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Fatal accident damages following Knauer – more logical and more lucrative

The law on fixing damages awards in high-value personal injury cases has never exactly been simple.

However, following the Supreme Court’s unanimous decision in Knauer v Ministry of Justice [2016] UKSC 9, it has just become a little more logical. For most Claimants, the decision also means that they will receive higher awards – in many cases, as in Knauer, the difference will run well into five figures.

Under the new approach, Claimants bringing dependency claims under the Fatal Accidents Act 1976 are to have their damages assessed in much the same way as is familiar from other personal injury claims, with the award for damages split in two parts:

  • an award of damages covering the period from the date of death to the date of trial
  • a lump sum award in respect of future loss, discounted for accelerated receipt, using an appropriate multiplier selected as at the date of trial

The main difference between fatal accident claims and other PI claims is the need to apply a further discount for the possibility that the deceased may have died in any event – note that this is entirely separate from the discount for accelerated receipt, which applies in all personal injury cases.

For users of Facts and Figures, the judgment means that “the actuarially recommended approach” to fatal accident damages, set out with worked examples at pp. 70-78 of the 2015-16 edition, is now the correct one.

It is likely, although the point was not directly at issue in Knauer, that Courts will now also be able to take into account advances in medical knowledge which have occurred since the death when fixing the multiplier. The Law Commission report cited at [10] envisaged an example where “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”. The change to calculating the multiplier at the date of trial may make it easier for Claimants to adduce expert evidence in appropriate cases – for instance, delayed diagnosis of cancer – to the effect that if the Claimant had been treated earlier, she would have survived an extra year, and because during that extra year we now know a new treatment for that condition became available, her life expectancy would have been much greater and her family should receive a much higher award.

Why the change? Really the question ought to be why damages in fatal accident cases had remained an exception to the general rules for PI damages for so long. For almost 40 years, damages in fatal accident cases were (for the most part) assessed following the approach set out in the House of Lords decision in Cookson v Knowles [1979] AC 556, a case decided before the Ogden tables (now the standard method of discounting a lump sum to reflect the fact that the Claimant is being awarded damages for e.g. lost earnings in 20 years’ time, but is actually receiving the money today) even existed. In Wells v Wells [1999] 1 AC 345, the use of those tables in personal injury cases was endorsed by the House of Lords. The Law Commission’s report recommending a change to the calculation of fatal accident damages was issued the same year, but that recommendation was not implemented until Knauer (though the Scottish Parliament made a similar change by way of legislation in 2011). At the time of Cookson v Knowles, fatal accident multipliers were apparently calculated by halving the victim’s life expectancy and adding one, with the maximum allowed being either 16 or 18. In more recent years, they have been calculated by taking the appropriate Ogden table multiplier as at the date of death and subtracting the number of years from death to trial – an actuarially unsound approach of which Hooper LJ said in Fletcher v A Train [2008] EWCA Civ 413 at [42] “I do not understand why” this is done. Some Courts were already finding ways to distinguish Cookson in particular cases, so the decision in Knauer brings certainty that the actuarially recommended approach is also that approved by the Supreme Court.

As Lord Neuberger and Lady Hale noted, the approach to calculating fatal accident damages is still not entirely logical. Section 3(3) Fatal Accidents Act 1976 requires the Court to disregard not only the prospect of remarriage, but the actual fact of remarriage, of a Claimant when calculating dependency. Section 4 FAA requires the Court to disregard any benefits which will or may accrue to any person as a result of the death – for instance, life insurance payouts do not count against the damages. The result is that many fatal accident Claimants will in fact be substantially over-compensated, and will continue to be over-compensated unless and until Parliament changes the law.

The immediate practical effect of Knauer, though, is that fatal accident Claimants can now rely on the actuarially recommended approach to claim substantially more than they could before.

Ross Beaton / 10th Mar 2016


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