In a landmark judgment the Court of Appeal have today ruled, in the case of Swift v Carpenter, that people who require special accommodation as a result of an injury will receive fair and reasonable compensation to purchase that property, following nearly half-a-century of Claimants receiving inadequate damages in such cases.
According to lawyers Leigh Day who represented Charlotte Swift in her seven-year legal battle, today's decision is a victory not only for Ms Swift, but also countless future Claimants who require special accommodation following serious injury.
In August 2018 Ms Swift was awarded more than £4m damages by the High Court but was told she would not receive the £900,000 the Court found, as a fact, she needed to fund the capital costs of larger accommodation due to her injuries. Ms Swift will now recover over £800,000 of the £900,000 she needs, where previously it had been zero as a result of guidance by the Court of Appeal in 1989 and a negative personal injury discount rate to be applied to future losses. As property is generally still considered an appreciating asset unlike other losses, Claimants will still have to give credit for the value of the increase at the time of death, but the decision will vastly improve a situation which was widely recognised as being unfair to seriously injured people.
Welcoming today's judgment Grant Incles, the personal injury partner at law firm Leigh Day who represented Charlotte Swift after she suffered serious leg injuries in a road traffic collision in 2013, said:
"This was an overwhelming triumph for somebody who deserved nothing less after everything she has been through. Charlotte's tenacity and ability to trust her legal team in the face of overbearing pressure from a truly David v Goliath situation, and the threat of crushing legal costs consequences, was astonishing. "The decision itself is the best and most thorough examination of a problem that has vexed legal practitioners for decades, and so enormous credit must go to the Judges in the Court of Appeal for taking it by the horns in the way that they did and to Derek Sweeting QC and James Arney of Counsel, and the expert witnesses, for enabling them to do so. "I am so pleased with the result; I only wish it wasn't at such a personal cost to Charlotte, who has had to bear the process for over seven years of her life. She can now get on with the rest of her life in an environment that provides her with the means to live the best life that she can. That is what this whole process is about for Claimant practitioners and, although it was a long and difficult fight, I am proud of what Charlotte has achieved."
Charlotte Swift said:
"When I lost my leg seven years ago, I thought my hardest battles would be rebuilding my life and dealing with chronic pain. However, the reality has been that on top of these challenges I have spent the past seven years in a lengthy legal case, which has been both incredibly stressful and upsetting.
"The insurance company fought me every step of the way while attempting to avoid both themselves, and their fellow insurers, from having to pay the proper compensation that thousands of claimants are legally entitled to every year. And every day, I have felt that weight of responsibility to fight them for both myself and for other injured people.
"I'm absolutely delighted with today's result and so relieved and thankful that the judicial system has come to the right conclusion. Thanks to this decision, thousands of people will benefit in the future: children who suffer brain injuries at birth, cyclists who lose limbs due to a road collision and many others who sustain life-changing injuries through no fault of their own.
"Grant Incles and my legal Counsel have been outstanding throughout and I will be forever grateful to them for what they've done and the support they've given me. I've been put through years of stress, but today's legal victory for people with disabilities makes it all worthwhile."
Background – commentary by Grant Incles
"The way that claims of this nature have been calculated for many years has meant that Claimants have been denied full compensation for the best part of 50 years and compounded by the decision of the Court of Appeal in Roberts v Johnstone in 1989.
"From 1989 the method of calculation employed has resulted in a shortfall in the amount needed to purchase the required property to varying degrees so that Claimants would have to 'borrow' from other parts of their damages originally awarded to cover essential items of future needs, such as care, loss of earnings and equipment.
"In 2017, for very good reason, the Lord Chancellor reduced the personal injury discount rate to apply to the calculation of future financial losses into negative territory. The already unsatisfactory position created by Roberts was brought into stark relief as a result.
"The interaction between the negative discount rate and the method in Roberts created the situation where Claimants would continue to receive nothing at all for an identifiable loss if the law remained as it was which is why we decided to challenge it.
"The legal dichotomy faced by the Court of Appeal in Swift and wrestled with by lawyers for nearly half a century, was the need to provide the Claimant with full compensation for her loss versus the dyed in the wool principle that a claimant must not be over-compensated. With all other losses which depreciate over time Claimants are provided with the full capital value for their need.
"Property has traditionally increased in value over time so that providing the Claimant with the full capital value of accommodation may, in theory, result in a windfall to the Claimant's Estate at the time of their death.
"Mrs Justice Lambert, recognising very well the problem by which she was bound granted permission for Ms Swift and her lawyers Leigh Day to challenge Roberts v Johnstone in the Court of Appeal and find a solution to this source of injustice for Claimants."
The calculation for the award of damages for the cost of purchasing a suitable property in the Appellant's case was:
- Cost of the property now required as per the judgment of Lambert J: £2,350,000
- Value of the Claimant's existing property per Lambert J: £1,450,000
- Capital shortfall: £2,350,000 - £1,450,000 = £900,000
- Claimant's life expectancy per Table 2: 45.43 years
- Value of the reversionary interest: £900,000 x 1.05-45.43= £98,087 *
- Damages award = £900,000 - £98,087 = £801,913
Taking these values as an example, finding the RI using a calculator requires the following steps:
- Enter 1.05
- Press the exponent key (^)
- Enter - 45.43 (don't forget the minus)
- Gives 0.1089
- Mutiply by 900,000
- Gives 98,087 (rounded down)
*The factor of 1.05 used to value the reversionary interest represents 1 + 5%, 5% being the investment return found by the Court of Appeal for the purpose of the market valuation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.