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Swift v Carpenter appeal could ensure Claimants properly compensated

Associate solicitor Jonathan Bamforth shares his view on the Swift v Carpenter appeal and the need for fair compensation for clients.

The delayed appeal in the case of Swift v Carpenter was heard remotely in the Court of Appeal last week. The importance of this case to catastrophically injured Claimants cannot be over-estimated.

It is to be hoped the outcome of the appeal will provide a degree of certainty to an aspect of many cases which currently creates frustration for Claimants and lawyers alike. For Claimants the current system adds an extra layer of unwelcome risk, and for lawyers it hinders the provision of clear and informed advice.

The central issue in the case is how the purchase cost of suitable accommodation should be factored into the damages awarded in a personal injury claim – when it is found that such accommodation is necessary. In many cases such suitable accommodation costs significantly more than the property the Claimant was living in before their accident occurred.

Not only does the outcome of this appeal have to ensure Claimants are properly compensated but it is to be hoped it will do so in a way that doesn’t put them under huge future stress and worry.

Until relatively recently the calculation used to assess accommodation damages was the one formulated in the case of Roberts v Johnstone (R v J) which was before the Court of Appeal in 1988.

The need for this calculation arose from the contention that to simply fund the full purchase price of a suitable property was an over-compensation and some form of credit had to be given to consider the broadly appreciating value of property.

It is fair to say this form of calculation was subject to a degree of criticism over the years in any event, but an appropriate and workable alternative had not been presented prior to the change in the discount rate in 2017.

As a result of the discount rate change, however, the formula born out of R v J produces no compensation to the Claimant in relation to the purchase cost of suitable accommodation meaning if they want to purchase such property the funds to do so have to be taken from other heads of damage – such as such as the sums received for their pain and suffering, their lost earnings and equipment needs. This is made all the more difficult in cases where damages for care and case management are quite properly to be paid annually reducing the overall capital sum available. This and associated matters are the subject of the appeal in Swift v Carpenter.

The arguments before the Court last week were far ranging and included whether the principle in R v J could be departed from or whether the Court had the power to maintain the calculation methodology from R v J by utilising a different discount rate. One of the lead arguments was that in a choice between the Claimant receiving no compensation towards the purchase of suitable accommodation or receiving the full capital cost of that accommodation, the only equitable outcome would be to award the latter.

There was also much discussion about the potential for the Claimant giving credit for the value of the reversionary interest in the property bought. The logic being that such interest could be sold post settlement to make up any shortfall needed to provide the claimant with a life interest in the property purchased.

The issue of over-compensation of the Claimant due to the nature of property being an appreciating asset is as much an issue for the Court in Swift v Carpenter as it was in Roberts v Johnstone.

However, if simply providing a Claimant with all of the money to buy a suitable house is the only realistically practical way to ensure they’re appropriately compensated is it not better to be overcompensated than to be under-compensated or worse, receive nothing?

Last week, the court heard sophisticated evidence from a number of financial experts dealing with possible solutions to what tends to be referred to as the ‘windfall’ which can benefit the Claimant’s relatives after their death by reason of the house passing as part of the estate. That evidence and the potential solutions that flow from this aspect of the case alone belie just how thorny an issue this is for the Court to adjudicate upon.

Following conclusion of the Appeal the Court reserved judgement as would be expected in a case involving issues as important as these. The outcome will be awaited eagerly by Claimants and Defendants alike.

To see the Swift v Carpenter decision click here.

To read an in depth analysis click here.

For more on how it could help our most vulnerable clients click here.

To find out more about Minster Law’s approach to Swift v Carpenter click here.