A Train & Sons Ltd v Fletcher

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.

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.

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.

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.

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%.

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).

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.

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.

This appeal proceeds with the permission of the trial judge.

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:

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

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.

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.

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.

The calculation proceeded by way of breakdown into three stages.

Period 1: Date of death to date of trial (October 2004 to April 2007)

Period 2: Trial to retirement at age 62

Period 3: From retirement for remainder of expected life.

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:

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.

S.69 of the County Courts Act 1984 provides that:

…

In the case of the sum for which judgment is given, the date of the judgment.

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:

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

Lord Diplock stated:

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”).

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.

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.

No interest should be awarded on the future loss. (573 B-D)” (emphasis added).

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

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).

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.

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.

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.

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.

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

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.

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:

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.

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 :

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.

Following such recommendation, the Ogden working party produced a further edition of the Ogden tables (4^th 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 5^th 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.

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.

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:

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.

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:

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.

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.

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.

I agree with both judgments.