Mesothelioma/asbestos compensation- Supreme Court increases compensation for victims’ dependents

Mrs Knauer had contracted mesothelioma from which she died in 2009 at the tragically young age of 46. Her mesothelioma resulted from asbestos exposure during her employment as an administrative at Her Majesty’s Prison, Guy’s Marsh, Dorset. Her widower brought a compensation claim for her mesothelioma and the loss of his financial and services dependency on her. The defendant eventually admitted liability for exposing her to asbestos and causing her mesothelioma. Many items of compensation were agreed. However, one thing not agreed was the figure for future dependency. The issue was the number of years by which the annual losses should be multiplied (the “multiplier”).

In personal injury claims to calculate future losses the number of years (“multiplier”) is normally calculated from the date of trial or settlement. The multiplier used is always discounted to less than the expected period of future loss. One of the reasons for that is the financial benefit a claimant gets in receiving future loss compensation in one big lump sum rather than just getting it gradually. This allows a claimant to earn an investment income on the compensation. To calculate the correct number of years/multiplier judges used to just knock off a few years to get a figure that “felt right.” However, in more recent years actuarial tables (“the Ogden tables”) have been used to calculate more scientifically the appropriate deductions for investment returns (assumed at 2.5% per year).

When calculating future dependency claims in mesothelioma and other fatal asbestos disease or accident claims the same discounting process was used, but the multiplier was calculated from an earlier point; not trial but death. This followed a 37 year old decision of the Supreme Court’s predecessors, the House of Lords, in Cookson v Knowles. The difference matters because the earlier calculation date can reduce compensation quite significantly.

For a woman of Mrs Knauer’s age, if the multiplier were taken from the date of her death (aged 46) this would give 25.67 to cover the estimated 43 years of life the mesothelioma took from her. However, there was then a deduction for the period between death and settlement/trial; about 7 years here; 25.67 – 7 = 18.67 years. Her widower would, therefore, get 7 years’ past loss of dependency but only 18.67 years’ future dependency. His total dependency claim would be limited to 25.67 years. By contrast, if the future dependency were calculated from the date of settlement/trial the widower would still get 7 years worth of past dependency. However, he would get 22.92 years of future dependency; the actuarially correct multiplier for a woman of the age she would have been by then, 53. His total dependency claim would be for 29.92 years; an additional 4 ¼ years of losses.

If his annual loss of dependency was say £12,500, calculating from death would give £320,875. Calculating from trial would give £374,000; a difference of over £50,000.
The High Court had no choice but to calculate Mr Knauer’s compensation for his wife’s asbestos disease according to the old “date of death” method, because it was bound by precedent from the highest court in the land. This precedent had been much criticised. However, only that highest court (or Parliament) could put this right.

The Supreme Court ruled in Mr Knauer’s favour, overturning the previous precedent. They explained that calculating damages from the date of death meant the dependent of this asbestos disease victim suffered a discount for early receipt of the money as if he had received it at the date his wife died. Yet in fact he would not receive it until after trial, several years after the mesothelioma had taken her. This resulted in under-compensation. To uphold the original judgment would be to rely on case law, decided in a ‘different era, when the calculation of damages for personal injury and death was nothing like as sophisticated as it is now’.

The court acknowledged there were other aspects where dependents of fatal asbestos diseases/accidents were over-compensated (eg ignoring payments received due to death). Those anomalies had been created by Parliament and could only be changed by Parliament. This, however, was an injustice made by the courts and which therefore the courts could and should correct. They allowed the appeal and they ruled that the correct date when to assess the multiplier for fixing compensation for future loss for fatal asbestos disease or any other claims should be the date of trial and not the date of death.

This decision should increase the compensation received by dependents of victims of fatal asbestos diseases and other fatal accidents. To maximize compensation for asbestos disease victims, the writer had for some time already been calculating his schedules this way. However, until this ruling that calculation would have been rejected by the court if disputed. He can now continue doing what he has always done, knowing it is safe from challenge!

Jeremy Horton specialises in mesothelioma and other asbestos disease compensation claims in Kent, the Medway Towns & beyond. If you would like free advice about a mesothelioma or asbestos disease claim, please contact Jeremy on 01622 680415 or JeremyHorton@brachers.co.uk

This content is correct at time of publication