CARPENTER DECISION IN THE COURT OF APPEAL: THE APPROACH TO ACCOMMODATION CLAIMS: THE AWARD OF NIL REVISED TO £801,913

A more detailed discussion of the Court of Appeal’s decision today in Swift -v- Carpenter [2020] EWCA Civ 1295 will follow.   For the time being it is sufficient to note that the court overturned the trial judge’s decision to award nothing in relation to the claimant’s accommodation claims. Damages for accommodation are to  calculated by awarding the additional capital cost of the new property less the present market value of the reversionary interest in that property. In the current case the additional value was £900,000 the value of the reversionary interest was £98,087, leading to an award of damages under this head of  £801,913. 

 

 

THE JUDGMENT OF LORD JUSTICE IRWIN

  1. I hope it will be helpful to draw together my conclusions on the case.
  2. In my view, for the reasons given [69, 71-80], this court is not bound to follow the approach to compensation for the incremental cost of property purchase attributable to the injury, formulated in Roberts v Johnstone.
  3. Again, for the reasons given above [100-101, 140-148], that approach is no longer capable in modern conditions of delivering fair and reasonable compensation to a claimant. The ‘cash-flow’ analysis said to justify that approach itself comprises such a level of conjecture, such complexity and such uncertainty of outcome that in my view it cannot be demonstrated to achieve fair and reasonable compensation.
  4. The principles of law by which this court is bound can be summarised in two propositions: firstly, that a claimant injured by the fault of another is entitled to fair and reasonable, but not excessive, compensation. Secondly, as a corollary of that fundamental principle, in relation to the head of claim with which we are concerned, the award of damages should seek so far as possible to avoid a “windfall” to a claimant, or more realistically to his or her estate.
  5. There are well established examples in the field of tort where a degree of overcompensation has proved unavoidable. They are helpfully digested in McGregor on Damages 20th Edition Paragraphs 2–005/8. If it were to prove impossible here to award a claimant full compensation without a degree of over-compensation, then it seems to me likely that the principle of fair and reasonable compensation for injury would be thought to take precedence. I emphasise however that such an analysis is not necessary for my decision in this case.  In my view it is possible, adopting the usual pragmatic approach to the law of compensation in tort, to make a fair and reasonable award in such cases while at the same time taking reasonable steps to avoid over-compensation.
  6. If the Roberts v Johnstone approach is set aside, then the Respondent has conceded that the ‘cash-flow’ analysis is not a practical means of determining the proper level of compensation in individual cases. It is here advanced as evidence bearing on the general decision as to the proper discount rate. For the reasons given, I am sceptical of the fragility of the “cash-flow” analysis, however I have borne that approach, and the outcome advanced by Mr Robinson, in mind as a reference or check.
  7. For the reasons I have given, [192-200] it appears to me that a market valuation is a more apt approach towards establishing the current value of a reversionary interest, which will not mature for many years. However, in response to the limited existing market and the other evidence given, I have reached a deliberately cautious view as to the appropriate discount at 5%.
  8. I reject the suggestion [168] from the Respondent that it is inappropriate to apply the Ogden table 28 multiplier to life expectancy when calculating the amount to be deducted in respect of the windfall. The court has reached a decision on the Appellant’s life expectancy. It seems to me appropriate to treat that decision as a term certain for the calculation.
  9. I accept the submission of the Intervener that this guidance should not be regarded as a straitjacket to be applied universally and rigidly. There may be cases where this guidance is inappropriate. However, for longer lives, during conditions of negative or low positive discount rates, and subject to particular circumstances, this guidance should be regarded as enduring.
  10. For those reasons, I would quash the decision of the judge declining to make any award in respect of an identified need for £900,000 to purchase a more expensive house. In my view the appropriate award, applying a 5% discount rate, and therefore taking the value of the reversionary interest to be £98,087, would be damages of £801,913, and I would so order. To that extent and with that outcome I would allow the appeal.

WEBINAR – 22nd OCTOBER

APIL is presenting a webinar on Swift -v- Carpenter on the 22nd October 2020. Details are available here.