Supreme Court reverses judgment under Fatal Accidents Act 1976


Supreme Court reverses previous House of Lords judgments regarding calculation of multipliers in claims under Fatal Accidents Act 1976.

The Supreme Court has recently published its eagerly anticipated judgment in the case of Knauer (Widower and Administrator of the Estate of Sally Ann Knauer) -v- Ministry of Justice [2016] UKSC 9.

The deceased, Mrs Knauer, was an employee of the Ministry of Justice at HMP Guy’s Marsh. During her employment, she developed mesothelioma as the result of exposure to asbestos; she died in August 2009 at the age of 46.

A claim was made by the deceased’s widower, Mr Knauer, in respect of, inter alia, future loss of dependency pursuant to the Fatal Accidents Act 1976.

At trial before Bean J in the High Court in July 2014, the parties had agreed a figure in respect of the annual value of the income and services that Mrs Knauer would have provided but for her death (the ‘multiplicand’).

The parties were in dispute as to whether the number of years by which that figure should be multiplied (the ‘multiplier’) should be calculated from the date of death or the date of trial. The differing approaches to this calculation would result in a difference of over £50,000 in the value of the total damages award.

The trial judge felt bound to follow longstanding House of Lords Authority in the cases of Cookson -v- Knowles [1979] AC 556 and Graham -v- Dodds [1983] 1 WLR 808, which decided that multipliers should be calculated from the date of death.

Such an approach has long been criticised as involving an unfair discount for early receipt of damages, when in fact those damages would not be paid until after trial – in particular by the Law Commission in their report on Claims for Wrongful Death (1999 Law Com No 263).

Bean J indicated at trial that, had he not been bound by the House of Lords judgments, he would have accepted that the proper calculation of the multiplier be by reference to the date of trial. Accordingly, he granted permission to Mr Knauer to appeal direct to the Supreme Court.

Supreme Court decision

The Supreme Court unanimously allowed Mr Knauer’s appeal, recognising that the previous approach ‘results in under-compensation in most cases’.

It has now confirmed that the correct date from which to assess the multiplier when fixing damages for future loss claims under the Fatal Accidents Act 1976 should be the date of trial and not the date of death.

The Court recognised that calculation of future financial losses is now based upon actuarial tables produced by the Ogden Working Party. The previous approach to calculating multipliers in fatal accident cases was said ‘to mix up a calculation based upon properly considered actuarial principles with an arbitrary arithmetical deduction’, and was arrived at at a time when the calculation of damages for personal injury and death ‘was nothing like as sophisticated as it now is’.

The Court had no hesitation in reversing the previous House of Lords decisions which were ‘illogical’ and resulted ‘in unfair outcomes’.

Comment

This decision gives certainty to practitioners dealing with claims under the Fatal Accidents Act 1976 on an issue which has long been considered by commentators to be liable to reform (either legislative or by judicial activism).

Insurers will note that this results in a change to rules which many have felt result in undercompensation of dependants of victims of fatal accidents.


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