Reports of decisions on dependency calculations are always welcome. Fatal accident damages account for 4% of payments made in personal injury claims. The number of reported cases on damages is relatively small. Cases are often better investigated and less likely to go to trial because there are far fewer disputed issues. The case of Knauer -v- Ministry of Defence  EWHC 2553 (QB) provides a working example of how damages are calculated. It also demonstrates the incorrect approach of some defendants to some aspects of claims for fatal damages.
THE FACTS OF KNAUER
Mrs Knauer had been exposed to asbestos when working as an administrator at a prison. As a result she developed mesothelioma and died at the age of 46. She had three sons aged 22, 20 and 16. The action was brought by her widower. She had what was described as an “old fashioned” relationship with her husband, in that she did most of the housework and shopping whilst he did household repairs. The couple ran a pub together.
The judge described mesothelioma as a “hideous and incurable disease causing appalling suffering.” Mrs Knauer was no exception. She was in considerable pain, and knew she was suffering from a terminal illness, from diagnosis in March 2009 to the date of her death in August 2009.
PAIN AND SUFFERING
The judge considered the Judicial College Guidelines:
- There are no appellate decisions on quantum: I was shown five first instance decisions. The most recent, given in July 2013, and in my view the most analogous to the present case, was Zambarda v Shipbreaking (Queenborough) Ltd. In that case deputy judge John Leighton Williams QC, one of the most experienced personal injury specialists in the country, awarded £77,500 (£79,500 in today’s money) in respect of the pain and suffering of a male victim of mesothelioma. Mr Zambarda was ill for slightly longer than Mrs Kanuer (seven months from the first symptoms, six months from diagnosis). He too had a partial pleurectomy. But a marked difference is that he was 70 when he died, far older than Mrs Knauer. Another broadly comparable case, heard in 2009 by Nigel Wilkinson QC, another deputy judge of great experience in this field, wasStreets v Esso Petroleum Co Ltd, where the victim died at the age of 60 and the award was £65,000 (£77,000 in today’s money). I assess general damages under this heading at £80,000.
ITEMS AGREED OR ALLOWED
- The costs of care for Mrs Knauer during the period of her illness are agreed at £11,520. Disbursements incurred during that period are agreed at £3,587.91. Loss of her income is agreed at £2,313. These three items total £17,420.91
Mrs Knauer’s inability to provide services during the period of her illness
- For reasons which I shall develop under the headings of past and future services dependency claims under the Fatal Accidents Act, I consider that an award should be made in respect of general household tasks done for 20 hours per week; the hourly rate claimed for this limited period, which I accept, is £8.98 giving a figure of £4,669.60. I also award £780 (2.5 hours per week at £12 per hour) for gardening services and a further £300 (half a year at 50 hours per year and £12 per hour) for decorating: a total of £5,749.60.
Fatal Accidents Act damages
THE COST OF THE FUNERAL RECEPTION WAS NOT ALLOWED
- Funeral expenses are agreed at £2,283. In addition, Mr Steinberg seeks to claim £725 for the cost of the reception or wake which followed the funeral. In his decision at first instance in Gammell v Wilson  AC 27 deputy judge Benet Hytner QC disallowed a claim under this heading. The case was appealed on other grounds to the Court of Appeal and House of Lords. Mr Hytner’s decision has been regarded as good law ever since and I am not prepared to depart from it.
THE JUDGE WOULD NOT DEPART FROM ACCEPTED METHODS OF CALCULATION OF THE MULTIPLIER
The judge rejected an argument on behalf of the claimant that the multiplier should run from the date of trial.
Income dependency: the multiplier
- At the time of her death Mrs Knauer had worked for many years and would have continued to do so. Mr Knauer therefore claims both for an income dependency and for loss of her domestic services. Both of these claims involve calculating a multiplicand and a multiplier. There is an issue of principle as to the multiplier. The multiplier in a Fatal Accidents Act claim, nowadays set out in what are known (and described in s 10 of the Civil Evidence Act 1995) as the Ogden tables, is reached by taking a starting point of the number of years to the predicted date of death of the claimant or retirement or death of the deceased (as the case may be), which is then discounted both for the uncertainties of life and for accelerated receipt. The conventional method of calculation is to fix one overall multiplier, then to classify the period to trial as special damages and the remainder as future loss. This method of calculation is illogical, because the discount for accelerated receipt should not apply in respect of the period from the death to the trial.
- Mr Steinberg submits that the time has come to depart from the conventional method. Instead, he says, I should treat the period to trial as special damages (with a small discount for the uncertainties of life but none for accelerated receipt) and then calculate the multiplier for future loss starting at the date of trial or judgment. That is essentially what the Law Commission recommended in its 1999 report Claims for Wrongful Death. For the reasons given by Nelson J in White v ESAB Group (UK) Ltd  PIQR Q6, I would follow that course if it were open to me to do so. But it is not. Like Nelson J, I consider that I am bound by the decisions of the House of Lords in Cookson v Knowles  AC 556 and Graham v Dodds  1 WLR 808, in which the conventional approach was set out and adopted. I will therefore approach the claims for past and future income dependency, and past and future services dependency, on that basis.
THE JUDGES APPROACH TO THE CLAIM FOR FINANCIAL DEPENDENCY
- The dependency ratio to be calculated in accordance with Coward v Comex Houlder Diving Ltd  EWCA Civ 18 and Crabtree v Wilson  PIQR Q24 is that in families consisting of a couple, both of them in work, with one or more children living at home for all or part of the year, one should assume that the surviving spouse would have spent 25% of the joint income on himself and that after the last child left home this proportion would have increased to one third. Mr and Mrs Knauer’s youngest son has been studying at university and staying at home during the vacations, and was 21 years old in March 2014. I accept Mr Steinberg’s submission that a dependency ratio of 75% should be applied to the past loss of income and a dependency ratio of two thirds to future loss.
- Between 2007 and 2009, as I have already recorded, Mr and Mrs Knauer lived in and ran a public house. Their plan had been to build the business and strengthen its profitability and sell it for a substantial capital gain after about two more years. In fact they disposed of their interest on a “fire sale” basis in May 2009 (although no claim for loss of the prospective capital gain is made). The claimant submits, and I accept, that Mrs Knauer would have continued to work in the public house until the sale and would then have returned to ordinary employment. She had previously been employed for many years as a receptionist or a personal assistant before her service at the prison.
- In the 2012 edition of the Annual Survey of Hourly Earnings (ASHE) the median gross income for administrative and secretarial occupations is given as £19,700, which produces a net annual figure of £16,350. Mr Poole submits that Mrs Knauer might not have returned to administrative or secretarial work on the sale of the public house or that she and her husband might have remained at the public house where she was only paid £5,783 in the tax year ending April 2009. I do not accept these submissions. The evidence, both from the claimant and from Mrs Knauer’s employment record, is that she was a reliable and industrious worker who would not have let the grass grow under her feet. I accept that the public house would have been sold, probably sometime in 2011, and that Mrs Knauer would then have found administrative or secretarial work without much difficulty.
- I will make a deduction of three months for uncertainties: one cannot assume that even someone as hard-working as Mrs Knauer would have glided seamlessly from leaving the public house one weekend to starting a new job on the Monday. But otherwise I accept Mr Steinberg’s submissions on this issue. I also accept that the claimant’s income for the period up to trial would have been £85,837.
- This produces the following calculation
Income of Mrs Knauer 59,522
Income of Claimant 85,837
Joint income 145,359
75% of this 109,019
Less Claimant’s income 85,837
Future income dependency
- This head of damage is admitted in principle. Mrs Knauer could have been expected to have worked until the state retirement pension age and thereafter to have drawn an occupational pension and the state pension. The multiplier makes allowances for the uncertainties of life. I therefore accept Mr Steinberg’s submissions as to how it should be calculated:-
(1) Period 1: to the Claimant’s retirement age (at 66) on 1 June 2027
(2) Period 2: From 2 June 2027 to Mrs Knauer’s retirement age (at 66) on 18 April 2029
(3) Period 3: From 19 April 2029.
• Deceased’s assumed net income £16,350 (as above)
• Claimant’s new income £15,195 (as above)
• Joint income: £31,545
• Less 1/3 dependency ratio: £21,030
• Less Claimant’s income (15,195)
• Annual loss of dependency: £5,835
• Deceased’s income £16,350
• Claimant’s pension income: £11,622
- State pension £8,160
- Standard Life K1119186000 £1,077 (taking mid-point projection)
- Standard life pension K2228263000 £2,035 (mid-point projection)
- Marstons (estimated at £350pa)
• Joint income: £27,972
• Less 1/3 dependency ratio: £18,648
• Less Claimant’s income: (£11,622)
• Annual loss of dependency: £7,026
• Deceased’s pension income £8,093
- State pension £6,466
- Civil service pension £1,627
• Claimant’s pension income: £11,622 (as above)
• Joint income: £19,715
• Less 1/3 dependency ratio: £13,143
• Less Claimant’s income: (£11,622)
• Annual loss of dependency: £1,521
Multipliers and calculations
• The period is 12.74 years.
• The arithmetical multiplier is 10.93
The loss is therefore £63,778 (10.93 x £5,835).
• The period is 1.88 years.
• The arithmetic multiplier is 1.83
• Discount for deferral (approx. 13 years) at 0.73
• Multiplier is 1.34
• The loss is therefore £9,415 (1.34 x £7,026)
• Applying the conventional multiplier, the remaining part is 5.88 [i.e. 18.15 less (10.93 + 1/34)]
• The loss is £8,943 (5.88 x £1,521)
THE CLAIM FOR SERVICES DEPENDENCY: THE DEFENDANT’S ARGUMENT THAT NO AWARD SHOULD BE MADE WAS REJECTED BY THE JUDGE
It is the claim for services dependency that is the most interesting. The defendant argued that, since no services had been hired in teh period since death, then no such award should be made.
- Mr Poole argued vigorously that there should be no award for either past or future services dependency. Five years have passed since Mrs Knauer’s death, he points out, yet Mr Knauer has not engaged a paid cook, cleaner, gardener or decorator, still less a resident housekeeper.
- This submission, with respect, is misconceived, on basic principles of the law of tort. If a claimant’s brand new Rolls-Royce is written off through the defendant’s negligence the damages must include its replacement value even if the claimant decides that he will change to a cheaper car or in future take public transport. The same principle applies to claims for loss of services under the Fatal Accidents Acts; and to claims for future loss, though not past loss, brought by a living claimant for her own personal injuries (Daly v General Steam Navigation Ltd  1 WLR 120). Of course in a sense the value of a lost spouse cannot be measured in money terms (see Proverbs, chapter 31, verses 10 ff.) but the law has to do the best it can.
- Mr Poole is right to say that in predicting the future one can take account of what is known to have happened already. As Aneurin Bevan said in a different context, “why look into the crystal ball, when you can read the book?” The classic example in tort law is a Fatal Accidents Act claim where the surviving spouse has himself died by the time of trial: there will be no award for his future dependency, though there may be for that of the deceased’s children. But this does not alter the basic rule that the claimant is entitled to the value of what he has lost. Indeed, Mr Poole’s submission is contradicted by high authority: in Hay v Hughes  QB 790 at 809B Lord Edmund-Davies said that “the fact that a widower decided to manage himself after the death of his wife would not disentitle him to sue for and recover damages for the pecuniary loss he had sustained.””
THE AMOUNT OF THE SERVICES DEPENDENCY
What is important about this case is the scientific way in which the judge approached the issue and the annual amount it produced. This belies the argument, often made, that services award should be “nominal”. The judge awarded damages on the basis of the commercial cost of replacement.
- The claimant’s case as put in the Schedule of Loss and in the report of Ms Kirby is that Mrs Knauer used to spend 20 hours per week on household tasks excluding gardening and decorating. Mr Knauer’s oral evidence, which I accept, was that his late wife was extremely houseproud and would spend three hours on these tasks on a typical weekday and more than that on Saturdays and Sundays. It may be that the figure of 20 hours is if anything an underestimate of the time she spent. I do not think it would be right to allow for more than the figure set out in the Schedule, but I do not accept the submission (as a fallback from the argument that nothing should be allowed at all) that 20 hours was an overestimate or that Mr Knauer could and should make do with less.
- Mr Steinberg submits that the claimant is entitled to the cost of engaging a resident housekeeper: there is a quotation from an established agency in the documents at £25,168 per year (£484 per week). He argues that this is the best way of providing the constant attention to which Mr Knauer had become accustomed.
- As to hourly rates for services such as cooking, cleaning and laundry, Mr Pawson writes that he would “expect Mr Knauer to recruit a cleaner locally and allow £8 per hour”. He bases this on the rates set by the National Joint Council for Local Government Services. He accepted, however, in answer to a question from me, that it is well known that the demand for services of this kind is rapidly expanding due to the combination of increased longevity and decreased local authority funding for community care. The days of a ready supply of cleaners and cooks eager to accept work from individual householders at barely more than the minimum wage are passing.
- Ms Kirby recommends a resident housekeeper, but on hourly rates said that she strongly disagreed with Mr Pawson’s figure of £8 per hour. She said that nowadays one should expect to pay £16 per hour for a cook/cleaner provided through an agency and at least £12 per hour for someone recruited direct, if you could find one. She later accepted that if the going rate in an area were £10 for direct hiring, the agency rate, involving a commission of about 20%, would be £12.50; but I did not understand her to be retracting her earlier figures. (The Schedule to her report contains lower figures, but it also has a number of calculation errors, and I prefer her evidence before me in the witness box.)
- Mr Steinberg submits that if I am against him on provision of a resident housekeeper, I should allow the agency rate for cooks and cleaners, since that would ensure a continuity of services similar to that provided by Mrs Knauer, and save the Claimant from having to recruit direct.
- In my view it would not be reasonable to require the Defendant to pay for a resident housekeeper to replace what has been lost, if broadly similar services could be obtained by other means. But I accept Mr Steinberg’s alternative submission that such continuity of services could only be provided through an agency. I allow 20 hours per week at £16 per hour, which totals £16,640 per year.
- In addition a claim is made for a gardener at £1,750 per year; hedge trimming services at £350 per year, decorating at £750 per year; £624 for online shopping delivery charges and £150 for travel costs. I disallow the last two items: I am not satisfied that online delivery charges will have to be incurred, nor that the cost to the family of driving to the shops will be increased. I allow 75 hours per year (2.5 hours per week for 30 weeks) for gardening and 50 hours per year for decorating. As to hourly rates for these, Mr Pawson would allow £10 per hour: Ms Kirby said with some force that “you would never get someone for that”. Neither is in truth an expert on gardening or decorating, and it would have been disproportionate for such experts to have been called. I allow £12 per hour under these headings also. The figures are therefore £900 pa for gardening and £600 pa for decorating.
- The multiplicand is therefore £18,140.
- The period from Mrs Knauer’s death to the date of trial is 4.86 years. The total award for past services dependency is therefore £88,160.
Future services dependency
- The multiplier put forward by Mr Steinberg is 18.15. Mr Poole’s is slightly higher (18.6) although his suggested multiplicand was far lower. I accept Mr Steinberg’s figure.
- The figure for future services dependency is therefore £329,241.
LOSS OF CONSORTIUM
The developing claim for “loss of consortium” between partners has been discussed before on this blog. In this case the judge awarded £3,000.
“Loss of intangible benefits
- Mr Steinberg’s original contention in the Claimant’s schedule of loss that an award of £10,000 should be made was over-ambitious. Mr Poole submits that this award is conventionally a much lower sum. Having regard to the long list of decisions cited in Kemp and Kemp at 29-052, in particular that of Mackay J in Fleet v Fleet, I accept Mr Poole’s figure of £3,000.”
This case shows, in particular, the importance of the claim for loss of services. That aspect of the claim exceeded £400,000 alone. The judge was willing to consider the evidence of experts on the issue.