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Summary

An issue that has been repeatedly highlighted in fatal accident cases is whether damages should be calculated from the date of the victim’s death or the date of trial. This question was recently addressed by the Supreme Court in the case of Knauer v Minstry of Justice.Radhika_Kapila_ph

For over thirty years, personal injury practitioners have been using the date of death as the starting point following the precedent set by the case of Cookson v Knowles [1979] AC 556. In Knauer, Lord Neuberger and Baroness Hale explored the various injustices of this approach, culminating in the Supreme Court unanimously overturning the Cookson decision, ruling (in favour of the claimant) that the date from which damages should be assessed should be the date of trial.

Background

The claimant, Mr Knauer, is a widower. His wife died of mesothelioma aged 46, which she contracted as a result of repeated exposure to asbestos during her employment at HMP Guy’s Marsh. Mr Knauer brought a claim for future loss of dependency under the Fatal Accident’s Act 1976 following his wife’s death and the Ministry of Justice admitted liability for her death in December 2013.

This admission of liability was followed by a damages hearing in July 2014, during which one key point remained in dispute – the question of how to define the “multiplier”, the figure used in the damages calculation to reflect a victim’s normal life expectancy. In this case, the debate surrounded whether the multiplier was to be calculated from the date of death or the date of trial. The difference between the two approaches was agreed to be £52,808.

At the hearing, Bean J held that he was bound to follow the precedent adopted in Cookson v Knowles; namely to calculate the multiplier from the date of death. However, he noted that if he were not bound by that authority, he would prefer the approach recommended by the Law Commission in their report on ‘Claims for Wrongful Death’ (1999, Law Comm No.263) of calculating the multiplier from the date of trial. He granted a certificate under Section 12 of the Administration of Justice Act 1969 which allowed the case to leapfrog the Court of Appeal and arrive directly at the Supreme Court.

Supreme Court decision

Two key questions were considered by the Supreme Court:

1. The principle

In fatal accident cases, the multiplier figure used to calculate damages reflects the normal life expectancy of the victim. This figure is based on actuarial tables and includes a discount to take into account the risk of an earlier death. There is also a discount to reflect future losses as a result of receiving a lump sum.

The Cookson judgment was made before actuarial tables were used to calculate the multiplier figure, at a time before when there was a need to account for individual contingencies when calculating loss resulting from a fatal accident. As a result, it was decided that the multiplier figure should be calculated from the date of the victim’s death as opposed to the date of trial, primarily to account for two key risks. The first risk was that had there been no tort, the deceased may have died during the period of time that elapsed between the actual date of death and the date of trial, and the second was that the support or services provided for a dependent might have been stopped or reduced.

However, the approach established by Cookson can lead to under-compensation, arising from the fact that when damages are calculated from the date of death, a discount is applied to the amount to account for early-receipt. This discount is applied to money that has not yet been received and often, the deduction substantially takes away from the amount awarded. In addition to this, actuarial tables already take into account relevant contingencies, so deducting the claimant’s amount further means that it is, in effect, being reduced twice for the same reason.

In Knauer, Lord Neuberger and Baroness Hale were both in agreement with the injustices caused by the Cookson precedent and acknowledged the numerous cases in which claimants had been unfairly disadvantaged by the principle of calculating damages at the date of death rather than the date of trial. In Cookson, a key reason for assessing damages at the date of death was that the deceased’s life expectancy could only reasonably be set from the date they had died. However, this decision was reached before more sophisticated means of calculating damages had developed.

The judges elaborated on this point by highlighting the fact that Cookson was decided in a different era and, following the case of Wells v Wells [1999] 1 AC 345 in 1999, using the Ogden tables is now considered the fairest and most sophisticated way of assessing damages. The Ogden tables are actuarial tables that take into account the uncertainties of life and accelerated receipt. As a result, the tables account for the uncertainty of the deceased’s life expectancy. Lord Neuberger and Baroness Hale noted that the way in which these tables take into account fatal accidents meant there should be no difference between the method used to calculate damages for death and damages for personal injury (the latter being calculated from the date of the trial). Logically, as more advanced means of calculating damages have developed, it makes sense to move away from reliance on outdated case law; a point which gave rise to the second issue in question – the best way of departing from a previous House of Lords decision.

2. Departing from previous House of Lords decisions

Lord Neuberger and Baroness Hale observed that the key point to clarify was whether it was justifiable to depart from the law established by the House of Lords in Cookson. This decision needed to be carefully considered in order to avoid undermining the role of precedent in common law and to ensure that certainty and consistency were maintained in accordance with the rule of law. With regard to the circumstances of Knauer, it was held that the Court should invoke the 1966 Practice Statement and change the precedent set in Cookson v Knowles. The application of the reasoning in the House of Lords’ previous decisions on this matter was considered illogical, resulting in unfair outcomes. These factors in themselves meant that consistency and certainty were undermined. In addition, Neuberger and Hale pointed to the change in the legal landscape since the Cookson case was heard in 1979 and the use of the Ogden tables. These fundamental changes were also valid grounds for adapting the law. Based on this reasoning, the Court allowed Mr Knauer’s appeal, overturning Cookson and establishing that the multiplier when fixing damages for future loss in claims under the Fatal Accidents Act 1976, should be the date of trial rather than the date of death.

Comment

This decision brings the assessment of damages in fatal accident claims in line with non-fatal claims, a progression which has been anticipated by many. It is a welcome change for dependant claimants who will avoid the under-compensation of receiving a deduction of sums they have not yet received and a positive development in bereavement damages, which are often considered too low to compensate for the loss suffered.