Knauer v Ministry of Justice – Calculating the Incalculable
In a long awaited departure from previous House of Lords authority, the Supreme Court has revised the method by which a dependant’s financial losses are calculated in fatal accident claims.
Mrs Knauer was exposed to asbestos in the course of her employment and contracted mesothelioma from which she died aged 46. Her husband brought a claim for damages which included compensation for his wife’s daily management of the household. The services element of the claim was assessed at £19,500.00 per annum. At first instance, Bean J had described the existing approach of utilising a multiplier from the date of death (as opposed to the date of trial) as ‘illogical’. This accorded with criticism levelled by the Law Commission in its 1999 publication Claims for Wrongful Death (Law. Com. No.263, November 1999). He was nevertheless bound by the decisions of the House of Lords in Cookson v Knowles  AC 556 and Graham v Dodds  1 WLR 808 and therefore granted a leapfrog appeal to the Supreme Court.
The central mischief identified by their Lordships was that the existing law gave rise to ‘under-compensation in most cases’. Claimants’ awards were subject to a discount for accelerated receipt in respect of a period in the past (between death and trial) when in fact no money had actually been received. The existing method of subtracting the number of years between death and trial to determine future loss was described as ‘mix[ing] up a calculation based on properly considered actuarial principles with an arbitrary arithmetical deduction’. The Court determined that the old authorities were decided in an era, pre-Ogden, when the calculation of damages was nothing like as sophisticated as it is now. On that basis, a unanimous Court invoked the 1966 Practice Statement allowing it to depart from its previous decisions in both Cookson and Dodds. The law is now aligned with the ‘Actuarially Recommended’ approach which has been a dormant feature of the Ogden Tables since the time of the Law Commission’s 1999 report.
Differences in awards of compensation can be substantial, with the relatively small multiplicand in Knauer producing an award over £50,000.00 more than it would erstwhile have been. At a time when bereavement awards continue to be fixed at a very low level, this is a very welcome development for dependant claimants. There remain a number of complexities involved with calculating schedules in FAA claims and our Personal Injury team will be happy to assist upon request.