The recent landmark decision in Swift v Carpenter introduced a new approach to calculating accommodation claims. The new approach, which replaces the calculation provided in Roberts v Johnstone, aims to provide fairer compensation for claimants with accommodation needs.
Roberts v Johnstone
After suffering a catastrophic injury, a claimant may require a larger or adapted property as a result of the injury they have suffered. Compensation has to be calculated accurately in order for it to be fair and reasonable. On the one hand, it would not be fair and reasonable for the claimant to cover the cost of the new property. On the other hand, the claimant would be overcompensated if the defendant were to fund the entire cost of a new property, as the claimant would still own this property on their death resulting in a windfall to their estate.
This matter was considered in the case of Roberts v Johnstone in which the Court of Appeal in 1989 introduced a calculation to quantify accommodation claims without overcompensating clients. The calculation was as follows:
Extra capital cost of the new accommodation x prevailing discount rate x life multiplier
However, the prevailing discount rate has been a negative ever since Roberts was heard in the court (and currently stands at -0.25%) resulting in no award for claimants for their accommodation claims. Claimants would therefore have to use money which was awarded to fund other aspects of their claim (such as loss of earnings or care) to cover their accommodation needs.
Based on this calculation, Mrs Swift ( who suffered leg injuries leading to a below -knee amputation after a road traffic accident in 2013) would have received no compensation for her accommodation needs.
The decision in Swift v Carpenter
The Court of Appeal in Swift v Carpenter confirmed that Roberts was guidance only. Accordingly, the Court in this claim departed from Roberts as it would not result in a fair and reasonable result for Mrs Swift. The Court decided the accommodation claim should be valued by subtracting the reversionary interest of the property (based on a discount rate of 5%) from the additional cost of the property. The calculation works out as:
Extra capital cost of the new accommodation - (Extra capital cost of the new accommodation x 1.05 to the power of the negative life expectancy)
Accordingly, Mrs Swift’s accommodation claim was valued at £801,913.
As claimant solicitors we are pleased with the outcome which will hopefully result in fairer and more certain compensation for claimants to cover their accommodation needs, though it is a shame that this has come at such a personal cost to Mrs Swift who has been fighting this battle for seven years.
Ruling on costs and permission to appeal
The Court of Appeal dealt with costs and permission to appeal last week.
It was acknowledged that Mrs Swift had beaten not only the defendant’s Part 36 offer of £600,000 but also her own offer of £800,000. Accordingly, the court had discretion to impose cost consequences on the defendants.
The defendants sought to rely on Cheeseman v Bowaters where the claimant was unable to recover all of his costs, despite beating the defendant’s Part 36 offer, as his success was attributed to the late addition of a new claim at trial which increased his award.
In July 2019 this case had been adjourned to allow Mrs Swift to obtain additional expert evidence. The defendants argued that this meant the successful basis of appeal had not been formulated at that point, and therefore the appeal costs up to the date of adjournment should not be considered. However, the claimant successfully distinguished this claim from Cheeseman and the defendant’s argument was unsuccessful.
Accordingly, Mrs Swift was awarded:
- Costs on a standard basis up to July 2019
- Indemnity costs from July 2019 onwards
- Additional damages of over £65,000
- 5% interest on costs and damages from July 2019
The Court of Appeal denied the defendant permission to appeal to the Supreme Court. Reasoning was not provided by the Court.
It is now left to the defendant as to whether they will to request permission to appeal directly from the Supreme Court.
About the author:
Anu Manda is a trainee solicitor in the Neurolaw department at Hugh James which specialises in representing claimants who have sustained brain and spinal cord injuries.