Knauer v Ministry of Justice [2016] UKSC 9

Mr Knauer's wife died of mesothelioma caused by asbestos exposure during her employment with the Ministry of Justice. The Supreme Court held that the multiplier for calculating future loss of dependency damages should be assessed from the date of trial, not the date of death, departing from earlier House of Lords authority.

Facts

The appellant’s wife, Mrs Sally Ann Knauer, died of mesothelioma in August 2009, aged 46, contracted from asbestos exposure during her employment as an administrative assistant at HMP Guy’s Marsh. Liability was admitted by the Ministry of Justice in December 2013. At the damages hearing before Bean J in July 2014, most items of damage were agreed, including the annual figure for lost income and services (the multiplicand). The sole dispute concerned whether the multiplier for future loss of dependency should be calculated from the date of death or the date of trial. The difference between the two approaches was £52,808. The trial judge, considering himself bound by Cookson v Knowles [1979] AC 556 and Graham v Dodds [1983] 1 WLR 808, calculated the multiplier from the date of death, but indicated he would have preferred the Law Commission’s recommended approach (date of trial). He granted a leapfrog certificate under section 12 of the Administration of Justice Act 1969.

Issues

Two issues arose: (1) whether the correct date for assessing the multiplier when fixing damages for future loss in Fatal Accidents Act 1976 claims is the date of death or the date of trial; and (2) if the date of trial is correct, whether the Supreme Court should depart, under the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234, from the established approach laid down by the House of Lords in Cookson v Knowles and Graham v Dodds.

Arguments

Appellant

Mr Frank Burton QC contended that the date of trial was the correct date because calculating from the date of death subjects the claimant to a discount for early receipt of money that will not in fact be received until after trial, producing systematic under-compensation. He argued that adopting the date of trial did not require departure from earlier authority, being merely a change to a judicial guideline.

Respondent

Mr Gerard McDermott QC fairly conceded the strength of the appellant’s case on principle. His substantive answer was that the system should be seen as a whole, pointing to statutory provisions producing over-compensation (such as section 3(3) and section 4 of the Fatal Accidents Act 1976, which require the court to disregard remarriage and certain accruing benefits). It was also submitted that any change should be left to Parliament.

Judgment

The Supreme Court unanimously allowed the appeal. Lord Neuberger and Lady Hale, giving the joint judgment with which the other five Justices agreed, reaffirmed that the principle underlying damages in tort is full compensation: no more, no less.

The Court explained that calculating the multiplier from the date of death applies a discount for accelerated receipt to a sum that will not actually be received until trial, producing under-compensation. While the appellant accepted that a discount should be applied to pre-trial losses to reflect the risk that the deceased might in any event have died, become unable to work, or that the dependency might otherwise have ceased, such a discount would normally be modest. The current method of taking a multiplier as at the date of death and then deducting the chronological years between death and trial was criticised as mixing actuarial principle with arbitrary arithmetic. The Court noted Hooper LJ’s observation in Fletcher v A Train and Sons Ltd [2008] EWCA Civ 413:

I do not understand why chronological years are deducted from the multiplier

The Court explained that Cookson v Knowles and Graham v Dodds were decided in a markedly different era, before sophisticated actuarial calculation became central to damages assessment. Lord Fraser’s reasoning in Cookson v Knowles focused on the vicissitudes of life rather than accelerated receipt:

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.

Lord Bridge’s additional concern in Graham v Dodds that adopting the trial date would create incentives for delay was characterised as a:

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

The Court held that the legal landscape had been transformed: the Ogden Tables (first published 1984) were now established following Wells v Wells [1999] 1 AC 345, and the Civil Procedure Rules 1998 enabled the court to control timetables. Lord Bridge’s uncertainty point could now be addressed sensibly through actuarial methods, and concerns about delay were equally applicable to non-fatal claims and were in any event addressed by modern case management.

Departing from precedent

The Court rejected the appellant’s submission that the change did not involve departing from precedent; Lord Bridge had decided the matter as one of legal principle. Applying the 1966 Practice Statement, the Court emphasised that mere disagreement is insufficient (citing Lord Bingham in Horton v Sadler [2007] 1 AC 307). However, the reasoning in the earlier decisions was now illogical, produced unfair outcomes, had encouraged lower courts to distinguish them on inadequate grounds (citing Lord Hoffmann in A v Hoare [2008] AC 844), and there had been a material change in the legal landscape through Wells v Wells and the Ogden Tables. The existence of statutory over-compensation provisions (sections 3(3) and 4 of the 1976 Act) was no answer, being legislative choices not justifying preservation of a flawed judicial rule. The matter was appropriate for judicial rather than legislative correction, the assessment of damages traditionally being a matter for the courts in England and Wales.

Implications

The decision establishes that, in claims under the Fatal Accidents Act 1976, the multiplier for future loss of dependency must be calculated as at the date of trial, not the date of death. Pre-trial losses are calculated separately, with a modest discount where appropriate to reflect the possibility that the deceased might in any event have died or ceased to provide the dependency before trial.

The decision aligns the treatment of fatal accident cases with personal injury cases generally, removes a longstanding source of systematic under-compensation, and brings English and Welsh law into line with the position in Scotland under section 7(1)(d) of the Damages (Scotland) Act 2011. It also reflects the recommendations of the Law Commission’s 1999 Report (Law Com No 263).

More broadly, the judgment is significant for its careful application of the 1966 Practice Statement: the Court emphasised circumspection in departing from precedent, requiring more than mere disagreement, but found that the combination of flawed reasoning, unjust outcomes, encouragement of artificial distinctions in lower courts, and a fundamental change in the legal landscape (the establishment of the Ogden Tables and the decision in Wells v Wells) justified departure. The decision affects claimants and defendants in fatal accident cases, practitioners advising on quantum, and insurers, and reflects the Court’s view that judge-made rules on damages assessment are properly corrected by judges where they have been overtaken by developments in actuarial practice.

Verdict: Appeal allowed. The Supreme Court departed from Cookson v Knowles [1979] AC 556 and Graham v Dodds [1983] 1 WLR 808, holding that the correct date for assessing the multiplier when fixing damages for future loss in claims under the Fatal Accidents Act 1976 is the date of trial, not the date of death.

Source: Knauer v Ministry of Justice [2016] UKSC 9