Knauer (Widower and Administrator of the Estate of Sally Ann Knauer) v Ministry of Justice

JurisdictionEngland & Wales
JudgeLord Neuberger,Lady Hale,Lord Mance,Lord Clarke,Lord Reed,Lord Toulson,Lord Hodge
Judgment Date24 February 2016
Neutral Citation[2016] UKSC 9
CourtSupreme Court
Date24 February 2016
Knauer (Widower and Administrator of the Estate of Sally Ann Knauer)
(Appellant)
and
Ministry of Justice
(Respondent)

[2016] UKSC 9

before

Lord Neuberger, President

Lady Hale, Deputy President

Lord Mance

Lord Clarke

Lord Reed

Lord Toulson

Lord Hodge

THE SUPREME COURT

Hilary Term

On appeal from: [2014] EWHC 2553 (QB)

Appellant

Frank Burton QC Harry Steinberg Niall Maclean

(Instructed by Charles Lucas & Marshall)

Respondent

Gerard McDermott QC Tom Poole

(Instructed by The Government Legal Department)

Heard on 28 January 2016

Lady Hale

Lord Neuberger AND (with whom Lord Mance, Lord Clarke, Lord Reed, Lord Toulson and Lord Hodge agree)

1

It is the aim of an award of damages in the law of tort, so far as possible, to place the person who has been harmed by the wrongful acts of another in the position in which he or she would have been had the harm not been done: full compensation, no more but certainly no less. Of course, there are some harms which no amount of money can properly redress, and these include the loss of a wife or husband. There are also harms which it is difficult to assess, especially those which will be suffered in the future, but the principle of full compensation is clear. The issue in this case is whether the current approach to assessing the financial losses suffered by the dependant of a person who is wrongfully killed properly reflects the fundamental principle of full compensation, and if it does not whether we should depart from previous decisions of the House of Lords.

The facts
2

The appellant is the widower of Mrs Knauer, who died from mesothelioma in August 2009 at the age of 46. It is now accepted that she contracted the disease as a result of exposure to asbestos during the course of her employment by the respondent as an administrative assistant at Her Majesty's Prison, Guy's Marsh. The respondent had initially denied such exposure but liability was eventually admitted in December 2013, when judgment was entered for the appellant with damages to be assessed.

3

The damages hearing took place before Bean J in July 2014. Many items of damage were agreed and he resolved those which remained in issue. This included the annual figure for the value of the income and services lost as a result of her death (the "multiplicand"). There is no appeal against any of those findings. The issue is whether the number of years by which that figure is to be multiplied (the "multiplier") is to be calculated from the date of death or from the date of trial. The parties are agreed that in this case the difference between the two approaches is £52,808.

4

The trial judge held (as had Nelson J in White v ESAB Group (UK) Ltd [2002] PIQR Q6) that he was bound to follow the approach adopted by the House of Lords in Cookson v Knowles [1979] AC 556 and Graham v Dodds [1983] 1 WLR 808 and to calculate the multiplier from the date of death. Freed from that authority, however, he would have preferred the approach which had been recommended by the Law Commission, in their report on Claims for Wrongful Death (1999) (Law Com No 263), of calculating the multiplier from the date of trial. He granted a certificate under section 12 of the Administration of Justice Act 1969 to enable the case to come directly to this court, leapfrogging the Court of Appeal.

5

The issue of principle which this court is asked to decide is whether the date of death or the date of trial is the proper approach. But if the answer to that question is the date of trial then the subsidiary issue is whether it is open to or proper for this court to depart from the approach laid down by Lord Diplock and Lord Fraser of Tullybelton in Cookson v Knowles and by Lord Bridge of Harwich in Graham v Dodds or whether the defect in the present law is one which should be left to Parliament to cure.

The principle
6

Mr Gerard McDermott QC, who appeared for the respondent, very properly conceded that the appellant's case on the issue of principle was a good one. The normal approach is to calculate the losses up to the date of trial and award a lump sum in respect of those. Future losses are calculated on the multiplier/multiplicand approach. The multiplier reflects the normal life expectancy of the victim, based on actuarial tables which include a discount to take account of the risk of an earlier death (frequently referred to as "the vicissitudes of life"). But there is also a discount to reflect the value to the claimant of receiving a lump sum now to cater for future losses which would have been suffered over a number of years in the future. Without such a discount, there would be over-compensation. The object is that, at the end of the period in question, the damages will have been exhausted in compensating the victim. The victim should not gain a profit from the compensation. That is the way in which damages for personal injury falling short of death are assessed.

7

Calculating damages for loss of dependency upon the deceased from the date of death, rather than from the date of trial, means that the claimant is suffering a discount for early receipt of the money when in fact that money will not be received until after trial. The appellant accepts that the sum calculated to reflect the loss which has been suffered up to the date of trial should contain a discount to reflect the risk that, had there been no tort, the deceased might have died between her actual date of death and the date of trial. There may also be a risk that the support or services provided for a dependant might have stopped or reduced, for example because of the deceased's accident, illness or loss of job or the dependency ceasing, for example because a child grows up. In most cases any discount would be a modest one, although of course there will be cases in which the risk was far from negligible and where a larger discount would be appropriate. But, as the figures in this case show, the effect of the discount for the non-existent early receipt of the money is far from negligible. It results in under-compensation in most cases.

8

This has become clear now that the calculation of financial losses is based upon the actuarial tables produced by the Ogden Working Party. The current approach in fatal accident cases involves taking a multiplier as at the date of death and then deducting from it the time which has elapsed between the death and the trial. This is to mix up a calculation based on properly considered actuarial principles with an arbitrary arithmetical deduction. As Hooper LJ confessed in Fletcher v A Train and Sons Ltd [2008] EWCA Civ 413; [2008] 4 All ER 699, para 42, "I do not understand why chronological years are deducted from the multiplier".

9

The trial judge in that case had awarded interest on the whole sum, in order to make up for the under-compensation, an approach which the Court of Appeal had to overturn. There have been other examples of courts seeking to get round the problem by adopting a distorted approach: see ATH v MS [2003] QB 965 and Corbett v Barking, Havering and Brentwood Health Authority [1991] 2 QB 408. The temptation to react to a rule which appears to produce an unjust result by adopting artificial or distorted approaches should be resisted: it is better to adopt a rule which produces a just result.

10

The Law Commission, in their report on Claims for Wrongful Death, said this:

"4.7 In the majority of cases it is the life expectancy of the deceased, and hence the period for which he or she would have continued to provide benefits to any dependants, which will govern the multiplier. It was in this context that the 'date of death' rule was adopted, on the basis that 'everything that might have happened to the deceased after that date remains uncertain'.

4.8 It is true that where the multiplier is controlled by the life expectancy of the deceased, the only information which will usually be relevant to that calculation is that which was known about the deceased at the time of death. On the other hand, it is possible to imagine facts on which matters emerging as certain after the deceased's death do affect the period for which it is estimated that he or she would have continued to provide benefits. For example, the deceased might have suffered from a life-shortening medical condition which could not be treated in his or her lifetime. If by the time of trial it is known that, within a year of his death, a treatment for the condition had been developed, this would inevitably affect the accuracy of any multiplier calculated at the date of death. Thus, even in cases where the deceased's life expectancy controls the multiplier, we do not agree with Lord Fraser's assertion that the multiplier should inevitably be selected 'once and for all' as at the date of death."

11

They recommended that, as in personal injury cases, actuarially calculated multipliers should be used for calculating future losses in fatal accident cases from the date of trial. For pre-trial losses the only difference from non-fatal cases would be that there would have to be a small deduction to take account of the possibility that the deceased might in any event have died or given up work before trial (para 4.17). They expressed this policy, not in the simple proposition that the multiplier should be calculated from trial, not death, but more precisely as "a multiplier which has been discounted for the early receipt of the damages shall only be used in the calculation of post-trial losses" (para 4.18). They also recommended that the Ogden Working Party should consider, and explain more fully, how the existing tables should be used,...

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