A Train & Sons Ltd v Fletcher [2008] EWCA Civ 413

[2008] EWCA Civ 413

Case No B3/2007/0783/CCRTF

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

Venue ON APPEAL FROM Manchester County Court

His Honour Judge Holman

4MA17983

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 24/04/2008

Before

SIR MARK POTTER

THE PRESIDENT OF THE FAMILY DIVISION

LORD JUSTICE HOOPER

LORD JUSTICE MOSES

Between

A Train & Sons LimitedAppellants

Maxine Emma Fletcher (Executrix of the Estate of Carl Fletcher Deceased)Respondent

(Transcript of the Handed Down Judgment of

WordWave International Limited

A Merrill Communications Company

190 Fleet Street, London EC4A 2AG

Tel No: 020 7404 1400, Fax No: 020 7831 8838

Official Shorthand Writers to the Court)

Patrick Limb QC (instructed by DWF Solicitors) for Appellant

Peter Cowan (instructed by Thompsons Solicitors) for Respondent

Hearing Hearing date: 27 November 2007

Judgment

Sir Mark Potter, P:

[1]This is an appeal from the order of his Honour Judge Holman dated 2 April 2007, sitting in the Manchester County Court. It concerns his award of interest to the claimant widow in respect of her fatal accident claim arising from the death of her father, Carl Fletcher deceased, who died on 21 October 2004 from the effects of a malignant mesothelioma resulting from his exposure to asbestos in the course of his employment with the defendant. In making his award, the judge departed from the guideline laid down by the House of Lords in Cookson v Knowles

[1979] AC 556

to the effect that interest on damages for loss of financial dependency under the 1976 Act should be awarded at one half of the special account rate and only on that part of the loss arising between the date of the death and the date of trial, (which I shall call the “conventional” basis). Instead, the judge made an award of interest from date of death to date of trial upon the whole sum of the damages claim including future loss. This resulted in an interest award of £29,070.37, rather than an award of £2,594.83, the sum contended for by the defendant on the conventional basis.

[2]The particular issue argued on this appeal is whether, in departing from the Cookson v Knowles guidelines in a fatal accidents case which had no special features calling for such a departure, the judge went outside the scope of the discretion conferred upon him by virtue of Section 69 of the County Courts Act 1984. The wider issue which has also been canvassed before us is whether the time is ripe for an alteration to be made to the Cookson v Knowles guidelines whereby the multiplier should be calculated from the date of trial and not from the date of death, but Mr Cowan for the Respondent accepted that it is not open to this court to make that change.

[3]The Claimant was the second wife of the deceased who died on 21 October 2004 at the age of fifty-six. She and the deceased had matrimonial problems during the period leading up to his death. However, at trial, the judge found that, had it not been for his terminal illness, the marriage would not have broken down and there is no appeal against that finding.

[4]The claimant’s claim for financial dependency was in the following agreed amounts: £35,184.10 in respect of the past loss of financial dependency from date of death to date of trial; £39,213.62 in respect of the further loss to the date of retirement; and £122,689.58 in respect of the loss after retirement. Those three capital sums total £197,087.30.

[5]So far as interest rates were concerned it was agreed that the appropriate full rate from date of death to trial was 14.75%, the half rate being 7.375%.

[6]On the question of interest, the judge heard short oral submissions from counsel on either side, during which no authority was cited, although passing reference was made to Cookson v Knowles. The judge rejected the defendant’s contention that, in the usual way, the award of interest on damages for loss of financial dependency should be at half (rather than the full) rate and limited only to the past loss of financial dependency (in this case £35,184.10).

[7]Instead, the judge agreed with the argument of the claimant that, as the whole sum of damages reflecting loss of financial dependency was in theory capable of being assessed at the date of death or shortly thereafter, interest should be awarded on the total sum of £197,087.30 at the full rate. The judge did not give a reasoned judgment but limited himself to stating that he accepted the claimant’s submissions in their entirety.

[8]Instead of awarding £2,594.83 (i.e. 7.375% x £35,184.10) on the conventional basis, he awarded £29,070.37 (i.e. 14.75% x £197,087.30) as urged by the Claimant.

[9]This appeal proceeds with the permission of the trial judge.

The grounds of appeal

[10]The grounds of appeal can be succinctly stated. They are that, in exercising his discretion, the judge was bound by the House of Lords decision in Cookson v Knowles

[1979] AC 556

to the effect that interest on damages for loss of financial dependency under s.69 of the County Courts Act 1984 should be awarded only on that part of the loss of dependency which relates to the period between death and trial, and that, by awarding interest on periods for loss of dependency that had not arisen as at the date of trial, the Judge overlooked or ignored the clear statement of the House of Lords at 578E to H per Lord Fraser of Tullybelton that:

“… The damages for the period after the date of trial are compensation for loss of dependency which the plaintiff has not suffered at that date and .. is therefore being compensated for future loss”

. See also: per Lord Diplock at 572B.

[11]It is the submission for the Respondent on the other hand that the observations in Cookson v Knowles in relation to the award of interest constitute a “guideline” which is neither a rule of law nor a binding principle, but a rule of practice which it is open to this court to revise in response to what is said to be a wide recognition that determination of the multiplier in a fatal accident case at the date of death causes injustice, in that it usually results in dependants being under-compensated for their loss of dependency. In this respect, we have had our attention drawn to the view of the Law Commission expressed in Chapter 4 of its report ‘Claims for Wrongful Death’ (Law Commn No 263) at paragraphs 4.16 – 4.25 to the effect that the multiplier in respect of post-trial losses in a fatal accidents claim should be calculated as at the date of trial rather than at the date of death. Reliance is placed upon the observation of Lord Diplock in Wright v British Railways Board

[1983] 2 AC 773

that “a guideline as to quantum of conventional damages or conventional interest thereon is not a rule of law, nor is it a rule of practice. It sets no binding precedent; it can be varied as circumstances change or experience shows that it does not assist in the achievement of even-handed justice..” We are urged to follow and develop the approach of the House of Lords in Wells v Wells

[1999] 1 AC 345

to the effect that in personal injury cases the actuarial calculations reflected in the Ogden tables should now be regarded as the starting point for the assessment of damages, and to endorse that approach as applicable to fatal accident claims, now that the Ogden tables, pursuant to the Law Commission Report, have been amended so as to offer guidance on what ought to be done when calculating damages in such cases.

[12]It is the submission of Mr Patrick Limb QC for the appellants that the arguments in this respect were succinctly but comprehensively reviewed and dealt with in the judgment of Nelson J in White v ESAB Group (UK) Limited [2002] PIQR Q76, in which, having stated his view that the multiplier in respect of post trial losses in a fatal accidents claim should be calculated as at the date of trial rather than as at the date of death, he also stated that he was bound by authority to follow the rule set out in Cookson v Knowles and reaffirmed in Graham v Dodds

[1983] 1 WLR 808

per Lord Bridge of Harwich at 815, neither of which decision had been expressly or impliedly overruled by the decision of the House of Lords in Wells v Wells. That reasoning was affirmed by this court in H v S

[2002] EWCA Civ 792

[2003] QB 965

per Kennedy LJ at para 36.

The figures

[13]Before turning to those authorities, it is appropriate to set out the figures in this case which Mr Cowan for the claimant submits illustrate the proposition that application of the guidelines in Cookson v Knowles can (and indeed generally does) lead to under-compensation of the claimant where a multiplier calculated as at the date of death is used to include both pre-trial and post-trial losses.

[14]By the end of the trial it was either agreed, or decided by the Judge, that in the absence of mesothelioma the deceased would have lived for a further 24 years from the date of his death and that the Claimant’s loss of dependency extended throughout that period because she would have outlived the deceased and would have remained dependent on him throughout. The deceased would have remained in work until he reached the age of 62 and would then have retired, giving a period from the date of retirement (May 2010) to cessation of the dependency (October 2028) of 18 years and 5 months. Based on the 24 year loss of life expectancy from date of death, the life time multiplier to be used to calculate the loss of dependency was 18.11 years, taken from the 2.5% column of table 28 of the Ogden tables.

[15]The calculation proceeded by way of breakdown into three stages. i) Period 1: Date of death to date of trial (October 2004 to April 2007) This was agreed to be a period of 2.46 years and the calculation of the loss on the conventional basis (deceased’s income plus widow’s income x ⅔, minus widow’s continuing income) produced the sum of £35,184.10. (ii) Period 2: Trial to retirement at age 62 The multiplicand on the same ⅔ basis was agreed as £14,631.95. For the purposes of the multiplier, the period from death to age 62 was taken as being 5.5 years and the multiplier from death to retirement was agreed at 5.14, a figure taken from table 28 of the Ogden tables (being the midpoint between the two figures given for 5 and 6 years respectively). Deducting the expired portion of 2.46 years under period 1 above, the balance of the multiplier for the loss of dependency on earnings for period 2 was 2.68 years. This element of loss of dependency was therefore 2.68 x £14,631.95 = £39,213.62. (iii) Period 3: From retirement for remainder of expected life. The balance of the life time multiplier remaining after deduction of the multipliers under periods 1 and 2 i.e. 18.11 minus [2.46 + 2.68] was 12.97. The multiplicand for the loss of pension dependency was agreed on the conventional ⅔ basis at £9,459.49, yielding a loss of dependency of 12.97 x £9,459.49 = £122,689.58.

The judgment below

[16]I have already referred to the brevity of the submissions of counsel before the Judge as to the appropriate award of interest. The transcript is before us. Cookson v Knowles was referred to by Mr Cowan, (from whom the Judge heard first), as authority for the proposition that the multiplier has to be taken from the date of death, which Mr Cowan stated was the argument for interest at the full rate from the date of death. In response, Mr Limb did not refer the Judge specifically to Cookson v Knowles. He simply asserted that interest is awarded to reflect the fact that in respect of a given head or item of loss the person to whom the money should be paid has been kept out of that money for a particular period of time and that was only true in respect of the loss of income dependency from the date of death to the date of trial. That was the only income which would have been received by the deceased had he lived and which the Claimant had therefore had lost by date of trial. She had not yet lost or been kept out of money that she would have received in the years following the trial.

The Judge’s ruling was as follows:

“Mr Limb submits that there is an entitlement to interest in respect of the loss of income from the date of death up to today’s date and submits that it should be at one half of the special account rate, but that thereafter the award, since it is effectively a future loss, should not attract interest. Initially, of course one’s reaction is that this sounds right, but the problem derives from Mr Cowan’s submission, rightly, that one operates from the date of death. That is the effect of Cookson. The multiplier is calculated from that date, so that the award for the loss of dependency is effectively calculated at that stage and it makes no difference when the courts actually assesses the damages, so that accordingly the loss to the dependant is the loss of the fund in its entirety, including future loss, at that time. Bearing in mind the effect of Cookson, that submission seems to me to have merit and I accordingly allow the claim for interest as formulated by the Claimant and not as formulated by the Defendant.”

[18]It thus appears that the Judge accepted the decision in Cookson v Knowles as authority for the fact that the dependency had to be calculated as from the date of death, without appreciating, or at any rate overlooking, that it was Mr Limb’s submission which was a succinct summary of the conclusion of the House of Lords in respect of the appropriate award of interest.

The authorities

[19]S.69 of the County Courts Act 1984 provides that: “(1) Subject to rules of court, in proceedings (whenever instituted) before a County Court for the recovery of a debt or damages there may be included in any sum for which judgment is given simple interest, at such rate as the court thinks fit or as may be prescribed, on all or any part of the debt or damages in respect of which judgment is given, or payment is made before judgment, for all or any part of the period between the date when the cause of action arose and –(a) …

(b) In the case of the sum for which judgment is given, the date of the judgment. … (5) Interest under this section may be calculated at different rates in respect of different periods.” (a) … (b) In the case of the sum for which judgment is given, the date of the judgment. …

[20]So far as awards of interest are concerned there is a broad principle, applicable in claims for personal injury and loss of dependency in fatal accident claims that:

“Interest should not be awarded as compensation for the damage done. It should only be awarded to a plaintiff for being kept out of money which ought to have been paid to him.”

Per Lord Denning MR in Jefford v Gee

[1970] QB 130

at 146 in respect of actions for personal injury, as approved by the House of Lords in respect of fatal accident cases in Cookson v Knowles.

[21]The key passages in Cookson v Knowles per the speeches of Lord Diplock and Lord Fraser of Tullybelton are as follows.

Lord Diplock stated:

“Looked at from a juristic standpoint, it may be accurate to say, as did the majority of the High Court of Australia in Ruby v Marsh (1975) 6 ALR 385, that the entirety of the damage is sustained by the widow at the moment that her husband dies; but what she loses then is only the expectancy of the benefits which he would have provided for her in future years if he had lived. Looked at realistically a loss of the benefit for each year is not suffered until the year in which it would have been received; and at the date of death the present value of that future loss is such a sum as would grow to the money value of the benefit if it were invested at compound interest at current rates until the year in which it would have been received. (569 A-C)… I agree therefore with that part of the decision of the Court of Appeal that holds that, as a general rule in fatal accident cases the damages should be assessed in two parts, the first and less speculative component being an estimate of the loss sustained up to the date of trial, and the second component an estimate of the loss to be sustained thereafter. (569 G) … I turn then to the question of interest on the two components in the award of damages; the loss of the dependency sustained by the widow up to the date of trial, and the future loss of the dependency after that date. I can deal with the matter shortly, for I agree with the result reached by the Court of Appeal. Once it has been decided to split the damages in to two components which are calculated separately, the starting point for the second component, the future loss (which I shall deal with first), is the present value not as at the date of death but at the date of the trial, of an annuity equal to the dependency starting then and continuing for the remainder of the period for which it is assumed the dependency would have inured to the benefit of the widow if the deceased had not been killed … From the juristic standpoint it is that discounted amount and no more to which the widow became entitled at the date of her husband’s death. Interest on that discounted figure to the date of trial would bring it back up to the higher figure actually awarded. To give in addition interest on that higher figure would be not only to give interest twice but also to give interest on interest. On the other hand, the first component of the total damages, the loss of dependency up to the date of trial, is in respect of losses that have already been sustained … before the award is made. Had her husband lived the widow would have received the benefit of the dependency in successive instalments throughout that period. A rough and ready method of compensating her for the additional loss she has sustained by the delay in payment of each instalment … is that adopted by the Court of Appeal, viz, to give interest for the whole of the period but at half the short term investment rate from the mean annual amount which represents the assumed dependency during that period. Looked at from the juristic standpoint the justification for giving interest at only half the current rate is that the amount the widow became entitled to at the date of her husband’s death in respect of the instalments of the dependency which would have inured to her benefit up to the date of trial, would be the present value of each successive instalment as at the date of death… (572 A-F) … To summarise: For the reasons I have given, which follow largely upon the arithmetical basis for the assessment of damages which is called for by the provisions of the Fatal Accidents Act 1976 I consider that: 1. In the normal fatal accident case the damages ought, as a general rule, to be split into two parts: (a) The pecuniary loss which it is estimated the Defendants have already sustained from the date of death up to the date of trial (“the pre-trial loss”), and (b) the pecuniary loss which it is estimated they will sustain from the trial onwards (“the future loss”). 2. Interest on the pre-trial loss should be awarded for a period between the date of death and the date of trial at half the short term interest rates current during that period. 3. For the purpose of calculating the future loss the “dependency” used as the multiplicand should be the figure to which it is estimated the annual dependency would have amounted by the date of trial. 4. No interest should be awarded on the future loss. (573 B-D)”

(emphasis added).

[23]Lord Fraser of Tullybelton stated at 578E-579C:

“The Court of Appeal, having split the damages into two parts, pre-trial and post-trial gave interest on the former part at half the appropriate rate and gave no interest on the latter part … In my opinion the Court of Appeal made its award of interest on correct principles. The only argument to the contrary that seems to merit consideration is the effect that interest ought to have been given on the post-trial damages as well as on the pre-trial damages on the ground that the whole sum of damages was due at the date of death and ought in theory to have been paid then. An argument to that effect prevailed with the majority of the High Court of Australia in Ruby v Marsh (1975) 132 CLR 642 … and in so far as the decision on Ruby’s case turned upon considerations that would have applied to the English legislation, I would respectfully prefer the view of the minority. The realistic view seems to me be that damages for the period after the date of trial are compensation for loss of dependency which the plaintiff has not suffered at that date and he has therefore been compensated for future loss. The realistic view has hitherto prevailed both in England – see Jefford v Gee [1970] 2 QB 130 – and in Scotland where similar, though not identical, statutory provisions apply. In Macrae v Reed and Mallik Ltd,1961 S.C. 68 (a case of personal injuries) Lord Patrick said at p.77: “What can never be justified, in my opinion, is an award of interest on loss which the pursuer has not yet sustained at the date of trial from a date anterior to the Lord Ordinary’s interlocutor …” and in Smith Middleton, 1972 S.C. 30 (a claim by a widow in respect of the death of her husband) Lord Emslie (The Lord Ordinary as he then was) expressed his general agreement to Lord Patrick’s opinion in Macrea’s case. I am of the opinion that the Court of Appeal rightly awarded interest on the damages in respect of the period before the date of trial and rightly declined to award interest on the damages for the period after the date of the trial”

(emphasis added).

[24]It seems to me quite plain that, had the Judge been referred to these passages in Cookson v Knowles, he would not, and certainly should not properly, have ruled as he did, bound as he was to follow those observations. Mr Cowan has urged upon us that in making his award of interest, the Judge was exercising the discretion conferred upon him by Section 69 of the County Courts Act 1984 which, in unqualified terms, permits an award at such rate as the court thinks fit on all or any part of the damages in respect of which judgment is given. In this respect Mr Cowan has referred us to the observations in Cookson v Knowles of Lord Diplock (at 566 C-F), Lord Fraser at 578 C-E and Lord Scarman (at 579 D-F) to the effect that, in exercising its appellate function to lay down guidelines as to which matters a judge should take into account when exercising his statutory discretion, the court is not expounding a rule of law from which the Judge is precluded from departing where special circumstances exist in a particular case, or where the decision to exercise it in one of two alternative ways is a decision on which judicial opinion might reasonably differ. Also to the observations of Lord Diplock in Wright v British Railways Board to which I have already referred (see para 11 above).

[25]In my view those observations do not meet this case. In exercising his discretion as he did, the Judge did so contrary to a principle upon which the House of Lords left no room for doubt, namely that the nature of the award of that part of the damages claim which relates to post-trial losses is a claim for future loss upon which an award of interest is therefore inappropriate. Similarly, an award of more than half the full interest rate on the total pre-trial loss at more than half the short-term interest rate leads to over-compensation of the claimant. For the Judge to make an award of interest which ignored or ran counter to those principles was not to take account of special circumstances existing in the case (there were none), nor to adopt one of two alternative ways of exercising the discretion; it was no more or less than an exercise of discretion contrary to binding authority as to the principle upon which such discretion should be exercised.

[26]It is nonetheless the contention of the Claimant that this court should not simply substitute for the Judge’s order in respect of interest the limited award of half the full rate on pre-trial loss as required by the decision in Cookson v Knowles, but that we should ourselves reconsider the guidelines in Cookson and make an award of interest which reflects the view of the Law Commission and various learned commentators that selection of the multiplier as at the date of death, rather than the date of trial (as in personal injury cases) is generally disadvantageous to the Claimant, as well illustrated in this case.

[27]It has not been in dispute between counsel before us that, had the appropriate multiplier been taken from the date of trial (i.e. discounting back to that date only and not to the date of death) the total award inclusive of interest would have been £212,737 rather than the figure of £199,682 produced by the calculation in accordance with Cookson v Knowles. That is because the multiplier from date of trial would have been 17.03 (as opposed to the agreed multiplier from date of death of 18.11). If one adds to that multiplier the loss to date of trial (2.5 years), the total multiplier for the whole period from death to future expected death would have been 19.49 (17.03 + 2.46) yielding £212,737, compared with the multiplier from date of death of 18.11 which yielded £199,682. It should be noted that the increased total figure of £212,737 is nonetheless substantially less than the total awarded by the Judge so that, should his award stand, the Claimant would effectively receive a windfall of some £13,500.

[28]Regardless of that fact, I do not consider that alteration of the guidelines in Cookson v Knowles is a course properly open to us, this court also being bound by that House of Lords authority. It was made clear in Cookson v Knowles per Lord Fraser at 576 C-D that in a fatal accident case the multiplier must be selected once and for all as the date of death and this reasoning was followed by the House of Lords in Graham v Dodds

[1983] 1 WLR 808

in which Lord Bridge, with whom their other Lordships agreed, described the reasoning in Cookson as cogent.

[29]In the relevant passage in the speech of Lord Bridge at 814h-815g, he stated as follows:

“in the unanimous decision of this house affirming the Court of Appeal, Lord Fraser of Tullybelton dealt with the last point expressly in the following passage at pp.575-576: ‘… [the Court of Appeal]... departed from the method that would have been appropriate in a personal injury case and counsel for the appellant criticised the departure as being unfair to the appellant. The argument was that if the deceased man had had a twin brother who has been injured at the same time as the deceased man was killed, and his claim for damages for personal injury had come to trial on the same day as the dependant’s claim under the Fatal Accidents Act, the appropriate multiplier for his loss after the date of trial would have been higher than 8½. On the assumption, which is probably correct, that that would have been so, it does not in my opinion follow that the multiplier of eight and a half is too low in the present claim under the Fatal Accidents Acts where different considerations apply. In a personal injury case, if the injured person has survived until the date of trial, that is a known fact and the multiplier appropriate to the length of the future working life has to be ascertained as at the date of trial. But in a fatal accident case the multiplier must be selected once and for all as at the date of death, because everything that might have happened to the deceased after that date remains uncertain. Accordingly, having taken a multiplier of eleven at the date of death, and having used two and a half in respect of that period up to the trial, it is in my opinion correct to take eight and a half for the period after the date of trial. That is what the Court of Appeal did in this case.’ If I may say so respectfully, I find the reasoning in this passage as cogent as it is clear. But, what is perhaps more important, I can find nothing in the speech of Lord Diplock which conflicts in any way with Lord Fraser of Tullybelton’s reasoning or with his conclusion. The two passages cited by Gibson LJ from Lord Diplock’s speech dealing with the assessment of the dependants’ future loss from date of trial are not directed to the question of the appropriate multiplier and certainly lend no support to the doctrine that this can be calculated on the assumption that the deceased, if he had survived the accident, would certainly have remained alive and well in the same employment up to the date of trial. Such a doctrine, ignoring the uncertainty which, as Lord Fraser of Tullybelton pointed out, affects everything that might have happened to the deceased after the date of his death, is clearly contrary to principle and would lead to the highly undesirable anomaly that in fatal accident cases the longer the trial of the dependant’s claims could be delayed, the more they would eventually recover.”

(emphasis added) ‘… [the Court of Appeal]... departed from the method that would have been appropriate in a personal injury case and counsel for the appellant criticised the departure as being unfair to the appellant. The argument was that if the deceased man had had a twin brother who has been injured at the same time as the deceased man was killed, and his claim for damages for personal injury had come to trial on the same day as the dependant’s claim under the Fatal Accidents Act, the appropriate multiplier for his loss after the date of trial would have been higher than 8½. On the assumption, which is probably correct, that that would have been so, it does not in my opinion follow that the multiplier of eight and a half is too low in the present claim under the Fatal Accidents Acts where different considerations apply. In a personal injury case, if the injured person has survived until the date of trial, that is a known fact and the multiplier appropriate to the length of the future working life has to be ascertained as at the date of trial. But in a fatal accident case the multiplier must be selected once and for all as at the date of death, because everything that might have happened to the deceased after that date remains uncertain. Accordingly, having taken a multiplier of eleven at the date of death, and having used two and a half in respect of that period up to the trial, it is in my opinion correct to take eight and a half for the period after the date of trial. That is what the Court of Appeal did in this case.’

[30]Thus the authority of the House of Lords on this point is clear, and the principle propounded has been consistently followed, even in the testing circumstances which existed in Corbett v Barking Havering and Brentwood Health Authority

[1991] 2 QB 408

in which the Court of Appeal, while going so far as it could to avoid the effects of Cookson upon the multiplier adopted in the case before them, rejected the solution proposed by counsel that the multiplier should be calculated from the date of trial.

[31]In Wells v Wells

[1999] 1AC 345

, the House of Lords was concerned with the setting of the appropriate discount rate for the calculation of future financial loss. In that context, at p.70 B-C Lord Lloyd observed: “Wright v British Railways Board is also important because of Lord Diplock’s observation, at p.784, that guidelines as to the rate of interest for economic and non-economic loss should be simple to apply, and broad enough to allow for the special features of individual cases. Such guidelines are not to be regarded as rules of law or even as rules of practice. They set no binding precedent, and can be altered as circumstances alter. It follows that a new approach to setting the appropriate discount rate, differing from that adopted in Mallett v McMonagle [1970] A.C. 166 and Cookson v Knowles, does not have to be justified under the Practice Statement (Judicial Precedent)

[1966] 1WLR 1234

”.

[32]However, that passage immediately followed a passage referring to the rate of return on index linked government securities as an appropriate indication of the rate of interest to be adopted as the current net discount rate in respect of personal injury damages awards. It is plain that Lord Lloyd was referring to guidelines on the exercise of discretion as to the rate of interest appropriate to changing economic circumstances; and, when he said that the Ogden Tables should now be regarded as the starting point, rather than a check, and that the judge should be slow to depart from the relevant actuarial multiplier on impressionistic grounds, he was dealing with the approach to the assessment of damages, and in particular multipliers, in personal injury cases. The decisions in Cookson v Knowles and Graham v Dodds asserted and emphasised the contrast between the calculation of multipliers in personal injury and fatal accident cases, and there is no suggestion that Lord Lloyd’s remarks were addressed to, or intended to modify, those decisions in that respect. As already indicated, it seems plain to me that the ‘new approach’ to which Lord Lloyd referred concerned the setting of the appropriate discount rate and the need for periodic change according to prevailing economic circumstances; it was not directed to, nor did it suggest there was an error in, the principle established by the House of Lords as to the date at which the loss of dependency should be determined and as from which the multiplier should be calculated in fatal accident cases.

[33]In its Report referred to at paragraph 11 above, the Law Commission set out at paragraphs 4.16-4.25 its reasons for regarding the present position as unsatisfactory. At paragraph 4.13 it stated that the present law could be subjected to powerful criticisms namely that :

“First, it is both irrational and unduly complex to calculate the claimant’s life expectancy at the time of death, only to make an adjustment to the ‘date of death’ figure to take account of information relevant to the original calculation. The present law appears to have developed on the erroneous assumption that the deceased’s life expectancy will always control the multiplier. Secondly, as highlighted above, the approach in Corbett may still result in the adoption of a lower multiplier than a simple date of trial calculation, raising the criticism of inaccuracy. Whilst in theory, the two approaches ought to give rise to the same result, the decision in Corbett suggests that in practice, there will be some inconsistency between the results derived from the two approaches. Corbett also provides evidence that this inconsistency will work to the claimant’s disadvantage, and that the decision in that case may create a problem of under-compensation.”

[34]The report went on to make certain proposals for reform and recommended that, to this end, the Ogden Working Party should consider and explain more fully how the existing actuarial Ogden Tables could be used or amended to produce accurate assessments of damages, and emphasised that in that respect the Commission’s view was that a multiplier which has been discounted for the early receipt of the damages should only be used in the calculation of post-trial losses.

[35]Following such recommendation, the Ogden working party produced a further edition of the Ogden tables (4th ed, 2000) in which a new section D dealt with the application of the Tables to fatal accident cases in line with the approach to personal injury cases i.e. by calculating the multiplier from the date of death instead of the date of trial. The tables, (the 5th edition of which has since been issued in 2005), provide that pre-trial losses will generally be calculated, as before, by multiplying the annual loss by the number of years between death and trial but, differently from before, they also provide for a deduction to be made for the possibility that the deceased might in any event have died before trial. The multiplier for post-trial losses is based upon the lesser of two periods, namely the expected period for which the deceased would have been able to provide the dependency and the expected period for which the dependant would have been able to receive the dependency. As was done by the parties in the instant case, separate calculations have to be made for the period before retirement age and after retirement age where retirement is likely to affect the level of support. A deduction may also have to be made to allow for the possibility that the deceased might not in any event have survived to trial so as to provide a post-trial dependency.

[36]This is an attractive solution. However it is predicated upon a departure from the practice or principle clearly laid down in Cookson v Knowles that the multiplier in fatal accidents cases should be calculated from the date of death. The arguments for a change in the practice were fully canvassed before Nelson J in White v ESAB, in which the judge (at paras. 27 and 43-45) indicated that he was personally persuaded by the merits of the arguments for change. He nonetheless considered himself bound by the authority of Cookson v Knowles and Graham v Dodds to follow the date of death calculation rule therein set out, neither of which he considered to have been expressly or impliedly overruled by the decision of the House of Lords in Wells v Wells.

[37]In H v S, the Court of Appeal was concerned in a different context with, inter alia, treatment of multipliers which departed from the approach adopted by the House of Lords in Cookson v Knowles and Graham v Dodds. The matter was shortly dealt with by Kennedy LJ at paragraph 36 of his judgment, with which the other members of the court agreed. He stated:

“In my judgment the departure was unjustified for the reasons cogently explained by Nelson J in White v ESAB Group (UK) Ltd [2002] PIQRQ 76. In fairness to the trial judge it should be said that White’s case was decided several months after he gave judgment in this case.”

[38]Whereas White v ESAB and H v S were cases directly concerned with the proper calculation of the multiplier in cases of alleged error by the Judge when assessing damages for future loss, rather than being appeals in relation to the award of interest upon such damages, the decision in Cookson v Knowles itself was directly concerned with the award of interest. However, their Lordships’ conclusions and consequent statement of the principles upon which interest should be awarded and calculated were based upon and informed by their conclusion(a) that the multiplier should be calculated from the date of death and

(b) that the pecuniary loss suffered by the Claimant should be divided into pre-trial loss upon which interest (at half rate) should be awarded and post-trial loss upon which, being damages for future loss, no interest was due.

Conclusion

[39]Speaking for myself, it does seem to me that the time is ripe for a reconsideration of the position. I cannot improve upon the way in which it was put by Nelson J in White v ESAB at paragraphs 29-30:

“29. When, however, the aim of the court is to do the best that it can to put the claimant as nearly as possible in the same position as he was before he was injured, the existence of a method of calculation which provides a known under compensation should in my judgment be reassessed. There is no reason why a court should not be able to assess uncertainties post death in a fatal claim as at the date of trial in the same way as it does in a personal injury claim when considering the uncertainties facing a living claimant in assessing his future loss. The actuarial tables themselves now deal with the question of mortality risk and whether, for example, a deceased would have remained in employment or become ill, or for other reasons ceased to provide maintenance, are all matters which a court has to assess on the evidence available to it at the trial. The same is true of facts relating to a spouse such as mortality and the likelihood of divorce or separation leading to no further maintenance. 30. The Law Commission conclusions that a multiplier which has been discounted for the early receipt of damages should only be used in the calculation of post-trial losses has, in my view, considerable force, and if known facts as at the date of trial are to be taken into account, as they must be, they should, it seems to me, be taken into account by assessing the multiplier as at the trial rather than as at the date of death so as to avoid any illogical deduction for an accelerated receipt which has not taken place.”

[40]Nonetheless, I do not consider that this appeal is the appropriate occasion for such reconsideration. To depart from the method of calculation prescribed in respect of the award of interest in Cookson v Knowles would be to depart from the clearly stated principles underlying and integral to it. Nor is it appropriate for this court, by an award of interest, to seek to compensate for any injustice said to be caused by the fiction that the damages are received at the date of death, so that the award is discounted to that date. I therefore consider that the exercise we have been invited to perform is one which this court is precluded from undertaking, the appropriate forum for such reconsideration being the House of Lords. I would therefore allow this appeal, substituting for the Judge’s award of interest the sum contended for by the Appellant.

Lord Justice Hooper:

[41]I agree that this appeal must be allowed for the reasons given by the President. I hope, however, that the House of Lords will reconsider Cookson v Knowles. In the present case the loss of life dependency was calculated as 24 years from death. Using the 2.5% column in the Ogden Table 28, the life time multiplier to calculate the loss of dependency is 18.11 years. The figure 18.11 is then used in the calculations of the period 2 and period 3 losses (see paragraph 13 above), the figure of 18.11 being based on the assumption that the amount of money required to compensate the widow will be paid at death. It was not. It seems therefore quite illogical to me not to award interest as from death on the whole sum payable.

[42]I also have difficulty with the calculation of the period 2 loss. The period from death to age 62 was calculated as 5.5 years. Using the 2.5% column in the Ogden Table 28, the multiplier to calculate the loss of dependency is 5.1. From that figure is deducted the period of time which elapsed between the death and the date of the trial: i.e. 2.46 years. But those are chronological years and I do not understand why chronological years are deducted from the multiplier. Furthermore, using the balance of the multiplier for the loss of dependency assumes that the amount of money required to compensate the widow will be paid at death. It was not and yet, applying Cookson v Knowles, the interest is not payable from death.

Lord Justice Moses:

[43]I agree with both judgments.