Financial dependency, extent of claims and considering events post-mortem

The recent case of Steve Hill Ltd v Witham addressed the extent of claims of dependency claims under the Fatal Accidents Act, and also circumstances in which events occurring after the death of the deceased may have on the value of the dependency.

Steve Hill Ltd v Witham [2021] EWCA Civ 1312

At first instance, the Claimant had been awarded over £900,000 following the death of her husband. The dependency award included the valuation of childcare on a commercial cost basis.  This, and the recent decision in Rix v Paramount have indicated that judges are increasingly prepared to use their discretion when making awards under section 3(1) of the Fatal Accidents Act.

The enthusiasm of the lower courts in this regard may prompt a request for the intervention of the Supreme Court in order to clarify the boundaries of section 3 of the FAA. There are suggestions that Rix will be the subject of an appeal to the Supreme Court, the outcome of which would be the subject of great interest.

Nonetheless, in this matter, the first instance decision was upheld with the Court of Appeal dismissing the appeal.  It was held that the Claimant was able to “legitimately claim the cost of securing those [childcare] services to enable her to place herself in the position she was prior to her husband's death.”

It must be noted that due to a change in the circumstances of the foster arrangement, the children were no longer in the care of the Claimant at the time of the appeal, and therefore, the dependency could not be said to be continuing on the same premise. The value of the dependency was remitted to the trial for revaluation.

Background

The deceased died aged 55 from mesothelioma, caused by exposure to asbestos when working as a labourer for the Defendant. Prior to his death, the deceased and his wife had jointly fostered two sibling children (“A and B”), who both had behavioural difficulties. It was agreed that due to the terms of the foster agreement, the deceased would be responsible for most, if not all, aspects of domestic life. His wife would be returning to full-time work.

After the deceased passed away, his wife became the sole carer of the foster children.

She made a claim against the Defendant pursuant to the Fatal Accidents Act. Under section 3(1) of the FAA, “damages, other than damages for bereavement, may be awarded as are proportioned to the injury resulting from the death to the dependants respectively.”

The claim was successful, and the Claimant was awarded in excess of £900,000.

At the trial, the judge, Anthony Metzer QC sitting as a Deputy High Court Judge, found that the dependency “is that of the claimant rather than A and B”, as the latter suffered no loss given the Claimant replaced her husband as carer. The Claimant was dependent on the deceased caring for the children so she could pursue her career for the benefit of the whole family.

It was held that “she had a reasonable expectation of pecuniary advantage, namely the money she would have earned at work from the continuation of her husband's life who would have continued to look after their home and their children.” Therefore, the Claimant’s dependency upon her husband, resulting from the relationship of husband and wife, was lost. In term of valuing that dependency, Whilst the Claimant’s loss of earnings and pension loss fell outside s.3(1) FAA’s ambit and in valuing the dependency, the judge instead settled for damages valued at the commercial rate of childcare services.

The Defendant appealed the decision.

Appeal

Four permitted grounds of appeal were identified in the appeal judgment. The submission that the award for future loss of services dependency was erroneous given the change in circumstances was addressed first.

• Introduction of fresh evidence on the foster arrangement

The Claimant was no longer caring for the children. They had been removed by the local authority and not returned, and an internal investigation was still ongoing in this regard.  However, the removal was “unforeseen and undisputed fact”, and therefore the factual basis of the dependency claim no longer existed.

The sum awarded was directly based off the deceased’s care for the children. Despite the need for finality in proceedings, this was overridden by the unforeseeable nature of the new evidence and to refuse its admittance “would affront common sense, or a sense of justice”. Remittance for revaluation of the dependency was therefore allowed.

The Court of Appeal then considered the three outstanding grounds of appeal, specifically those appealing the basis on which the dependency was awarded.

• The award of £585,904 for childcare and domestic work was not a loss suffered by the Claimant

The Defendant submitted that it was A and B who had lost the benefit of the deceased’s services, not the Claimant. Foster children do not fall under s.1(3) FAA and the Claimant’s only loss was that of lost opportunity, which is not recoverable under the FAA. The judge at first instance found that the Claimant lost her career as a consequence of losing her husband’s service and it was immaterial whether the children had suffered loss.

The Court of Appeal held the trial Judge’s findings were based upon the evidence before him and were not open to challenge. In losing the benefit of her husband’s service, the Claimant was able to legitimately claim the cost of childcare services placing her in the position she would have been in prior to her husband’s death.

This ground for appeal was dismissed.

• The loss suffered in replacing the deceased’s childcare service had to take into account fostering allowances and other pecuniary benefits received by the Claimant.

The Defendant submitted that the Claimant had suffered no loss because she continued to receive foster care payments when she replaced the deceased in acting as the children’s carer.

The payments were found not to affect the Claimant’s lost dependency. It was found that “the fact that she had sole responsibility for fostering after the death, as opposed to joint responsibility before it, is neither here nor there.” The payment itself was the same before death as it was after but the Claimant had lost the benefit of her husband’s services when he died.

This ground of appeal was dismissed.

• It was contrary to principle to assess the value of the dependency with reference with the full commercial cost of the services

The Defendant submitted the trial Judge should not have costed care at the commercial rate as the Claimant was accepted as the person who would provide the care. The Court of Appeal found that the measurement of damages by the commercial cost of such care was a reasonable method for quantifying the Claimant’s loss, with reference to the decision of Housecroft v Burnett. Although this was not an FAA claim, it was good authority for holding that the commercial rate of care may be appropriate where earnings have been lost. However, there was still a need for the fact-specific approach, which had been adopted by the judge at first instance.

The key point with dependency under the FAA was the value of the deceased’s services which he would have provided. The compensation valuation was based on services lost, not the value of how the dependent manages post-death.

The first instance decision to ignore the potential gratuitous replacement by a relative or friend of the deceased and his services, instead estimating the costs from employing labour, was a reasonable decision. There was no obligation to provide a discount of any sort.

This ground was dismissed.

Outcome

As noted above, the Court of Appeal remitted the case back to the High Court for revaluation. Considering the unforeseen removal of A and B from the Claimant’s care, this affected the value of the dependency, but also noting the Claimant’s continued efforts to have A and & B returned to her care.

What we can learn

• It is clear that there is no universal approach for assessing pecuniary benefits to dependents. Contextual factors will be accounted for and the dependency is not always limited to one party/class of person. In this instance, the dependency was found to be that between the Claimant and her deceased husband, rather than between the children and the deceased.

The Court of Appeal addressed case law considering the questions of section 3 dependency, including Cape Distribution v O’Loughlin where Lord Justice Latham stated that there is no "prescriptive method by which such damage is to be identified, or calculated apart from the principle that it requires that some damage capable of being quantified in money terms must be established." This emphasises the fact specific nature of assessing a dependency and subsequent valuation.

• In respect of the decision to remit the claim for revaluation, this was an instance where the need for finality was overridden, and a failure to consider fresh evidence would have been an affront to common sense. A reasoned answer considering all the information available was the most appropriate outcome.  The Claimant had submitted that no attempt was made at trial on the likelihood of the foster arrangements not working and this should negate the request for revaluation. However, it was correctly noted that the Defendant had no basis on which to base such questioning. The use of statistics to understand the prospect of the foster arrangement ending would have reduced the multiplier, nothing more. The subsequent outcomes had removed the factual basis of the dependency claim.