Reesha Armstead, now aged 27, of Halesowen, West Midlands, was starved of oxygen during her birth on Christmas Day 1970. She has cerebral palsy and is confined to a wheelchair. Her solicitor said she would be seeking compensation of "substantially more than pounds 1m".
During an earlier hearing at the High Court in Birmingham, lawyers for Ms Armstead claimed the baby, who was in a breech position, was already on its way when the midwife, Sydney Todd, took the mother, Barbara Boddison, to hospital by ambulance. Because the birth was delayed, the baby suffered severe brain damage.
Mrs Todd claimed the baby did not start to be born until Mrs Boddison was in the ambulance. Dudley Health Authority, Worcestershire County Council and Mrs Todd all denied liability.
Giving judgment yesterday at the High Court in London, Mr Justice Harrison said the issue of when the delivery started was important as it was admitted on behalf of the defendants that, if Mrs Boddison was fully dilated and the presenting part of the baby was outside her body while she was in the house, it would have been negligent for the midwife not to have attempted delivery at the house.
The judge said the plaintiff's case - denied by the defendants - was that delivery began in the house and that the midwife tried to push the baby back inside the mother.
The judge ruled that "on the balance of probabilities" the members of Ms Armstead's family had seen the baby emerging in the house.
"I therefore find as a fact that delivery of the baby outside Mrs Boddison's body had commenced in the house before the departure by ambulance for hospital."
The judge said he had "considerable sympathy" for the midwife, but found she had been negligent "in failing to attempt delivery in the house".
Dudley Health Authority said in a statement after the judgment: "Although we accept the judgment and extend every sympathy to the Boddison family, we are naturally disappointed by the outcome.
"We obtained independent opinions from eminent experts who were of the view that the midwife was placed in a dreadful dilemma and deserves no censure."Reuse content