Multipliers for loss of dependency in fatal claims to be calculated from the date of trial, not the date of death

On 24 February 2016, a unanimous seven Justice Supreme Court, departed from long established principles and ruled that damages for future loss of dependency in fatal injury claims should be calculated from the date of trial, rather than the date of death.  This change has been anticipated since 1999 when the Law Commission published its report on Claims for Wrongful Death, and it brings the law in England and Wales in line with the approach adopted in Scotland since the enactment of the Damages (Scotland) Act 2011.  This method of calculating damages was recommended in the 7th Edition of the Ogden Tables (paragraph 64 onwards of the explanatory notes), and should now be applied.

In its ruling, the Supreme Court commented that the precedent set down in the cases of Cookson[1]and Dodds[2] came from an era when the calculation of damages for personal injury and death was less sophisticated, and applying these principles in the current climate was outdated and unscientific.  While the new approach is arguably a more reasonable method of calculating damages, insurers should note that it will result in higher dependency awards, and an increase in case reserves.  However, the change is limited to fatal cases only, and therefore, will affect a small number of claims, most notably those involving young dependent children.  In all existing fatal claims, Part 36 Offers should now be reviewed.

Facts

The present case involved a claim brought by the widower of Mrs Knauer, a prison officer, who died of mesothelioma in 2009, aged 46, after exposure to asbestos at Guy’s Marsh Prison in Dorset.  Liability was admitted in December 2013, and the case proceeded before Bean J in July 2014, on an assessment of damages only.  The value of the income and services lost as a result of the death (the “multiplicand”), was agreed, and at issue was whether the number of years by which that figure was to be multiplied (the “multiplier”) was to be calculated from the date of death, or from the date of trial.  The difference between the two approaches in this case was around £50,000 (or 10% of the total award). 

Interestingly, the trail judge commented that while he was bound to follow the Cookson principles, he would have preferred the approach recommended by the Law Commission, of calculating the multiplier from the date of trial.  In what is clearly indicative of the calls for reform in this area, he invoked section 12 of the Administration of Justice Act 1969, granting a certificate to allow the case to bypass the Court of Appeal, and come directly before the Supreme Court. 

Arguments for Reform

The principle criticism of the conventional approach, was that Claimants were being awarded reduced damages as a consequence of a discount being applied to past losses.  In fatal cases, the practice was to take the multiplier as at the date of death, and deduct from it the time which has elapsed between the death and the trial.  The Supreme Court in Knauer commented that this was to "mix up a calculation based on properly considered actuarial principles, with an arbitrary arithmetical deduction", and noted that in previous cases trial judges were seeking to circumvent potential injustice by invoking "artificial or distorted" methods to avoid under-compensating Claimants.  This practice was leading to certainty and consistency of litigation being undermined.  In one case, for example, in a bid to ensure the Claimant was sufficiently compensated, a trial judge awarded interest on the whole sum of damages[3]. This decision was subsequently overturned on appeal. 

While it was clear that reform was needed, arguments against reform had been raised by the trial judge in Dodd.  He commented that adopting the date of death reduced the need to deal with uncertainties around what would have happened to the deceased between the death and the date of trial.  Further, if the date of trial was to be adopted, this would encourage Claimants to delay trials, as the longer the trial was delayed, the more a Claimant could recover.

In dealing with these concerns, the Supreme Court in Knauer commented that the Ogden Tables, published since the Dodd ruling, included fatal accident calculations based on the recommendations of the Law Commission, which dealt with the first concern.  With regard to the second, this was less of an issue in present day litigation, as the CPR requires parties to litigation to adhere to strict timetables. 

The Court concluded that the correct date as at which to assess the multiplier when fixing damages for future loss in claims under the Fatal Accidents Act 1976, should be the date of trial and not the date of death.

Conclusion

This ruling represents a significant departure from longstanding principles, however, it is one which has been long anticipated.  Principally the change is beneficial to Claimants, however, it also provides Defendants with more certainty when calculating reserves in fatal cases.  While this will lead to increased damages, it is limited to fatal claims, and therefore, change only affects a relatively small number of cases.