The recent Supreme Court decision in the case of Knauer –v- Ministry of Justice (MoJ) has been welcomed by clinical negligence and personal injury lawyers alike. It means that claimants will now be better off when it comes to assessing their claims for future loss of dependency in fatal accident cases.
Mrs Knauer contracted the fatal lung disease mesothelioma when working at Guys Marsh Prison, and died in 2009. Her husband brought a claim for loss of dependency (a combination of income and lost services) under the Fatal Accidents Act 1976. The MoJ admitted liability and agreed the future annual sum (known as the ‘multiplicand’) to be claimed for loss of dependency.
However, the parties were unable to agree on the number of years (known as the ‘multiplier’) by which the annual sum was to be multiplied from, with the claimants arguing that it would be fair and just for the multiplier to start from the date of the Trial. However the defendants argued that it should run from the date of death, as had always been customary.
The trial Judge ruled that he had no choice but to follow the customary approach which had been decided in cases that were heard in 1979 and 1983. He commented that if he had not been ‘hamstrung’ by those earlier binding cases, he would have sided with the claimant. He did however give the claimant permission to appeal to the Supreme Court, who subsequently allowed the appeal, reversing the trial Judge’s decision.
When explaining their decision, the Supreme Court Judges pointed out that under the traditional approach, claimants were losing out financially as they were having their damages discounted for early receipt (the notion being that the claimant could expect to receive interest on early receipt of damages paid for future losses – thereby gaining financially) from the date of death, when in fact they were not being compensated until after the trial, which is often many years later.
Additionally, the Supreme Court Judges pointed out that in the earlier cases (1979 and 1983), the use of Actuarial tables was positively discouraged by the courts, and that the legal landscape has changed dramatically and become far more sophisticated in the last 30 years or so.
By way of an example:
- Mr Gregory Dutton pursued a claim on behalf of his wife, who died at the age of 45 in 2010 as a result of clinical negligence. The trial was held 5 years later in 2015.
- The annual sum for loss of dependency (the multiplicand) was agreed at £25,000.
- Prior to the landmark ruling of Knauer, the multiplier would have run from the date of death in 2010.
- Using ‘The Ogden Tables’ (a set of actuarial tables), the appropriate multiplier would have been 26.03. Therefore damages for future loss of dependency using the old formula would have been 26.03 x £25,000 = £650,750.
Post-Knauer, the approach would be to not apply a discount rate of 2.5% (for early receipt of monies) to the 5 year period between the date of death and the trial. Therefore the damages for that period would be a straight forward 5 x £25,000, equating to £125,000. A multiplier would then be applied from the date of Trial (hypothetical age of 50 for the deceased), and again using The Ogden Tables shows a multiplier of 24.14. Therefore 24.14 x £25,000, plus £125,000 = £728,500.
As can be seen from this fictitious example, Mr Gregory would be better-off financially to the sum of £77,750, post-Knauer.
***The writer cannot accept any liability for any inaccuracies within this article, which is merely intended for guidance purposes only.
If you would like further information about this particular topic, or wish to discuss the possibility of bringing a fatal injury claim, or indeed any other type of injury, please contact the Dutton Gregory Clinical Negligence Team on (01202) 315005, or email email@example.com.