlinson J referred in Freeman v Lockett should have led him to conclude that a substantial discount to the multiplier was necessary. It is by no means far-fetched to suggest that, at some time in the future, the ministerial policy of ring-fencing personal injury damages and/or the Council's approach to that policy will change.
109. The paucity of material available to the judge (and to this court) to which we have referred above is such that we do not feel able to determine the correct multiplier.

Overall conclusion

110. We therefore allow this appeal. As we said earlier, it would have been better if the direct payments issue had been hived off from the rest of the trial and adjourned for full consideration. The effect of that not having been done is now apparent. We now consider that the whole of the direct payments issue should be remitted to the judge for further consideration in the light of this judgment. In view of the difficulty of the relevant legislation and guidance, the size of the care costs and the fact that the claimant will need care for the rest of his life, we think that it would be highly desirable if the Council were joined as a party to the proceedings.
111. We cannot conclude this judgment without expressing our dismay at the complexity and labyrinthine nature of the relevant legislation and guidance, as well as (in some respects) its obscurity. Social security law should be clear and accessible. The tortuous analysis in the earlier part of this judgment shows that it is neither. We would endorse the criticisms made by Stanley Burnton J in Bell v Todd paragraph 64 and Munby J in Ryan v Liverpool Health Authority [2002] Lloyds LR Med 23 paragraph 5.