Over three days this week the Court of Appeal heard – remotely – the test case challenge to the current basis of valuing awards for the additional costs of suitable or adapted accommodation in claims arising from serious injuries. The calculation features use of the personal injury discount rate and, since that is negative at present, it produces (mathematically at least) ‘no loss’ for the claimant. The claimant in Swift v Carpenter argues this is unsatisfactory and therefore seeks a new approach.
The essence of the challenge in Swift is that because using a negative discount rate in the calculation of any award for additional accommodation costs results in an artificial ‘no loss’ outcome, therefore the court must set the approach aside and find a new way of valuing this head of damage.
The defence to the challenge is that the methodology inherent in the calculation stems from binding authority of the Court of Appeal – Roberts v Johnstone – and of the House of Lords – Thomas v Brighton Health Authority – and cannot therefore be disregarded.
The Roberts approach was scrutinised by the Law Commission around two decades ago and by the Civil Justice Council in 2010/11. Both bodies recommended reform, by statute if necessary, but nothing was taken forward.
The test case invites the court to depart from the Roberts approach but the claimant does not seek a full award of the capital cost of the new/adapted property. It is widely recognised that a full award would be likely to result in a “windfall” to the claimant’s estate upon his or her death. For this reason, the claimant argues for a new approach by which credit would be given, at the time of making the award, for this reversionary interest. The claimant also argues that the binding precedent point does not arise because the Roberts calculation is not a fundamental legal principle and is merely a pragmatic judicial guideline, albeit one which has endured for three decades.
Several competing basis of technically valuing the reversion were offered to the court by the parties and by the Personal Injury Bar Association acting as intervener. Unusually, the Court of Appeal permitted examination and cross examination of experts witnesses (actuaries, economists and investment specialists) on these matters. Taking evidence in this way meant that legal submissions amounted to a single day of the three day hearing. [This blog is hardly the place to detail the various technical proposals for valuing the reversion but please get in touch with me if that is of interest.]
Inevitably, judgment was reserved and no indication of its likely publication date was given. It may be optimistic to think it might be available before the summer break in around a month’s time but we will certainly be tracking it and shall update you as soon as we possibly can.