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You are here: BAILII >> Databases >> United Kingdom Supreme Court >> Knauer v Ministry of Justice [2016] UKSC 9 (24 February 2016) URL: http://www.bailii.org/uk/cases/UKSC/2016/9.html Cite as: [2016] WLR(D) 103, [2016] 2 WLR 672, [2016] AC 908, 150 BMLR 16, (2016) 150 BMLR 16, [2016] 4 All ER 897, [2016] UKSC 9, [2016] PIQR P10 |
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[2016] UKSC 9
On appeal from: [2014] EWHC 2553 (QB)
JUDGMENT
Knauer (Widower and Administrator of the Estate of Sally Ann Knauer) (Appellant) v Ministry of Justice (Respondent)
before
Lord Neuberger, President
Lady Hale, Deputy President
Lord Mance
Lord Clarke
Lord Reed
Lord Toulson
Lord Hodge
JUDGMENT GIVEN ON
24 February 2016
Heard on 28 January 2016
Appellant Frank Burton QC Harry Steinberg Niall Maclean (Instructed by Charles Lucas & Marshall) |
|
Respondent Gerard McDermott QC Tom Poole (Instructed by The Government Legal Department) |
LORD NEUBERGeR AND LADY HALE: (with whom Lord Mance, Lord Clarke, Lord Reed, Lord Toulson and Lord Hodge agree)
The facts
3.
The damages hearing took place before Bean J in July 2014. Many items of
damage were agreed and he resolved those which remained in issue. This included
the annual figure for the value of the income and services lost as a result of
her death (the “multiplicand”). There is no appeal against any of those
findings. The issue is whether the number of years by which that figure is to
be multiplied (the “multiplier
”) is to be calculated from the date of death or
from the date of trial. The parties are agreed that in this case the difference
between the two approaches is £52,808.
4.
The trial judge held (as had Nelson J in White v ESAB Group (UK) Ltd [2002] PIQR Q6) that he was bound to follow the approach adopted by the House of Lords
in Cookson v Knowles [1979] AC 556 and Graham v Dodds [1983] 1
WLR 808 and to calculate the multiplier
from the date of death. Freed from that
authority, however, he would have preferred the approach which had been
recommended by the Law Commission, in their report on Claims for Wrongful
Death (1999) (Law Com No 263), [1999] EWLC 263, of calculating the
multiplier
from the date
of trial. He granted a certificate under section 12 of the Administration of
Justice Act 1969 to enable the case to come directly to this court, leapfrogging
the Court of Appeal.
The principle
6.
Mr Gerard McDermott QC, who appeared for the respondent, very properly
conceded that the appellant’s case on the issue of principle was a good one.
The normal approach is to calculate the losses up to the date of trial and
award a lump sum in respect of those. Future losses are calculated on the
multiplier
/multiplicand approach. The
multiplier
reflects the normal life
expectancy of the victim, based on actuarial tables which include a discount to
take account of the risk of an earlier death (frequently referred to as “the
vicissitudes of life”). But there is also a discount to reflect the value to
the claimant of receiving a lump sum now to cater for future losses which would
have been suffered over a number of years in the future. Without such a
discount, there would be over-compensation. The object is that, at the end of
the period in question, the damages will have been exhausted in compensating
the victim. The victim should not gain a profit from the compensation. That is
the way in which damages for personal injury falling short of death are
assessed.
7.
Calculating damages for loss of dependency upon the deceased from the
date of death, rather than from the date of trial, means that the claimant is
suffering a discount for early receipt of the money when in fact that money
will not be received until after trial. The appellant accepts that the sum
calculated to reflect the loss which has been suffered up to the date of trial
should contain a discount to reflect the risk that, had there been no tort, the
deceased might have died between her actual date of death and the date of
trial. There may also be a risk that the support or services provided for a
dependant might have stopped or reduced, for example because of the deceased’s
accident
, illness or loss of job or the dependency ceasing, for example because
a child grows up. In most cases any discount would be a modest one, although of
course there will be cases in which the risk was far from negligible and where
a larger discount would be appropriate. But, as the figures in this case show,
the effect of the discount for the non-existent early receipt of the money is
far from negligible. It results in under-compensation in most cases.
8.
This has become clear now that the calculation of financial losses is
based upon the actuarial tables produced by the Ogden Working Party. The
current approach in fatal accident
cases involves taking a
multiplier
as at the
date of death and then deducting from it the time which has elapsed between the
death and the trial. This is to mix up a calculation based on properly
considered actuarial principles with an arbitrary arithmetical deduction. As
Hooper LJ confessed in Fletcher v A Train and Sons Ltd [2008] EWCA Civ 413; [2008] 4 All ER 699, para 42, “I do not understand why chronological years
are deducted from the
multiplier
”.
9. The trial judge in that case had awarded interest on the whole sum, in order to make up for the under-compensation, an approach which the Court of Appeal had to overturn. There have been other examples of courts seeking to get round the problem by adopting a distorted approach: see ATH v MS [2003] QB 965 and Corbett v Barking, Havering and Brentwood Health Authority [1991] 2 QB 408. The temptation to react to a rule which appears to produce an unjust result by adopting artificial or distorted approaches should be resisted: it is better to adopt a rule which produces a just result.
10. The Law Commission, in their report on Claims for Wrongful Death, said this:
“4.7 In the majority of cases
it is the life expectancy of the deceased, and hence the period for which he or
she would have continued to provide benefits to any dependants, which will
govern the multiplier
. It was in this context that the ‘date of death’ rule was
adopted, on the basis that ‘everything that might have happened to the deceased
after that date remains uncertain’.
4.8 It is true that where
the multiplier
is controlled by the life expectancy of the deceased, the only
information which will usually be relevant to that calculation is that which
was known about the deceased at the time of death. On the other hand, it is
possible to imagine facts on which matters emerging as certain after the
deceased’s death do affect the period for which it is estimated that he or she
would have continued to provide benefits.
For example, the deceased might have suffered from a life-shortening medical
condition which could not be treated in his or her lifetime. If by the time of
trial it is known that, within a year of his death, a treatment for the
condition had been developed, this would inevitably affect the accuracy of any
multiplier
calculated at the date of death. Thus, even in cases where the deceased’s
life expectancy controls the
multiplier
, we do not agree with Lord Fraser’s
assertion that the
multiplier
should inevitably be selected ‘once and for all’
as at the date of death.”
11.
They recommended that, as in personal injury cases, actuarially
calculated multipliers
should be used for calculating future losses in
fatal
accident
cases from the date of trial. For pre-trial losses the only difference
from non-
fatal
cases would be that there would have to be a small deduction to
take account of the possibility that the deceased might in any event have died
or given up work before trial (para 4.17). They expressed this policy, not in
the simple proposition that the
multiplier
should be calculated from trial, not
death, but more precisely as “a
multiplier
which has been discounted for the
early receipt of the damages shall only be used in the calculation of
post-trial losses” (para 4.18). They also recommended that the Ogden Working
Party should consider, and explain more fully, how the existing tables should
be used, or amended to produce accurate assessments of damages in
fatal
accident
cases, based upon their preferred approach (para 4.23).
12.
If this is now so obvious, why did the House of Lords reach a different
conclusion in Cookson v Knowles and Graham v Dodds? The short
answer is that both cases were decided in a different era, when the calculation
of damages for personal injury and death was nothing like as sophisticated as
it now is. In particular, the courts discouraged the use of actuarial tables or
actuarial evidence as the basis of assessment, on the ground that they would
give “a false appearance of accuracy and precision in a sphere where
conjectural estimates have to play a large part”. Hence “[t]he experience of
practitioners and judges in applying the normal method is the best primary basis
for making assessments”: Lord Pearson in Taylor v O’Connor [1971] AC
115, 140. Rather like the assessment of the “tariff” in criminal cases, the
answer lay in the intuition of the barristers and judges who appeared in these
cases. This was wholly unscientific. Counsel in the current case were agreed
that, when they started at the Bar, the conventional approach to deciding upon
the multiplier
was to halve the victim’s life expectancy and add one year, with
a maximum of 16 to 18 years. This is an approach which depends upon “being in
the know” rather than reality.
13.
In Cookson v Knowles the main issue was whether interest should
have been awarded on the whole sum of damages awarded, as the trial judge had
done. Both the Court of Appeal and the House of Lords held that it should not.
The damages should be split into pre-trial and post-trial losses and interest
(at half rate) should be awarded on the former but not on the latter. Lord
Fraser also dealt with the date from which the multiplier
should be calculated
and held that, in a
fatal accident
case, it should be the date of death,
whereas in a non-
fatal
personal injury case, it was the date of trial. He
justified the distinction on this basis at p 576:
“In a personal injury case, if the
injured person has survived until the date of trial, that is a known fact and
the multiplier
appropriate to the length of his future working life has to be
ascertained as at the date of trial. But in a
fatal accident
case the
multiplier
must be selected once and for all as at the date of death, because
everything that might have happened to the deceased after that date remains
uncertain.”
14.
It seems clear that he was thinking of the multiplier
in terms of taking
account of the vicissitudes of life rather than in terms of accelerated
receipt. The only other substantial speech was that of Lord Diplock, who did
not question the propriety of assessing the
multiplier
as at the date of death
(although for the purpose of awarding interest, it had to be divided into the
pre- and post-trial periods).
15.
In Graham v Dodds, the majority of the Court of Appeal in
Northern Ireland took the view that Lord Diplock and Lord Fraser had expressed
“opposite and irreconcilable opinions” (p 814), Lord Diplock favouring the date
of trial and Lord Fraser the date of death. The court preferred what they took
to be Lord Diplock’s view. In the House of Lords, Lord Bridge (with whom all
the other members of the appellate committee, including Lord Diplock, agreed)
held that Lord Fraser and Lord Diplock had not disagreed. Lord Bridge agreed
with the reason given by Lord Fraser for distinguishing between fatal
and
non-
fatal
cases and added that choosing the later date “would lead to the
highly undesirable anomaly that in
fatal accident
cases the longer the trial of
the dependants’ claims could be delayed the more they would eventually recover”
(p 815). Once again, the emphasis was on the uncertainties of life, the
difficulty of knowing what would have happened to the deceased between death
and the date of trial, and not upon the question of accelerated payment.
16.
The Ogden Tables did not exist when these two cases were decided. The
working party under the chairmanship of Sir Michael Ogden QC produced the first
edition of Actuarial Tables with Explanatory Notes for use in Personal
Injury and Fatal Accident
Cases in 1984. Since then they have become a
staple of personal injury and
fatal accidents
practice, the current edition
being the 7th in 2011. Any doubts about using them in the courts were laid to
rest in the landmark case of Wells v Wells [1999] 1 AC 345, where Lord
Lloyd of Berwick said this at p 379F-G:
“I do not suggest that the judge
should be a slave to the tables. There may well be special factors in
particular cases. But the tables should now be regarded as the starting-point,
rather than a check. A judge should be slow to depart from the relevant
actuarial multiplier
on impressionistic grounds, or by reference to ‘a spread
of
multipliers
in comparable cases’ especially when the
multipliers
were fixed
before actuarial tables were widely used.”
17.
Following publication of the Law Commission’s report, the tables have
included fatal accident
calculations based on the Law Commission’s recommended
approach, although at present they cannot be used. Of the two reasons given by
Lord Bridge for the present approach, it is now clear that there is a perfectly
sensible way of addressing his uncertainty point, which would remove the
current distinction between
fatal
and non-
fatal
cases. The twin brothers
mentioned in argument in Cookson v Knowles, one of whom was injured and
the other of whom was killed in the same
accident
, would both be dealt with in
the same way.
18.
If his first concern can thus be dealt with, his second concern, any
incentive for claimants to delay the trial, is a little harder to understand.
If it were valid, it would apply equally to non-fatal
personal injury claims.
Further, if the present approach leads to under-compensation, it could be said
that it creates an incentive for defendants to delay the trial. The reality is
that this is another respect in which the litigation landscape has been
transformed since 1984. Under the Civil Procedure Rules 1998, the court is now
in a position to set timetables and insist that parties keep to them. In any
event, the proper use of the Ogden Tables makes the concern irrelevant. The
dependants will get that which reflects their probable loss on an actuarial
calculation based on the facts known at the date of trial. There is no
injustice either way.
Departing from previous House of Lords decisions
19.
The question for us is not simply the identification of the date as at
which the multiplier
should be assessed. Before we can decide that that date
should be the date of trial rather than the date of death, we also have to be
satisfied that we should depart from the established law as laid down by the
House of Lords in Cookson v Knowles and Graham v Dodds.
22. In our view, therefore, the issue is whether this is a case where this Court should apply the 1966 Practice Statement. In that connection, it is well established that this Court should not refuse to follow an earlier decision of this Court or the House of Lords merely because we would have decided it differently - see per Lord Bingham of Cornhill in Horton v Sadler [2007] 1 AC 307, para 29. More than that is required, not least because of the desirability of certainty in the law, as just discussed. However, as Lord Bingham said in the same passage, while “former decisions of the House are normally binding … too rigid adherence to precedent may lead to injustice in a particular case and unduly restrict the development of the law”.
23. This Court should be very circumspect before accepting an invitation to invoke the 1966 Practice Statement. However, we have no hesitation in concluding that we ought to do so in the present case. At least in the current legal climate, the application of the reasoning in the two House of Lords decisions on the point at issue is illogical and their application also results in unfair outcomes. Further, this has encouraged “courts … to distinguish them on inadequate grounds” (to quote Lord Hoffmann in A v Hoare [2008] AC 844, para 25), which means that certainty and consistency are being undermined. Above all, the fact that there has been a material change in the relevant legal landscape since the earlier decisions, namely the decision in Wells v Wells and the adoption of the Ogden Tables, when taken with the other factors just mentioned, gives rise to an overwhelming case for changing the law.
24.
As already noted, Mr McDermott very fairly acknowledged the strength of
the appellant’s case for a change of approach. His only substantive answer to
the contention that we should change the law was to point out that the system
should be seen as a whole and that there are respects in which the current
legislation requires that claimants be over-compensated. One example is section
3(3) of the Fatal Accidents
Act 1976, which requires the court to ignore, not
only the prospect but the actual remarriage of the claimant, but another is
section 4, which requires that benefits which will or may accrue to any person
as a result of the death shall be disregarded.
26.
Finally, it was also suggested that, rather than this Court changing the
law, we should leave it to the legislature to do so (as has happened in
Scotland, where the Scottish Parliament has enacted section 7(1)(d) of the
Damages (Scotland) Act 2011, following the recommendation of the Scottish Law
Commission in their Report on Damages for Wrongful Death (2008) (Scot
Law Com No 213), [2008] SLC 213 (Report), to the effect that the multiplier
should be fixed as at the
date of trial). We would reject that suggestion. The current law on the issue
we are being asked to resolve was made by judges, and, if it is shown to suffer
from the defects identified above, then, unless there is a good reason to the contrary,
it should be corrected or brought up to date by judges. That is, after all, the
primary principle which lies behind the 1966 Practice Statement. Of
course, there may be cases where any proposed change in the law is so complex,
or carries with it potential injustices or wider implications that the matter
is better left to the legislature, but this is not such a case. Furthermore, in
England and Wales, questions relating to the assessment of damages are and
always have been very much for the courts, rather than for the legislature
(although there are exceptions, to which we have already alluded). In relation
to the point at issue on this appeal, that was recognised by the Law Commission
in paras 4.19-4.22 of their 1999 report, where it is said that “legislation is
probably neither necessary nor appropriate” to change the law on this point, on
the ground that there was “room for judicial manoeuvre without legislation”.
Conclusion
27.
For these reasons, we would allow this appeal, and refuse to follow Cookson
v Knowles and Graham v Dodds, on the basis 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.