Knauer v Ministry of Justice [24.02.16]

Supreme Court decides that the multiplier for determining damages for future loss in fatal accident claims should be assessed at the date of trial.

Background

Since Cookson v Knowles [1978] and Graham v Dodds [1983] were decided by the House of Lords there has been a peculiar quirk to the calculation of damages in fatal accident claims. This quirk arises in taking the multiplier for the calculation of future dependency (both financial and services) as at the date of death and then deducting from it the number of years that has elapsed between the death and the trial.

This has long been at odds with the established practice of calculating damages in non-fatal cases and ignores the actuarial tables produced by the Ogden Working Party. It produces potentially illogical, unsophisticated and unjust results.

Mr Knauer is the widower of Sally Knauer, who sadly died from mesothelioma in August 2009. He sought to challenge this approach in an appeal from Mr Justice Bean’s 2014 decision which was granted permission for a leapfrog appeal to the Supreme Court.

Key issues

The Supreme Court was asked only to determine two discrete issues:

  • Whether the date of death or the date of trial is the correct approach to be taken to determining the multiplier for future dependency claims in fatal accident cases.
  • Whether the Supreme Court could depart from the approach of the House of Lords in Cookson v Knowles and Graham v Dodds or whether this should be left to Parliament.

Decision

The Supreme Court unanimously agreed that the correct approach is to assess the multiplier for fixing damages for future loss claims as at the date of trial.

Implications

This brings the calculation of future dependency in fatal accident claims in line with the current approach to calculating future losses in personal injuries claims and, more importantly, acknowledges the central importance of the Ogden tables.

That said, there remain some important distinctions between the two approaches which can still result in over-compensation in fatal cases rather than merely the full compensation to which personal injury damages are directed. One example is s.3(3) Fatal Accidents Act 1976, which requires the court to ignore not only the prospect but the actual remarriage of the claimant. Another is s.4, which requires that benefits which will or may accrue to any person as a result of the death shall be disregarded.

The Supreme Court rejected an argument that the change in the calculation of multipliers should not be made as the system for fatal accident compensation should be looked at as a whole, by the legislature. As the anomalous multipliers rule was a result of judicial decision it could and should be corrected by the Supreme Court whereas amending sections 3 and/or 4 would require primary legislation. The Court held that it would be wrong to preserve what is now known to be a flawed practice resulting in under-compensation affecting most claimants in order to counteract the potential for over-compensation via the operation of sections 3 and 4. The solutions to the latter lie with Parliament.

The overwhelming consideration for changing the law in this case was that when Cookson v Knowles and Graham v Dodds were decided, the Ogden tables were not in existence. This provided the Supreme Court with the opportunity and ability to depart from the previous decisions. The decision ensures that both fatal and non-fatal cases are dealt with in the same way and by reference to Ogden, providing, in the Supreme Court’s view, consistency and certainty.

It was raised as a concern that adopting a multiplier as at the date of trial will encourage claimants to delay trials so as to maximise the multiplier. This was swiftly refuted by the Supreme Court. It referred to the Civil Procedure Rules and said that the courts are in a position to ensure tight timetables and compliance with those timetables. The Court was also of the view that the proper use of the Ogden tables will ensure that dependants are compensated based on probable losses on an actuarial calculation on known facts as at trial and therefore injustice will be avoided.

This should not come as a huge surprise to those dealing with personal injury claims. We are these days so used to working with the Ogden tables and applying the multiplier as at trial approach that it should not represent a significant shift in ordinary working practices.

The practical result of this decision, however, on a mathematical basis is that in most cases the damages awarded for fatal accident claims will increase. Mr Knauer’s damages claim is now expected to increase by around £50,000. It is important that current fatal accident claims reserves are reviewed factoring in this new approach.

Defendants or insurers with cases that have settled, but are awaiting court approval, may also face arguments that the settlements should be reviewed and reconsidered in light of this judgment.