How is a life worth £12,980?

Max Mosley has been a pioneer in claiming damages for a privacy breach

Trinity Mirror's chief executive recently questioned how compensation for phone hacking could come close to the amount awarded for deaths caused by wrongdoing. How can compensation for things as different as bereavement and lost privacy be calculated?

Phone hacking victims Sadie Frost and Paul Gascoigne were recently awarded £260,250 and £188,250 respectively from Trinity Mirror. A number of other notable victims also received damages.

The newspaper group's chief executive Simon Fox compared the sums with the £350,000 each received by Neil Shepherd and Sharon Wood, whose two children died because of a faulty boiler on a Thomas Cook holiday in Corfu. Each parent effectively received £175,000 per child from the Greek hotel directly responsible.

"Is it right that for hacking infringements someone should get close to that?" Fox queried.

It is not the first time there's been controversy over the scale of compensation. Twenty years ago Elton John won £350,000 from the Sunday Mirror for a libellous story about his diet.

Upon reducing the payment to £75,000, a judge said: "It is, in our view, offensive to public opinion, and rightly so, that a defamation plaintiff should recover damages for injury to reputation greater… than if that same plaintiff had been rendered [disabled]."

One might expect a death - if the fault of someone else - to fetch the highest compensation of all.

But that's not the case.

Massive injury payouts make the news fairly regularly. In 2012, a 17-year-old victim of a serious car crash was awarded £23m. That same year a teaching assistant won more than £800,000 after tripping over a wheelchair.

But injury compensation can reach such big figures because of a combination of ongoing medical costs and the curtailing of a normal working life.

Death compensation can often be much lower. This week the family of a 79-year-old woman who died because of "inadequate" medical care were awarded £4,000 compensation.

If it's a case of negligence, insurers and lawyers are the ones who typically thrash out the final amount. With criminal violence it's the state that pays.

In England and Wales's compensation law, lawyers and judges refer to the Judicial College Guidelines (JCG), which lists a range of suggested sums according to body part and severity.

It can be as low as £1,100-£2,255 if the victim suffers "immediate unconsciousness" - or at least shortly after injury - and dies within one week.

It rises the longer someone stays alive.

Some of the phone hacking victims had been repeatedly targeted

The suggested figure is £6,820 if that same person were to die within six weeks instead of one.

"From a health point of view it's obviously better to survive, of course it is," explains Carlos Lopez, director of clinical negligence at Vincents Solicitors. "But the law recognises that if you survive, your suffering goes on longer."

Compensation is fundamentally about reimbursing the losses of the living - whether physical, psychological or financial.

The Fatal Accidents Act 1976 establishes three main elements of death compensation - bereavement, funeral expenses and dependency.

Dependency covers money the family would have received from the victim had they survived.

Bereavement damages compensate families for their pain and suffering. English and Welsh law values that pain at a maximum of £12,980 - and it's only applicable to very few cases.

Partners of the deceased can claim. So can parents - but only if the child was an unmarried minor. If the child was "illegitimate", only the mother is legally bereaved.

Siblings or children are not usually entitled to bereavement damages at all, explains Lynsey Furley, a solicitor at Bridge McFarland Solicitors.

But often neither bereavement nor dependency applies. And it wouldn't matter how much at fault the guilty or negligent person had been, explains Lopez.

A concert pianist would probably receive more compensation if their fingers were injured

Gross negligence may lead to criminal proceedings, but it will not increase the compensation in civil claims, he says. Nor does it matter much whether it's the fault of an incompetent doctor, a reckless driver, or a useless architect - compensation calculations are largely the same.

"A lot of families do get frustrated because they've seen all these massive awards in the media for relatively minor injuries," says Furley, "and - compared to losing a loved one - they wonder why they don't get as much."

In Scottish law, under the Damages Act 2011, there is instead no statutory limit on bereavement damages - and more family members are entitled to claim.

Victims of violent crime - in England, Scotland or Wales - are also treated slightly differently in terms of eligibility and bereavement sums, as compensation is instead handled by the Criminal Injuries Compensation Authority (CICA). There's an upper limit of £500,000.

But to get anywhere close to an award like that, the bereaved person needs to rely on a claim of lost income.

The starting point in the calculations is the victim's annual salary - for instance, £20,000. That £20,000 is then multiplied by a number reflecting many factors, explains Lopez, including the age at death, the profession, and the expected retirement age.

Social background and gender are also included because they affect both predicted income and life expectancy, Lopez says.

But had a victim survived, they would have spent a portion of their earnings on themselves. So a reduction is made to the amount.

Victims of non-fatal accidents undergo a similar analysis of their loss of future earnings.

A top concert pianist who loses a finger would receive far more than if a call centre worker was to suffer the same injury. Not only would the pianist's salary be higher to begin with but it's more likely to permanently impede their job. They would also receive damages for the emotional impact.

The JCG catalogues a cost for almost every injury imaginable. These are used in combination with precedents from earlier cases. A survivor may also need ongoing medical care, continued transport to hospital, or require adaptations to their houses - all of which are included.

Most cases - fatal or not - are settled rather than going to court, Lopez says. "It's about negotiation, there is no exact science."

Last year, £40,000 was the sum negotiated with the parents of nine-year-old Raychel Ferguson, who died in 2001 after an appendix operation.

Her mother branded the figure an "insult", but said her legal team had advised against going to trial because they risked receiving only bereavement damages.

In stark contrast, £40,000 was the amount awarded for one newspaper article written using hacked information.

But the phone hacking claims did go to trial.

The Mirror was looking to pay between £10,000 and £40,000 in compensation. The victims were asking for between £250,000 and about £1m.

Mr Justice Mann delivered the judgements. The previous record privacy payout had been £60,000 to Max Mosley in 2008, after a News of the World story on his sex life.

The phone hacking judgements are the first time in privacy law that a judge has sought to establish a comprehensive method for assessing the various damages of privacy invasion, says Steven Heffer, a partner at Collyer Bristow.

There are few precedents. "Privacy is a developing law that's really only taken off in the last 10-20 years."

Sadie Frost described her experience as "a living hell". Paul Gascoigne told the court how it had "ruined his life" and left him scared to use the phone for a decade.

But emotional "injury" was only part of the equation. Mr Justice Mann widened the compensation to include damages for the loss of privacy itself, as well as a sum for the "damage to dignity or standing".

Trinity Mirror has labelled the judge's decision as "fundamentally flawed because the basis used for calculating damages is incorrect".

The victims were further compensated for every article found to have been written using hacked information - with awards ranging from £750 to £40,000 for a single article.

One example reads: "This article represents a serious intrusion into Miss Frost's personal relationships and mental health, including a reference to self-harm… Some very private messages must have been listened to… It attracts compensation of £25,000."

Frost submitted 31 articles in her case.

The duration and extent of privacy invasion - in Frost's case four-and-a-half years - was another consideration, with a starting point of £10,000 for every year of "serious" hacking.

"What this decision reflects is the fact that it was repeated acts of infringement and the severity of what they did that led to such high rewards," says Jenny Afia, a specialist in privacy law at Schillings.

"The general point for both privacy and libel is it's an art, not a science. The distress [of phone hacking] is extreme paranoia - thinking that it's your closest friends and family who are selling stories to the papers about you."

Mr Justice Mann found the impact on Frost to be "severe", noting how she'd tried to extract confidentiality agreements from friends and family - such was the level of her distrust.

"But how do you quantify that?" Afia says. "Nobody has a very good answer."

More from the Magazine

The US and UK offer compensation to veterans for the loss of limbs and for other serious injuries during wartime. How are those rates determined?

Who determines a foot's worth? (May 2014)

Subscribe to the BBC News Magazine's email newsletter to get articles sent to your inbox.