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 Respondent
Frank Burton QC Gerard McDermott QC
Harry Steinberg Tom Poole
Niall Maclean
(Instructed by Charles
Lucas & Marshall
)
(Instructed by The
Government Legal
Department
)
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LORD NEUBERGER AND LADY HALE: (with whom Lord Mance, Lord
Clarke, Lord Reed, Lord Toulson and Lord Hodge agree)
1. It is the aim of an award of damages in the law of tort, so far as possible, to
place the person who has been harmed by the wrongful acts of another in the position
in which he or she would have been had the harm not been done: full compensation,
no more but certainly no less. Of course, there are some harms which no amount of
money can properly redress, and these include the loss of a wife or husband. There
are also harms which it is difficult to assess, especially those which will be suffered
in the future, but the principle of full compensation is clear. The issue in this case is
whether the current approach to assessing the financial losses suffered by the
dependant of a person who is wrongfully killed properly reflects the fundamental
principle of full compensation, and if it does not whether we should depart from
previous decisions of the House of Lords.
The facts
2. The appellant is the widower of Mrs Knauer, who died from mesothelioma
in August 2009 at the age of 46. It is now accepted that she contracted the disease
as a result of exposure to asbestos during the course of her employment by the
respondent as an administrative assistant at Her Majesty’s Prison, Guy’s Marsh. The
respondent had initially denied such exposure but liability was eventually admitted
in December 2013, when judgment was entered for the appellant with damages to
be assessed.
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
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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.
5. The issue of principle which this court is asked to decide is whether the date
of death or the date of trial is the proper approach. But if the answer to that question
is the date of trial then the subsidiary issue is whether it is open to or proper for this
court to depart from the approach laid down by Lord Diplock and Lord Fraser of
Tullybelton in Cookson v Knowles and by Lord Bridge of Harwich in Graham v
Dodds or whether the defect in the present law is one which should be left to
Parliament to cure.
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.
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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
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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:
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“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
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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.
20. For the appellant, Mr Frank Burton QC contended that a determination that
the appropriate date is the trial date would not involve a departure from those
previous decisions, and therefore did not require the appellant to rely on the Practice
Statement (Judicial Precedent) [1966] 1 WLR 1234, whereby the House of Lords
declared that it could depart from its previous decisions. This contention rested on
the basis that we are merely being asked by the appellant to change a judicial
guideline, rather than to depart from any earlier decision. We do not accept that
contention, which appears to fly in the face of the reasons given by Lord Bridge for
reaching the conclusion which he did in Graham v Dodds. He stated that the
selection of the date of trial date would be “clearly contrary to principle” and would
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give rise to a “highly undesirable anomaly” (p 815). However much we may doubt
those observations for the reasons already given, they demonstrate that he was
deciding the issue as a matter of legal principle, and not merely giving non-binding
guidance.
21. Furthermore, it is important not to undermine the role of precedent in the
common law. Even though it appears clear that both the reasoning and conclusion
on the point at issue in Cookson v Knowles and Graham v Dodds were flawed, at
least in the light of current practice, it is important that litigants and their advisers
know, as surely as possible, what the law is. Particularly at a time when the cost of
litigating can be very substantial, certainty and consistency are very precious
commodities in the law. If it is too easy for lower courts to depart from the reasoning
of more senior courts, then certainty of outcome and consistency of treatment will
be diminished, which would be detrimental to the rule of law.
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
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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.
25. These are, of course, examples of over-compensation. They result from
legislative choices and not (unlike the principles with we are concerned in this case)
from judicial decisions. The Law Commission recommended that they be modified
by legislation. But none of this is an answer to the basic question under consideration
here. The present claimant should not be deprived of the compensation to which on
ordinary principles he would be entitled because some other claimants, as a result of
understandable legislative choices made by Parliament, receive more than they
would receive on those ordinary principles. It would be wrong to preserve what is
now known to be a flawed practice affecting most claimants in order to counteract
those choices. Because those matters are dealt with in the 1976 Act itself, the
solutions must lie with Parliament.
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), 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
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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.
