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The High Court found that a widow was entitled to a financial dependency claim following the death of her husband from mesothelioma. It was held to be irrelevant that her husband's business had become more profitable following his death, as the value of dependency is fixed at death. The income earned was down to the deceased’s hard work; the shareholding would not necessarily continue to yield the same income irrespective of his capacity for work.
Eunice Rix (widow and executrix of the Estate of Martin Rix (deceased)) v Paramount Shopfitting Company Limited  EWHC 2398 (QB)
The Claimant's husband died in April 2016, aged 60, from asbestos-related mesothelioma. Liability was admitted by the Defendant as Mr Rix had contracted the mesothelioma when exposed to asbestos through his job with the Defendant as an apprentice carpenter/shopfitter.
After he left the Defendant's employment in the 1970s, Mr Rix built up a successful business, which at the time of his death was a profitable company due to his "skill and acumen". In the last two years prior to his illness, the business turnover was almost £1.5 million per annum, with gross profit exceeding £300,000. The Claimant held 40% of the shares in the company, drawing a salary as a director and also receiving dividends. On Mr Rix's death the Claimant inherited her husband's share of a further 40%, with their two sons holding 10% each. It had been expected that Mr Rix would carry on the business for many years whilst training his sons in the management of the business.
The Claimant brought claims under the Law Reform (Miscellaneous) Provisions Act 1934 and the Fatal Accidents Act 1976.
The Claimant argued she was financially dependent on Mr Rix, and that her financial dependency should be calculated by reference to her share of the annual income that she and Mr Rix would have received if Mr Rix had lived. Alternatively, quantification should be made by reference to the annual value of Mr Rix's services to the business as managing director, calculated by reference to the cost of employing a replacement.
In response, the Defendant denied that there was a financial dependency claim because the business had been more profitable since Mr Rix died and the Claimant's shareholding was greater. The Defendant submitted the Claimant was better off, in purely financial terms, than when her husband was alive. The financial dependency which Mrs Rix had enjoyed prior to her husband's death had come through his and her shareholding in the business. The shareholding was akin to a capital asset, and this was inherited, not lost as a result of her husband's death.
The Defendant further argued that as the Claimant was a director and shareholder in the company then this should be treated as her own income, and not something she received as a result of her financial dependency on Mr Rix.
Mr Justice Cavanagh's judgment dealt with whether the Claimant had a valid claim for financial dependency.
Mr Justice Cavanagh found there was "no dispute that Mrs Rix was her husband's dependent". Mr Rix had "skill, energy, hard work, and business flair," resulting in the success of the business. Case law in O'Loughlin and Williams had made it clear that, as the value of the dependency is fixed at death, "the health of the business after the deceased's death is irrelevant."
The Defendant's argument that the shareholding was an income-generating asset was not accepted. Until very shortly before his death Mr Rix remained the "prime mover" in the business. The business would not necessarily generate money regardless of who was in charge of it. The judge stated the "reality was that the income that Mr and Mrs Rix earned, both from salary and from dividends, was the result of Mr Rix's hard work and flair." This was not a case where the shareholding was passive and "would continue to yield the same income irrespective of the deceased's capacity for work."
It was also not accepted that the Claimant's salary and dividends did not count towards her financial dependency. Looking at the practical realities it was clear the income the Claimant received as a director and shareholder "was entirely the result of her husband's work for the business".
Having accepted the validity of the claim, Mr Justice Cavanagh stated there were three key principles when considering quantification:
The objective in a family business case is not to compare the income of the dependant before and after the deceased's death and award the shortfall. In this case, a substantial award for financial dependency was appropriate even though the business continued to thrive and provide an income for the dependant.
The judge agreed with the Claimant's argument that it was most appropriate to calculate the Claimant's loss by reference to her share of the annual income she and Mr Rix would have taken from the business if Mr Rix had lived.
The judge accepted the Claimant's expert accountancy report and found the annual value of the financial dependency claim for each year in which Mr Rix would have continued to work full-time was between £75,108 and £67,460 for the years April 2016 – March 2022, and £64,612 thereafter.
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