is not, strictly, a fatal accident case. However it is of interest to all those acting on behalf of estates. The Court of Appeal held that the estate of a deceased employee was entitled to recover the loss of chance of a death in service benefit.
There are some interesting discussions about the relevance of Auty, and also how the loss should be calculated. The Court of Appeal confirmed that the appropriate means of quantification.
THE QUANTIFICATION OF THE LOSS
- Other things being equal, where a claimant has as the result of a tort suffered the loss of a benefit in the nature of life assurance, the appropriate measure of damage would appear to be the cost of securing an equivalent benefit in the market. In Auty Oliver LJ recorded (at p. 801 D-F) the plaintiffs’ submission that
“[t]heoretically he ought to be compensated for [the diminution in the value of the widow’s pension on death in service] by an award of a sum which would enable him to buy, in the market, insurance cover to protect his widow against loss by providing for her, on his death in service, a sum equal to the difference between what she will actually receive in this event and what she would have received if he had continued to work normally”
– though that was not in fact possible because no such equivalent cover was available in the market; and he did not suggest that that submission was wrong as far as it went. That that is the usual measure is taken for granted in the Guidelines referred to at para. 24 above and was also unchallenged in Knapton. Langstaff J took the same view in the present case: see para. 29 of his judgment (p. 61 H).
- However in the unusual circumstances of the present case other things are not equal. Once Mr Fox had died it was too late to seek alternative life insurance cover. Nor, as Langstaff J notes at para. 34 of his judgment (p. 62H), was it argued that he should have mitigated his loss by seeking such cover prior to his death: that was probably in any event precluded by his impecuniosity and/or his already poor health.
- In these circumstances it is necessary to go back to first principles. Mr Fox ‘s estate is entitled to be put in the position that Mr Fox would have been in if he had not been dismissed (ex hypothesi unlawfully) when he was. In that case he would virtually certainly still have been in employment at the date of his death: the possibility that his employment might have terminated (lawfully) for some other reason in the interval between 21 September and 16 October 2010 is too small to require any discount. His beneficiaries would at that point have become entitled to the payment of £85,000. Since that entitlement is to be regarded as a benefit to him he – or his estate – can only be put in the position that he would have been in but for his dismissal if it is put in a position to enable an equivalent payment to be made; and that can only be done by the award of compensation in the full amount. The logic of that seems to me inexorable, and indeed in his oral submissions in reply Mr Nawbatt was constrained to accept that in truth his case was “all or nothing” – that is, either the death-in-service benefit was wholly irrecoverable or the full amount lost had to be paid in compensation.
- Before Langstaff J Mr Coghlin had put forward a superficially different approach, asking what premium it would have been necessary for Mr Fox to pay, as at 21 September 2010, to obtain life assurance in the sum of £85,000 on the basis – which he submitted must be adopted since the court does not speculate when it knows – that he was in fact to die in 25 days’ time; to which the answer was that the premium would inevitably have been no lower than the full amount. Langstaff J was content to accept that way of putting it – see para. 34 (p. 62 G-H); but although it produces the same result it seems to me flawed, for the reasons given by Moore-Bick LJ in his judgment. The right approach is not to make an artificial prospective valuation of the loss as at the date of the termination of the employment but to value it in the light of the events which have actually happened
- I would emphasise, as Langstaff J did (see para. 34, at p. 62H), that this outcome depends on the particular, and very unusual, facts of the present case. In all ordinary cases the cost of obtaining insurance which will provide equivalent benefits will be the appropriate measure; and even if for some reason that route is not available, so that the tribunal has – as Tudor Evans J did in Auty – to value the loss for itself, normally the loss will be less than a certainty and the exercise will be one of the valuation of a lost chance.
There is a discussion on the case from the employment law angle by Lawrence Graham at http://lgblogshr.lg-legal.com/lgblogshr/13-09-09/Compensation_for_loss_of_death_in_service_benefit.aspx