Supreme Court rejects ‘illogical’ precedent on death payments
The Supreme Court has ruled that a mesothelioma victim’s family was under-compensated because of the date when damages were calculated.
The widower of Mrs Knauer, a former administration assistant who died at the age of 46 from the disease in 2009, appealed a ruling that the annual figure for the value of lost income and services (the multiplicand) should be calculated from the date of her death.
The appellant argued the figure should be calculated from the date of trial – making a difference of almost £53,000 in compensation payable.
In a joint judgment in Knauer v Ministry of Justice, Lord Neuberger and Lady Hale explained that calculating damages from the date of death meant the claimant suffered a discount for early receipt of the money, when in fact the money will not be received until after trial.
The effect of the discount, they said, was ‘far from negligible’ and results in under-compensation in most cases.
The defendant, Knauer’s former employer the Ministry of Justice, acknowledged the strength of the claimant’s case but urged judges to see the system as a whole, with some claimants being over-compensated.
But the judges said it would be wrong to preserve a ‘flawed practice’ affecting most claimants to counteract other legislative choices made by parliament.
To agree with the original judgment, they argued, would be to rely on two cases from the House of Lords, Cookson v Knowles and Graham v Dodds, decided in a ‘different era, when the calculation of damages for personal injury and death was nothing like as sophisticated as it is now’.
The reasoning in those cases was ‘illogical’ and their application resulted in unfair outcomes.
Instead, the Supreme Court opted to depart from precedent and side with the approach recommended by the Law Commission in its 1999 report Claims for Wrongful Death.
The court allowed the appeal and ruled that the correct date at which to assess the multiplier for fixing damages for future loss should be the date of trial and not the date of death.
In its review of the case, defendant firm Kennedys said this should not come as a huge surprise to those dealing with personal injury claims and 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,’ said the firm.
‘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.’