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||Neutral Citation Number:  EWHC 3092 (QB)
||Case No: TLQ/12/0897
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
||Royal Courts of Justice
Strand, London, WC2A 2LL
||18th October 2013
B e f o r e :
Mrs Justice Andrews
|| Sarah Davison
||- and -
Michael Mylonas Q.C. (instructed by Irwin Mitchell) for the Claimant
Angus McCullough Q.C. (instructed by Capsticks) for the Defendant
Hearing dates: 8th – 11th October 2013
HTML VERSION OF JUDGMENT
Crown Copyright ©
Mrs Justice Andrews:
- This is a claim for damages arising from a serious obstetric injury suffered by the Claimant, Mrs Sarah Davison, during the delivery of her first child, Freddie, on 7th December 2008, whilst under the care of the Defendant, a Consultant Obstetrician. In the course of her labour, the Defendant performed a mid-line episiotomy which caused a third degree tear affecting both her internal and external anal sphincters. In the UK the more conventional form of episiotomy is a medio-lateral one, so as to avoid the risk of such injuries. The Defendant carried out some form of repair at the time, but failed to keep a clear record of what he did. It appears that there was no proper examination carried out post-delivery, so that the severity of the tear remained undetected and thus it was not made the subject of immediate surgical repair and treatment with antibiotics. Unfortunately, the Defendant failed to tell Mrs Davison about either the injury or the repair that he had undertaken, save that her discharge letter stated that "a small mid-line episiotomy extended slightly and I repaired this with vicryl".
- Whatever the nature of the repair, it was plainly insufficient. Some two weeks after Freddie's birth, Mrs Davison had a very painful experience whilst straining to empty her bowels, when she felt a sensation as if her stitches had given way, and she passed a lot of blood. It took most of the evening for the pain and the bleeding to subside. Although the midwife who examined Mrs Davison the next morning said that everything looked as it should, she remained in constant pain in the region of her coccyx, and began to experience severe difficulty in controlling her bowels, and incontinence of flatus. Mrs Davison only became aware that she had suffered a serious obstetric injury after a review by a colo-rectal surgeon, Mr Richard Cohen, to whom the Defendant referred her following her six week check up on 21st January 2009, and consequential investigation by endo-anal ultrasound on 24th February. That revealed "unequivocal evidence of a structural internal and external sphincter defect and an associated functional deficit". Mrs Davison had suffered significant obstetric trauma and a total loss of her perineum. On examination it was found that there was virtually no sphincter between the anal canal and the vagina.
- On 20th March 2009, Mr Cohen undertook a sphincter overlap repair and reconstruction of her perineum. The operation was successful in separating the vagina and anal canal. In the immediate aftermath of the surgery she suffered excruciating pain for two to three weeks and was bedridden for around five weeks. She was then referred for biofeedback treatment commencing in June 2009.
- The biofeedback treatment did bring about some improvement, and Mrs Davison has shown considerable fortitude in adapting and coping with her condition. Despite this, she has been left with significant ongoing symptoms, referred to in the reports of the colo-rectal medical experts, Miss Vaizey and Professor Winslet, and in Mrs Davison's own evidence, which cause her embarrassment, inconvenience and distress, and which have had a significant impact upon her life and career trajectory. There is no significant dispute as to the nature and extent of her symptoms and their effects and I will not add to Mrs Davison's distress by repeating them in this judgment.
- The experience has also taken its toll on Mrs Davison's mental health and in particular, on her ability to cope with stressful events. Prior to her injury, she had no history of depressive illness or anxiety, even though she had suffered an earlier miscarriage. The expert psychiatrists who examined Mrs Davison (Dr Denman and Dr Latcham) initially concurred in their diagnosis of a "mild adjustment disorder." Although Dr Latcham now doubts whether she continues to meet the criteria for such a diagnosis, there was no significant dispute between him and Dr Denman as to her need for continuing treatment and as to the nature of that treatment, but only as to its frequency.
- The Defendant admitted liability on 25th July 2013, some three years after the original letter of claim was sent. The lateness of the admission is regrettable, and is understandably a source of considerable grievance to the Claimant, as Mr McCullough Q.C. readily acknowledged. However, I accept Mr McCullough's assurance that the admission was made as soon as it was appreciated that the Defence was no longer supported by the available expert medical evidence.
- The issues at trial therefore pertained to quantum only. After the experts had given their evidence, Counsel were able to agree the figures for pain, suffering and loss of amenity (£65,000), interest on general damages (£2,600) and for future medical treatment (£22,000 for future surgical costs and £25,400 for future psychiatric care). Prior to trial they had also agreed a total figure of £5,500 for all heads of past loss besides loss of earnings, and the interest thereon. The only outstanding dispute relates to the claim for loss of past and future earnings and the claim for loss of congenial employment. I therefore turn to consider the facts relating to those remaining heads of claim.
- Mrs Davison was born on 10th January 1977 and thus she was almost 32 when Freddie was born. She is an intelligent, able and articulate woman, and at the time of Freddie's birth had every prospect of returning to the pursuit of a highly successful banking career in the City. She graduated from Warwick University with a first class honours degree in history and managed to secure a place on the prestigious Goldman Sachs graduate training programme (for which there was intense competition). After completing the 24 month programme, which involved a six month rotation through each back office function at the bank, she worked in Goldman Sachs Asset Management for a short time before moving to the London office of UBS in 2000. Her job at UBS involved sales of Euro sterling corporate bonds to European pension funds.
- Mrs Davison's career in equity sales began with her move to ITG Europe in 2001. ITG had developed a network called "POSIT" which traded equities several times a day. Institutional clients using the POSIT network were able to trade anonymously (which had the advantage of minimizing market impact) and to keep down their trading costs. Mrs Davison's role called for aggressive selling of the network as a "product" to achieve critical mass, working out a client's trading patterns and interest in trading particular stock so as to develop trading opportunities outside the fixed crossing schedules, and creating broader distribution for an associated suite of products. The equities with which Mrs Davison was dealing were European equities, including UK stocks.
- Building a good relationship with clients was essential, and Mrs Davison had strong inter-personal skills that enabled her to foster a strong client base. It was this client base that attracted the attention of Credit Suisse, by whom she was headhunted in 2004. The person who hired her was Mr Gerry Keneally, then a Managing Director responsible for the overall supervision of around 400 people, including a sales trading team of around 50 individuals who sold European Equities to US and European institutions. By the time of his retirement in March 2013, Mr Keneally had become the Bank's Head of Equity Distribution and Co-Head of Cash Equities. He gave evidence at trial via video link from the United States en route to catching a plane, and the Court is indebted to him for interrupting his busy schedule in order to do so. It was readily apparent from both the manner and content of that evidence that he is not a man who suffers fools gladly, or indeed at all. Mr Keneally's support for Mrs Davison was based upon a genuine respect for her abilities, and his evidence was of great assistance to the Court in assessing how her career would have progressed had it not been for the injuries that she sustained in consequence of the Defendant's negligence.
- Mrs Davison was employed by Credit Suisse as an equity sales trader based in Canary Wharf, as part of a team of around 25 equity sales traders. Only 5 of the team were female and only one of those women was senior to Mrs Davison. Mrs Davison was still doing that job when she went on maternity leave shortly prior to giving birth to Freddie. Mr Keneally's unchallenged evidence was that Mrs Davison's gender was not an issue in the role that she had. She was very much able to hold her own on the trading floor and was extremely well respected by co-workers and clients alike.
- As a Tier 1 bank, Credit Suisse was much larger than ITG and had its own internal system similar to POSIT, which was run by an entirely different department from the equity sales trade department. Initially Mrs Davison concentrated on small cap, Institutional only sales, but her role expanded to encompass the full client range across all asset classes (small, mid and large cap European and UK listed stocks). She was promoted to Vice President in 2006. Most of her Institutional clients were global, in the sense that they had offices in the other major financial centres including New York and Hong Kong. Many of them were household names. Mrs Davison had a number of significant successes, including helping to secure an improvement in Credit Suisse's ranking with one major client from 7th to 2nd in paid European commissions within a matter of months. The client in question was the bank's top paying client in terms of gross fee income, and Mr Keneally explained that the difference between being number 2 and number 7 was probably 10 million dollars in business. He said it would be no problem for the bank to pay the trader who achieved this leap in the rankings an extra $100,000 in remuneration. As a direct result of Mrs Davison's achievement, both internal and external market reviews placed the bank in a top 3 ranking on performance compared with its peers. Mr Keneally described this as an "incredible achievement".
- The hours were long and the work was hard but Mrs Davison loved her job. She would typically arrive at her desk at 6am and work through to around 5.30 or 6pm. On average twice a week she would then have to go out for meetings with clients, often involving some form of corporate entertainment, rarely arriving home before 11pm. The frequency of such events depended on the time of year (for example, it happened more often in the run up to Christmas) and it was wholly unpredictable whether Mrs Davison would be required to go out in the evening. When asked in cross-examination whether sleep was secondary to achievement, Mrs Davison responded that "it felt like it". Despite changes to the norms in relation to equality and diversity, the trading floor is a macho environment and its cut-throat nature was attested to by Mrs Davison. However despite being in a small minority, some women thrived there and Mrs Davison was one such. In each of the years 2006-2008, she earned gross sums in excess of £200,000. Prior to her departure on maternity leave she had earned £206,828 gross (£126,396 net) or £10,700 net per calendar month.
- Within Credit Suisse it is the norm for a Vice President to stay in that role for at least three years before being taken to the next level. However, from early on Mr Keneally had marked Mrs Davison out as someone who was going to progress quickly, and who had the potential for a stellar career with the Bank. Thus, as a result of his recommendation she was selected for Director training (the first step on the route to becoming a Director) within only 2 years. Once on the Director route, the individual is mentored by senior members of the Bank and given accelerated and better training to set them on the path to promotion. As Mr Keneally explained, the selection process itself is extremely vigorous, and involves overcoming many hurdles. Candiates need to be vetted by the Equity Management Committee to reach a candidate shortlist and then undergo an in-depth application process. Mr Keneally would not have recommended any candidate unless he believed that person would succeed in becoming a Director and succeed in that role once it was achieved. Mrs Davison was the only member of the team that he recommended that year, as she was the only outstanding candidate.
- Mrs Davison joined the programme in 2008, but after she became pregnant that summer, she decided (after consultation with Mr Keneally) that due to her absence on maternity leave, her application to be made a Director would be postponed until after she returned to work following the birth of her child. It was then intended and expected that she would return in late June 2009. On that basis, Mrs Davison aspired to achieving the position of Director by January 2010. It was reasonable for her to have anticipated that if she did not achieve the position then, she would have done so the following January.
- Although in her last year before taking maternity leave, Mrs Davison achieved only an average rating ("met expectations") with some poor scores in her internal appraisal, Mr Keneally explained that in context this rating was good. Global Management had indicated that the ratings in the previous year had been too high, and in consequence the assessment had been stricter. No-one liked their rankings, but "you wanted to give everyone something to strive for". Overall Mrs Davison was well above average; an AA, putting her in the bracket just below the top 10%. Mr Keneally also pointed out that the areas of Mrs Davison's performance that were marked out as needing improvement were purely to do with internal relationships. However, he very fairly conceded that she would have needed to show a better rank in these areas on her return to work in order to achieve the desired promotion.
- Mrs Davison intended to return to work in late June 2009, and to that end she had already secured the services of Mrs Rebecca Broster as a full time live-out nanny on a salary of £40,000 per annum, plus babysitting at £10 per hour as and when required. As will become apparent later in this judgment, the amount of credit to be given for the cost of childcare on Mrs Davison's return to work is a matter of contention, but I need say no more about the costs of Mrs Broster, because for reasons which will become apparent, they do not fall to be considered for the purposes of the claim.
- In the event, Mrs Davison's return to work was delayed by the aftermath of her injury. If Mrs Davison had returned to work uninjured on 26th June 2009 following the birth of Freddie, as she planned to do, it is possible that she could have achieved Directorship by January 2010, but it is far more likely, on the balance of probabilities, that she would not have achieved that rank that year. Had she remained working as an equity sales trader in London, it is probable that she would have been made a Director with effect from January 2011.
- However, even without the injury, Mrs Davison would not have remained working as an equity sales trader in London, because in July 2009, i.e. within weeks of her planned return, her husband was offered what she described as a "fantastic job opportunity" in Hong Kong by Deutsche Bank as a regional head. Mr Keneally agreed that Mrs Davison could postpone her return to work until September 2009, whilst she and her husband investigated Hong Kong and reached a decision about the offer. She remained on full maternity pay. Mrs Davison handed in her resignation from Credit Suisse on 1 September, and after a short holiday, the Davisons moved to Hong Kong in late October 2009. I accept the Defendant's submission that there was no loss in the period up to the date of Mrs Davison's resignation, because the payslips show that she was still being paid what she would have received by way of salary if she had been working since June.
- In my judgment, despite tentatively exploring the possibility of a direct internal transfer to the Hong Kong office, Mrs Davison would have handed in her resignation to Credit Suisse in those circumstances come what may, as she would have wanted to be in a position to explore all her potential options for employment in Hong Kong instead of putting all her eggs in one basket. No doubt Credit Suisse in Hong Kong would have been interested in employing her as an equity sales trader, especially with a recommendation from Mr Keneally, but other Tier 1 banks would have been keen to employ her too, and at a commensurate salary, despite the impact on the banking sector of the global financial crisis and the broader economic climate. Although Tier 1 banks were making people redundant, they targeted the under-achievers and areas of the business that were unprofitable, such as derivatives. Although the total remuneration packages of those who survived were reduced on average by 20%, the statistics are taken across a broad range of different roles within the banking industry, and the real hit was taken to the levels of bonuses, with base salaries being increased as partial compensation. Those like Mrs Davison who were good in client facing roles were still regarded as a valuable asset.
- Mr Keneally's evidence, which I accept, was that Credit Suisse did nothing to its Hong Kong business until the end of 2012 because its business in Asia had weathered the storm more successfully than Europe and America. Given the general trends in the Asian markets at the time, the same is likely to be true of its competitors.
- The Defendant's case was that Mrs Davison's failure to return to work was not a result of her injury but a lifestyle choice consequent upon the move to Hong Kong in 2009 and the subsequent challenges of looking after her growing family (the Davisons went on to have two more children). In this regard, heavy reliance was placed upon what she was recorded at various times as saying to Miss Vaizey and Dr Denman, and certain observations made by Dr Latcham in his expert report. For example, Miss Vaizey recorded that since 2009 "she has also had two pregnancies so she has never got around to going back to work". However as Miss Vaizey fairly observed in cross-examination, "a motivated woman is different from an injured woman". Moreover Miss Vaizey explained that what appeared in her report was a summary of a much longer conversation or series of conversations, and that accorded with Mrs Davison's evidence. In my judgment records of this nature are less reliable evidence of a person's intentions than what the person was actually doing and planning at the time when he or she was uninjured. Mrs Davison was actively arranging childcare to provide for her return to work after Freddie's birth. Mrs Davison herself was adamant when giving evidence that these statements were being taken out of context, and that she never intended to convey to any medical expert that she would have chosen to stay at home with the children even if she had not been injured.
- Mrs Davison was an impressive witness who was robust in her rebuttal of this point when it was put to her. I accept that she was being truthful, as she was throughout her evidence. There is no doubt in my mind that if she had not suffered from the difficulties consequential upon her injury, Mrs Davison would have wished to continue working and that she would have sought employment at the earliest opportunity, despite the fact that her husband's remuneration package was sufficiently generous for her to have been able to afford not to work. Moreover she would have chosen to return to work after each subsequent pregnancy. The type of work is something that I address later in this judgment. Childcare in Hong Kong is cheaper and more plentiful than it is in London, and the Davisons took on a Filipina live-in helper, Arlyn, in December 2009, shortly after their move. They paid her HK$12,000 or £1,000 per month. They took on a second helper, Rona, in March 2013 when Mrs Davison was expecting her third child, Josh. The Claimant has accepted that if Mrs Davison had not been injured, a second helper (Rona or equivalent) would have been engaged at the same time as Arlyn and that credit should be given against lost earnings for the cost of that second helper. The amount of credit is contentious and I will determine that later in this judgment.
- I accept Mrs Davison's evidence that, after taking a reasonable time to settle into the new environment of Hong Kong, it is likely that she would have obtained employment as an equity sales trader in Hong Kong by around January 2010. It is realistic to assume that her new employer would have agreed that her contract would run from 1 January. In the Claimant's preliminary Schedule, at paragraph 41, it was stated that "the Claimant will give credit for the possibility that she would have struggled to find work in the financial sector in any event". However a claim for loss of future earnings is not a claim for the loss of a chance, and that preliminary Schedule was prepared at a time before all the evidence was available, especially that of Mr Keneally.
- The Court has to make an assessment of what the Claimant is likely to have earned and over what periods, on the balance of probabilities, and difficulty in finding employment at relevant times is but one factor to be taken into account in assessing when such work would have commenced. In the light of the evidence that I have heard from Mr Keneally and accepted, the possibility that the Claimant acknowledged in the preliminary Schedule is a remote one. I have found as a fact that she would have had little difficulty in obtaining commensurate employment in Hong Kong. The period from the move to Hong Kong to the date of starting such employment (1st January 2010) realistically reflects any initial difficulty that she may have had.
Earnings in the calendar year 2010.
- Mrs Davison's base salary in her new job would have been at the same level as her previous job in London, namely Vice President, that is, around £80,000 per annum. I reject the Defendant's argument that she was unlikely to have secured employment by the time she discovered (in March 2010) that she was pregnant with Harry, and that this discovery would have led her to defer seeking employment until after he was born.
- Of course, having secured fresh employment, Mrs Davison would have needed to familiarise herself with new products in the Asian markets and to have taken examinations. She would have taken some time to build up new client relationships, but she would not have been starting from scratch. Her clients back in London were global, and although Mr Keneally accepted that she would have needed some time to re-establish relationships with the people in Hong Kong, I am satisfied that someone as good at her job as Mrs Davison was would have taken no more than around 6 months in which to get up to speed. However, even if the bank which hired her in Hong Kong had been Credit Suisse, it seems likely that any decision about her promotion to Director would have been deferred in the wake of the move. I accept Mr Keneally's evidence that she could have expected to achieve a directorship within 18 months rather than a year. The 18 months would start to run from the commencement of her new job, so she would not have made Director in January 2011. In practice even if she had a favourable decision later that year, her promotion would have taken effect from the following January (2012).
- I am also satisfied, on the basis of the evidence of Mr Keneally and Mrs Davison herself, that whether she went to work for Credit Suisse or for another Tier 1 bank in Hong Kong, she had the necessary drive and interpersonal skills to re-establish herself as a successful equity sales trader by no later than around June 2010, and that by the time she went on maternity leave for the second time in November 2010 she would have qualified for a performance related bonus which she would have received at the end of the year. The level of that bonus would have depended on the market at the time (bearing in mind the general downward trend) and on her achievements in sales over a period of around six months, which were likely to have been significant given the comparative buoyancy of the markets in Asia. These two factors may well have cancelled each other out to some extent.
- Although Mrs Davison did experience some difficulties during her second pregnancy, including a thyroid problem, this was addressed by appropriate medication. She would have continued working throughout the pregnancy until around 2 weeks before she was due to give birth, and she would have returned to work as soon as possible after the baby was born, and in any event within six months thereafter. Mrs Davison was acutely aware of the need to continue fostering client relationships. Of course, during her period of maternity leave, her earnings would have been restricted to maternity pay. Although women on maternity leave were not discriminated against, the Credit Suisse maternity pay provisions indicate that performance related bonuses were not paid in respect of periods of maternity leave. Accordingly the bonus she would have received in January 2011 would have been restricted to her achievements prior to Harry's birth. Nevertheless, based on her previous track record, even though the key period would have been from June to November 2010, she is likely to have earned a sizeable bonus. Mr Keneally's evidence demonstrated that simply by achieving a leap in the rankings for one major client, as Mrs Davison did in a relatively short period, could have earned an equity trader $100,000.
- Taking all these factors into account seems to me that she is likely to have achieved a gross salary of around £185,000 in 2010, including bonus awarded for her performance that year, even after taking into account the re-establishment period. Counsel have agreed that the net figure would be £115,461.
Earnings in 2011
- Harry was born on 27th November 2010 and Mrs Davison could have remained on maternity leave up to the end of June 2011, though she may not have used the whole of that period had she remained in Hong Kong. She could have expected to continue to be paid her base salary during that period of maternity leave. Unfortunately, in February 2011, her husband was unexpectedly made redundant. This was a traumatic and stressful period for the Davisons, who were living in a very expensive rented flat, and were locked into the contract for a year. Despite being shortlisted for a job in Hong Kong, Mr Davison was ultimately unsuccessful. Whilst Mrs Davison believes that, had she been uninjured, she could well have returned to work early and supported the family whilst her husband was continuing to hunt for jobs in Hong Kong, the economic reality was that jobs at his level of seniority were few and far between, and it would have been foolish to turn down a job in London in the hope of getting something similar or better in Hong Kong.
- Happily, within a relatively short period Mr Davison did obtain a job offer from another major bank in London (albeit at a lower level of seniority), and in April 2011 the family moved back to the UK, taking their live-in home help Arlyn with them. It was their intention to move back to Hong Kong as soon as an opportunity presented itself, but there was no telling when that would be, and thus Mrs Davison would have had little option but to either resign from her Hong Kong job whilst she was still on maternity leave, or seek an internal transfer to a job in the London office of the bank for which she was working. Either way there was bound to have been some hiatus because of the move.
- When Mrs Davison was asked what she would have done in that situation had she been uninjured, she said "Gerry [Keneally] would have been my first port of call". Mr McCullough submitted that it was implausible to suggest that even in full health, Mrs Davison would have returned to the 6am to 6pm, sleep deprived, results-driven pressures of equity sales trading in those circumstances. However, despite the enforced relocation to London and the undoubted trauma of the period when her husband was out of work, things would have been looking brighter by the time she had that conversation with Mr Keneally. There would have been no problem for Mrs Davison in obtaining trusted childcare for Freddie and Harry, even in the evenings, because she would have had two live-in domestic helpers. A fully fit Mrs Davison would have been less susceptible to stress, and no doubt eager to return to work. One has to remember that she would have been back on the path to Directorship at that stage and that is something she was unlikely to have wanted to sacrifice to yet another move.
- Mr McCullough also submitted that however much of a supporter of Mrs Davison Mr Kenneally was, he was unlikely to have re-hired her in the context of the adverse economic environment. I disagree. It is entirely plausible that Mrs Davison would have approached Mr Keneally on the family's return to London, and in the light of his evidence, the probabilities are that he would have been only too willing to offer her her old job back as soon as she felt able to return to work. As for the fact that the Davisons then intended to go back to Hong Kong if and when they could, I doubt if that would have made any difference to Mr Keneally's attitude, even if Mrs Davison had mentioned it to him, so long as she remained committed and enthusiastic about the job. Mr Keneally's view was emphatically that a good trader would flourish in any of the major financial centres however much he or she moved around.
- Mr Keneally gave an example of how during this period he re-hired another equity trader named Jonas who had left to start a business which had failed. He also referred to another female equity trader, Natalie Klimt, who had followed her husband to New York in 2012, had a child, and (with his backing) still secured promotion to Director within around a year. Despite the economic downturn and the difficulties in the banking sector, it seems abundantly clear that a good trader was seen as an asset. Mr Keneally would have been glad to have Mrs Davison back on the sales team.
- Given that it would have taken her some time to settle down after the move back to London, it is likely that Mrs Davison would have recommenced work on or around 1st July 2011. She would have been on maternity pay until April 2011 and unless she timed her resignation from the Hong Kong employment to coincide with taking up her new position, there would have been some gap in her earnings. That would have been for no more than three months. Given her existing familiarity with the products in London, and her sales background there, I have no doubt that within around three months of her return, that is, by October 2011, Mrs Davison would have picked up again where she left off. However in the light of the interruption to her career caused by the unexpected relocation to London, she would probably not have achieved a directorship in January 2012.
- The pleaded claim postulates an increase in base salary in October 2011 on the basis that Mrs Davison would have achieved promotion to Director by then. Although I have found that (for reasons beyond her control) she would not have done so, I do accept her own evidence that there was an increase in baseline salaries in around 2010 as a partial amelioration of the cuts in bonuses. I have assumed that she would not have benefited from that increase when she first moved to Hong Kong. However from 1st July 2011 when she returned to work in London her baseline salary would have increased to £100,000 per annum. Given Mr Keneally's evidence about a bank being willing to increase a trader's remuneration by $100,000 merely on account of a significant leap in the rankings for one major client, (which Mrs Davison had already achieved once) and even assuming a cut in bonuses of 20% (though the evidence was that the 20% figure applied to total remuneration packages) it is not unrealistic to suppose that she could have earned a bonus of £75,000 in the period from her return to work in July to December 2011. That is despite taking into account the need to re-establish contacts in London and despite the fact that most of her sales would have been generated in the final three months of the year. Although Mrs Davison's overall remuneration in 2011 would have been slightly less than in 2010, this is because there would have been a period in 2011 when she was neither working nor on paid maternity leave. She would therefore have earned a base salary of £100,000 for six months (£50,000) and she would have been awarded a bonus of £75,000 relating to the work done in that period, bringing her total earnings from her return to work in 2011 to £125,000 (gross) which is £76,119 (net).To that figure must be added her pay during her maternity leave from January to April 2011, which is £26,667 gross or £15,000 net, giving a total net income for 2011 of £91,119.
Earnings in 2012
- Mrs Davison's baseline salary would have continued at the rate of £100,000 per annum in 2012. It is probable that once the family moved back again to Hong Kong, as they did in March 2012, she would have been subject to an internal transfer at Credit Suisse and well back on the path towards promotion. She would have maintained an equivalent baseline salary upon her move back to Hong Kong. For the avoidance of doubt, I reject Mr McCullough's submission that the relocation to Hong Kong would have caused further interruption to Mrs Davison's career. Whilst I acknowledge the force of the submission that if she resigned because of the move back to Hong Kong, she would have needed time to find fresh employment and to re-acclimatise herself, that is an unlikely scenario. There are significant differences between the situation in March 2012 and the situation in September 2009. This time the move was foreseen and planned and Mrs Davison's career prospects would have been specifically discussed and included in those plans. She would have had no need to resign and is likely to have been encouraged by Mr Keneally to stay with Credit Suisse. The Davisons took their existing home help back to Hong Kong with them. This would have facilitated a smooth transition.
- Mrs Davison would have been away from her desk in Hong Kong for some time, but she had not been away from equity sales trading and she did not need to get to know the products all over again. Mr Keneally's evidence of the experience of some other female traders who had relocated to other financial centres, including Ms Klimt, is indicative that someone of Mrs Davison's talents would have continued on an upward trajectory despite her relocation.
- In about August 2012 Mrs Davison fell pregnant again, and she gave birth to Josh in May 2013 after what appears to have been a more complicated pregnancy. In particular, it seems that there was more difficulty this time in addressing her thyroid problem, and there was also an iron deficiency. Neither was connected to the complications arising from her injury. Whilst these problems may have had an adverse effect on her energy levels and therefore affected her trading performance to some extent, I consider it more likely than not that Mrs Davison would have continued working during the pregnancy and that she would finally have achieved her target of being made a Director in January 2013.
- So far as her earnings in 2012 are concerned, I have no difficulty in accepting that in that calendar year, even with her difficulties during this pregnancy, Mrs Davison could have achieved a gross remuneration figure of £251,828 per annum as is claimed in the Revised Schedule. I have already made the finding that she would have earned a bonus of £75,000 in 2011 despite only recommencing her job in July 2011 and spending three months or so in getting back up to speed. The bulk of that bonus would be attributable to her efforts in the final three months of the year. On that basis, it is reasonable to assume that over the whole of the following year (to the end of 2012) she would have earned around £200,000 in bonus on top of her uplifted baseline salary of £100,000. However, her claim is confined to the figure of £251,828 and I cannot award her more than she is seeking for that period.
- The fact that the Claimant's more conservative calculation was based on the assumption that she would have been promoted to Director by then is irrelevant, as is the fact that no allowance has been made in that calculation for any difficulties that she would have experienced in her pregnancy. I have made those allowances and concluded that in spite of them, she is likely to have earned more than she is claiming. The Claimant has confined her claim to a sum that is less than the amount I have found she would probably have earned. Regrettably that limits the amount that I can award her, but I am not bound to discount her figure still further as the Defendant appears to suggest in written submissions received from Mr McCullough after my draft judgment was supplied to Counsel. The net figure is £139,403.
Earnings in the pre-trial period in 2013.
- On achieving her promotion in January 2013, Mrs Davison's base salary would have increased to the Hong Kong dollar equivalent of around £130,000. Mr Keneally's evidence was that the base salary for a director in 2010 was around £110,000 and that if Mrs Davison had been made a Director in 2010 her base salary would have increased to £120,000-£130,000 in 12-18 months (i.e. by mid 2012). Mrs Davison's evidence was that between 2010 and 2013, Directors' baseline salaries rose to £140,000-160,000. As I have already found, baseline salaries were increased despite the downward trend in total remuneration packages. Mr Keneally's evidence was also that there was no marked difference between the salaries and bonuses payable in London, New York and Hong Kong, subject to his qualification in cross-examination that the impact of the economic downturn on the remuneration packages of those employed in the better performing market sectors such as Asia was less (5%-10%). Taking into consideration the totality of the evidence, I find that the HK dollar equivalent of £130,000 is a realistic estimate of Mrs Davison's base salary in 2013 up to and including her current period of maternity leave.
- So far as Mrs Davison's performance related bonus is concerned, technically speaking that is a future loss because it would have been paid at the end of the financial year. It would have been based on five months' trading (to May 2013). There was no evidence before me to suggest that if Mrs Davison changed her job within the bank on her return from maternity leave she would forfeit the bonus that she had earned in that period. On a conservative basis, taking into account the fact that her illness during pregnancy was likely to have had some impact on her trading performance, I would expect her to have earned a bonus of around £100,000 or the equivalent in Hong Kong dollars, for the calendar year 2013, based on those five months of trading. That means that the gross figure for 2013 (base salary and bonus) is £208,000. Counsel have agreed the net figure is £120,928.
- Damages for personal injury are compensatory, and intended so far as money can to put the Claimant in the same financial position as if the injury had not happened. Thus Mrs Davison is entitled to receive as compensation the salary she would have earned but for the injury, less tax and any other statutory or contractual deductions. There is a further fundamental principle, which is that it is no concern of the tortfeasor how the injured Claimant chooses to spend his or her earnings. However, that principle is qualified to the extent that a deduction must be made for the expenses of earning the income that has been lost. In Dews v National Coal Board  AC 1, Lord Griffiths said at page 14F that the tortfeasor is, subject to sums necessarily spent to earn the income, entitled to no credit for expenditure saved as a result of the injury (emphasis added).
- Thus an allowance for the costs of childcare would seem to require analysis of the extent to which in any given case such costs could be properly attributed to lifestyle choice (and thus ignored) and the extent to which they could be properly said to be a cost without which the Claimant could not have gone back to work (and thus brought into account). That must be a question of fact in any given case.
- There is no issue between the parties that an appropriate sum on account of the additional (and necessary) cost of childcare should be brought into the computation for lost earnings, on the basis that in order to be able to go out to work, Mrs Davison would have had to engage someone to look after the children as well as the live-in domestic helper that she and her husband would have engaged in any event. The claim for loss of earnings in the Revised Schedule has been calculated on the basis of a concession by the Claimant that the second helper would have been engaged from the time that Mrs Davison returned to work after the birth of Freddie and continuously thereafter. In the Revised Schedule (to which a signed statement of truth is appended) it is asserted that the total cost of the two helpers was £1,300 per calendar month and that the additional costs of childcare equates to the cost of the second helper, assessed at half the cost of the domestic assistance. However there is an obvious mathematical error in the calculations. Half of £1300 is £650 per month, not £750 as stated in the Schedule.
- At one stage there was an issue as to whether the whole of the relevant costs or only the half share which Mrs Davison would have borne in practice fall to be deducted. However, that point has now been agreed. In my judgment Mr Mylonas was right to concede that in principle, the whole of that expense must be brought into account, because what matters in this context is how much had to be spent on childcare to enable Mrs Davison to go back to work (regardless of whether she or her husband paid or what they each contributed). If and to the extent that the costs of domestic help were not a necessity, in that sense, but a lifestyle choice, i.e. something that would have eased the domestic burden on Mrs Davison, they are irrelevant and the cost falls to be excluded (again, regardless of who actually paid or what they contributed).
- The only issues that remain for decision are (a) what were the costs of the additional helper, and (b) over what period should the allowance be made, given that Rona was engaged by the Davisons in any event on 1 March 2013. These issues only arose after written and oral closing submissions and after an earlier draft of this judgment had been circulated to Counsel. At that time the question whether the whole of the costs or only half should be deducted was still a live issue, and I had invited further written submissions from Counsel on the case of Dews v National Coal Board. When the written submissions arrived, I was informed of Mr Mylonas' concession on this point but that it was now contended by the Claimant that the costs of the additional helper were £417 per month and not £650. I was told that there was also an issue as to whether the saved costs should continue after 1 March 2013.
- The evidence on the cost of the additional childcare is far from clear. The matter was raised in the counter-schedule and specific disclosure was sought on the point. Mrs Davison deals with the matter in her third witness statement albeit quite briefly. She said that their helpers are domestic helpers so they perform many roles, of which childcare is one. They pay a total of HK$17,000 (£1300) a month plus occasional bonuses, most recently $75,000 as a mid-year. When Rona started the salaries became HK$12,000 a month to Arlyn and HK$5000 to Rona.
- Mr Mylonas now seeks to put the case on the deductions on the basis of the sums paid to Rona, which on the evidence is the equivalent of £417 per month, though that is not what was conceded in the Revised Schedule, a document which itself was served very late in the day. In my judgment that is too little an allowance. Although there was no specific delineation between the tasks allotted to the two domestic helpers it seems clear that Rona was not specifically engaged to assume a "nanny" type role and that the higher salary paid to Arlyn reflected the fact that she had always undertaken childcare responsibilities on top of her domestic work. Thus whilst it would not be appropriate to treat all the costs of Arlyn's employment as the equivalent of what the Davisons would have paid the hypothetical additional helper, it would be equally inappropriate to use Rona's remuneration as the benchmark. Doing the best I can on the evidence available it seems to me that the figure conceded in the Revised Schedule of half the total domestic costs (subject to the mathematical correction referred to above) is the best measure. The amount that should be allowed per month for the costs of childcare is therefore £650.
- As for the bonus, there is no clear evidence that a bonus would have been part of the agreed remuneration for the helper in the nanny role, let alone of the amount or timing of payment of such bonuses. In those circumstances it is inappropriate to treat a bonus as part of the necessary cost of childcare.
- So far as the second issue is concerned, there is no evidence that the Davisons would have needed three domestic live-in helpers to enable Mrs Davison to return to work after Josh was born, particularly if, as I find below, she would not have returned to the long hours of equity sales trading. The fact that Mrs Davison referred to a friend who worked in financial Human Resources who employs two helpers and a nanny is no indication that Mrs Davison would have had to do the same in order to be able to return to work. Surprising as it may seem, a professional woman with three small children whose partner also works full-time is capable of going out to work if she has one full time nanny, particularly if the nanny is living in. A similar woman living in Hong Kong with a domestic helper as well as the nanny, and "bus mothers" available to take the children to and from school, could easily manage without additional help. I am not persuaded that it was necessary for the Davisons to pay for an additional helper after Rona was engaged in any event, in order for Mrs Davison to continue working. Therefore no allowance should be made for the additional cost of childcare after 1 March 2013.
Loss of future earnings.
- Although the Davisons took on additional help in the home before Josh was born, at the age of only four months Josh became seriously unwell and had a spell in hospital. Mrs Davison's evidence was that her two older boys are at school in the mornings and have activities which keep them busy, and that her two home helpers are more than able to facilitate schedules. She genuinely believes that being the mother of three young boys would not have affected her enthusiasm to return to her high pressure job. In this respect, however, I consider Mrs Davison to be unrealistic. It is true that Tier 1 banks are extremely supportive of women who wish to return to work and do their best to make it possible. Nevertheless there is a world of difference between juggling a career with two small children and trying to do so with three under the age of five. It is not impossible, but it is rare.
- Having observed Mrs Davison for some time giving her evidence, however career minded she may have been, and however splendid the childcare support system in Hong Kong, I find it highly unlikely that when Mrs Davison returned to work after her maternity leave on this third occasion, she would have had the appetite to return to the stresses of the trading floor and face the prospect of never seeing her three small children during the week, even if she was fully fit. I do take into account the fact that even though she is currently at home, she entrusts the two elder boys to carers for much of the time, but that is quite different from not seeing them at all for days on end.
- However much she would like to believe otherwise, in my judgment it is far more likely that she would have moved to a less stressful position within the bank, involving shorter working hours – possibly, as pleaded in the Revised Schedule (albeit by reference to a later period), heading up a client's team on the "buy side" rather than selling.
- Mrs Davison's pleaded claim is premised on the basis that she would have chosen to change her role at about age 45 until she retired at about age 55 and on the conservative estimate that the resulting reduction in her salary and bonus would have been some 50% of what she was earning at Credit Suisse at that time, which, based on the estimates in the Revised Schedule would be £138,505 gross (i.e. half £277,011). In my judgment, however, that choice would have been made much earlier, whilst she remained on maternity leave after giving birth to Josh.
- In the absence of any figures for salary and bonus relating to the sort of alternative job that Mrs Davison might have taken within the bank which then employed her, or one of its competitors, there is little choice but to accept the Claimant's own pleaded figures, but to apply them to the whole period of future loss from the projected date of Mrs Davison's return to work around six months after Josh's birth. I have no compunction about the fairness of taking that course. Her base salary in 2013 would have gone up to £130,000, and I have held that in the five months to Josh's birth, she would have earned another £100,000 in bonus. Over a full twelve months, therefore, a total remuneration package of £277,011 would have been easily achievable in 2013. Thus, if one assumes that a less stressful job in the bank would have brought in an annual salary of approximately half what a Director of Mrs Davison's calibre could have earned as an equity trader, the figure of £138,505 per annum seems to me to be realistic, and indeed conservative, given that nothing is built into the Claimant's calculations for any increase in that hypothetical salary over her remaining years of work (to age 55).
Residual earning capacity
- So far as residual earning capacity is concerned, it is plainly out of the question for Mrs Davison to return to the trading floor or to any form of work that involves a substantial client interface or a crowded office environment. I accept Mr Mylonas's submission that she faces very significant challenges finding a suitable area of work and then finding employment in it. I share the reservations he expressed about her taking up counselling or similar vocational work. She is likely to be more comfortable running her own small business, and has expressed an interest in interior design. Such businesses take time to launch and to become profitable, so it is unrealistic to expect Mrs Davison to be earning anything like £40,000 per annum.
- On the other hand, I do accept Mr McCullough's submission that to attribute only an earning capacity of £20,000 per annum to her is to underestimate her considerable abilities. I have to bear in mind the impact on her confidence that her injuries have had, as well as the fact that any new form of employment will involve her in learning completely new skills. Nevertheless she has displayed enormous resilience and courage in trying to rebuild her life. Doing the best I can, it seems likely that she would be able to earn on average a gross salary of £25,000 per annum over the residual period of her working life (i.e. to age 55).
Loss of Congenial Employment
- The only remaining matter for me to consider on damages is the claim for loss of congenial employment. I have been taken to two authorities, Evans v Virgin Atlantic Airways  EWHC 1805 and Dudney v Guaranteed Asphalt Ltd  EWHC 2515 which demonstrate that the range of awards is normally in the order of £5,000 - £7,000 (as is borne out by the schedule in Kemp & Kemp) and illustrate the types of factors that can influence whereabouts in the range a particular claim will fall. This is a case in which Mrs Davison's injury has put paid to her ability to return to any form of work in the financial sector and severely limited the nature of any future employment. Many of her undoubted talents are going to go to waste. Her future is uncertain and any work that she does undertake in future is likely to be fairly solitary and considerably less well paid. In my judgment, a figure towards the upper end of the range is justified. I shall award £6,500 under this heading.
- So far as loss of future earnings is concerned, Counsel are agreed that the multiplier before contingencies is 14.52 for loss to age 55. Table C would give a discount of 0.89 but Mr McCullough contends that the discount should be 0.8 to reflect contingencies such as the higher risk of redundancy in the banking sector. Given my findings as to Mrs Davison's attractiveness to potential employers despite the general economic downturn, I am unable to accept this submission. The correct calculation is £82625 x 14.52 x 0.89 which equals £1,067,746.
- So far as future residual earnings are concerned, again I agree with Mr Mylonas' submission that there is no justification from departure from the appropriate Table D figures. The correct calculation of the deduction is £19,819 x 14.52 x 0.42 which equals £120,864.
- Hopefully the parties will now be able to agree the correct calculations of interest.
- On 11 September 2013, the Claimant's solicitors sent a Part 36 offer offering to settle for £900,000 plus their reasonable costs. The relevant period for acceptance expired on 2 October, which was before the trial started (but only because the case was not ready for trial and I had to give directions). The Claimant has done better than that offer and better than an earlier Part 36 offer from the Defendant of £800,000. This means that I have to consider the effect of CPR 36.14.
- This provides that the court will, unless it considers it unjust to do so, order that the claimant is entitled to:
(a) interest on the whole or part of any sum of money (excluding interest) awarded at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;
(b) costs on the indemnity basis from the date on which the relevant period expired;
(c) interest on those costs at a rate not exceeding 10% above base rate, and
(d) an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage to an amount which, in the case of a money claim, is the sum awarded to the claimant by the court.
For damages of between £500,000 and £1 million the prescribed percentage is 10% of the first £500,000 and 5% of any amount above that figure.
- Sub-paragraph (4) provides that in considering whether it would be unjust to make such an order, the court will take into account "all the circumstances of the case" including the terms of the Part 36 offer, the stage in the proceedings at which it was made, including how long before trial started, the information available to the parties at the time when it was made, and the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.
- The first relevant factor is that the Claimant has beaten her own offer by a very significant margin.
- The length of time before trial started is a relevant and significant factor because if the offer is made less than 21 days before trial, unless the court has abridged the relevant period, these provisions do not apply. Since the Part 36 regime is designed to encourage parties to settle and to save costs, this makes sense: although significant costs (brief fees, etc.) are incurred in the run up to trial, the later the offer is made, the less the cost savings likely to be made by accepting it. Had the Claimant's legal team got their tackle in order, this trial would have started on 2 October, the first day of the trial window, and the rule would not have applied at all. In the event, by the time the matter first came before me for directions on 3rd October, no trial bundles had been lodged, there was no skeleton argument from the Claimant's counsel, and the joint expert reports had not been finalised – indeed at least one pair of experts had yet to meet. Moreover, no formal application had been made for an adjournment, though at the last minute the listing office had been requested to list the trial to commence on 10th October.
- As is clear from the Defendant's letter of 7th October, the Defendant was prepared to settle at £900,000 provided that the costs made since his own Part 36 offer were paid by the Claimant. This was because the Defendant's own Part 36 offer had been made at a time when the Claimant had not yet obtained permission to serve the highly significant witness statement of Mr Keneally (in breach of the terms of a Final Order) and long before the Revised Schedule was served (one working day before the start of the hearing).
- Costs savings are not the only important factor to take into consideration, however. In the present case, for example, acceptance of the Claimant's part 36 offer would have avoided the need for Mrs Davison to leave a small baby, who has recently been very ill and in hospital, to travel from Hong Kong, and then undergo what (despite the commendable sensitivity of Mr McCullough's cross-examination) must have been the deeply unpleasant and distressing experience of giving evidence about matters of a highly personal nature over the course of two days (with an interruption of two hours for the evidence of Mr Keneally). Moreover it would have avoided the considerable expense and inconvenience of having to arrange for Mr Keneally to give his evidence by video link from the USA, including a long-distance telephone call on Mr Mylonas' mobile phone when the sound on the video link broke down.
- At the time the offer was made, Mr Keneally's evidence had been served and there was ample time to have evaluated that evidence. Mrs Davison's second witness statement had also been served in July, and this deals in detail with the Defendant's suggestion that her failure to return to work was a matter of lifestyle choice. She states in detail what she would have done in terms of working despite the various relocations and her subsequent pregnancies. Although that case was not formally pleaded until the Revised Schedule there was more than enough evidence to put the Defendant's legal team on notice and to evaluate the Claimant's case. The Claimant's third witness statement and the statement of Mrs Broster had not yet been served, but Mrs Broster's statement in the event added little of significance and I am not persuaded that anything new that emerged in Mrs Davison's further statement would have had any significant bearing on the evaluation of the offer had it been available to the Defendant on 11th September. The Revised Schedule pleaded a claim for the costs of psychiatric treatment, but that, too was already in evidence.
- Taking all these matters into account and paying due regard to the written submissions of both Counsel, I consider that it would not be unfair to the Defendant for some of the consequences of Part 36.14 to be visited on him but that it probably would be unfair for all of them to apply. Costs are always a matter of discretion. I consider that costs should remain on the standard basis but that interest should be awarded on the costs recoverable by the Claimant from the date at which the offer expired until the date of judgment, at a commercial rate of 2% above base. I shall also award the full sum produced by applying the prescribed percentage to the amount of the damages under (d). The CPR regime makes no distinction in this regard between damages for future losses on which interest would not normally run and damages in respect of past losses, but simply refers to the monetary award. However given that the full sum of £75,000 is awarded I consider it would be unfair to award an uplift of interest on the damages as well, and therefore no award is made under (a).
- The Defendant seeks the costs of the hearing on 3rd October including the application to adduce witness statements out of time and the costs of the morning of 10th October and the application to rely upon the Revised Schedule out of time. In principle a party seeking the court's indulgence should pay the costs of the application and any costs thrown away. However the parties would have been in court on 10th October in any event. In my judgment the Defendant is entitled to the costs of the hearing on 3rd October, having substantially succeeded in preventing further evidence from being adduced. There would have been no need for any case management on that date if the case had been in the proper state of trial preparation and as I made clear when I gave the directions on that occasion I was not impressed by the excuses put forward. Those costs can be set off against any sums due to the Claimant by way of costs.
- All the costs are to be the subject of detailed assessment if not agreed.
- Finally, the Defendant has asked for an extension of time in which to consider the position in relation to any appeal following the finalisation of the judgment and order. No reasons are put forward, and I see no good reason to accede to this request in circumstances in which both parties have had the substance of the judgment in draft form for some time before it is handed down.
- The handing down of judgment was delayed for several days in order that further submissions could be made in writing about a single issue – the deduction for the costs of additional childcare. The submissions that arrived were far more extensive than I had contemplated and directed. The key issue on which I had invited submission was now agreed. The written submissions covered a multitude of new or related issues, including costs, and on the Defendant's part indicated that the draft judgment had been the subject of very careful consideration by Counsel. The time limits prescribed by the CPR for applying for leave to appeal should be more than adequate to make a decision in those circumstances.
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