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A person whose life expectancy was shortened by a wrongful act could recover compensation for his loss of earnings only for his remaining life span. This has been the prevailing legal approach taken by the Israeli Courts for the past 20 years.

Both the living injured person whose life span was shortened, and the person who died as a result of the accident, were not entitled to compensation for their loss of earnings during the "lost years", i.e. the years that the victim lost from his usual life expectancy as a result of the wrongdoing.

A recent Israeli Supreme Court precedent handed down on 15^th March 2004, has changed this approach and recognized the right of the injured person (or his estate in case of a fatal accident) to be compensated for loss of earnings also during the "lost years".

The Court based this approach on the view that the earning ability of the injured person should be regarded as one of his assets which was damaged by the tortfeasor's wrongdoing, and hence should be compensated in all cases where the life expectancy was unchanged, and where it was shortened.

The Court surveyed the approaches of various common law systems and noted the changes which were taken, for example, by the English Courts,. which have adopted the rule that the injured victim should be compensated for his loss of earnings also for his lost years where his life expectancy was shortened.

The Court also noted the fact that English Courts deduct the saved living expenses of the injured during the lost years, which usually amounts to 50% of the compensation amount.

(In other countries, the Courts applied various systems to calculate the saved expenses, and reached a deduction which varied from 30% to 70%). The Israeli Supreme Court did not set the exact mode of calculating the deduction, but suggested to adopt the system used in dependants' claims for loss of support caused by the accident in which their supporter was killed - i.e. deduction of a proportionate share related to the living expenses of the deceased.

This new precedent equals the situation of the Israeli living injured person, as regards his right to compensation for the lost years of earnings, to that in English Courts.

However, the Israeli Supreme Court recognised also the right of the person who died in the accident to compensation for the lost earnings during the lost years. In this respect, the Israeli system differs from that prevailing in England whereby under statutory law , the estate of the deceased person does not have a claim for loss of earnings during the lost years.

According to the Israeli Supreme Court, once the claim of the living injured to damages for loss of earnings in the "lost years" is recognised as valid - also the right of the estate of the deceased to such damages should be recognised. This might be deprived only by the legislator.

Similar as in the case of the living injured - also from the compensation awarded to the deceased, any saving of living expenses of the deceased - should be deducted.

The Supreme Court also related to the fear that this precedent may lead to double compensation and answered it as follows:

Where the heirs of the estate were also dependant on the deceased for their living - the amount awarded to the estate for the "lost years" will be deducted from their claim as dependants; where the heirs are not dependants - the amount awarded to the estate should be diminished as to reflect the amount left for savings after the living expenses of the deceased and expenses to support any of his dependants are deducted.

Therefore, at the end of the day, the Court so stated, the additional amount which the tortfeasor will have to pay beyond the amount for which he is now liable is fairly moderate, and would reflect only the net amount which would have been left for the deceased after all of the deductions for living expenses.

The claim was referred to the District Court to determine the amount which should be awarded to the estate of the child for loss of earnings in the lost years.

Remarks:

(1) Reserves

The pending claims which involve bodily injury should be checked and adjustments should be made to the reserves set in the relevant cases.

(2) Deductions

In calculating the increase of the exposure, the amount of the prospective earnings need not be taken in full, but approximately 50% - 60% thereof.

(3) Non-pecuniary Loss

In the present case, the District Court awarded the amount of NIS 350,000 (approximately $80,000) as non-pecuniary damages for the death of the 12 year old child. No additional amount was awarded for pain and suffering as the child died the day after the accident after being in a coma.

The Supreme Court held that this amount is appropriate for the shortening of the life expectancy by 59 years. This may serve as a yardstick for the non-pecuniary damages for the death of child due to a civil wrong in similar circumstances.