In the most serious personal injury claims, Claimants will often need to purchase a new property. This is due to their existing home being unsuitable for their new needs. In almost all cases this new property will be more expensive than the Claimant’s current home. The principle behind compensation is that a Claimant should be returned to their pre-accident position so far as possible, but no more than that. If a Claimant is awarded the difference in value between the two properties the potential exists for them to receive a windfall over and above the compensation due.
The previous approach taken by the Court was that Claimants would essentially borrow money from their general damages, i.e. the lump sum awarded for the pain and suffering caused by their injuries. The Court would then make an award based on the likely return had the amount spent in purchasing the property been invested elsewhere. This was based on a Court of Appeal decision in Roberts v Johnstone.
Since the decision in Roberts a number of factors have changed. A combination of falling interest rates and changes to the discount rate (the predicted return on investment of a lump sum) meant that the calculation in Roberts gave a value of zero for accommodation costs. In addition, house prices have increased significantly since Roberts was decided in 1989. This meant that in addition to borrowing from general damages, personal injury Claimants also had to make use of amounts awarded for future loss, such as nursing care.
Recently the Court of Appeal has provided new authority in the case of Swift v Carpenter. Ms Swift suffered severe injuries, including amputation of her left leg below the knee, following a road traffic accident. Suitable housing was roughly £900,000 more than Ms Swift’s existing home. The Court decided the appropriate method was to calculate the windfall and subtract it from the £900,000 required. This calculation was based on an investment rate of 5% and the Claimant’s life expectancy of 45.43 years. The Court valued the windfall at £98,087, resulting in an accommodation award of £801,913.
This judgment represents good news for personal injury claimants. When an injured person has much of their life ahead of them, they will be able to recover a significant proportion of their accommodation costs. This is in stark contrast to the previous approach, which left many injured people responsible for the full cost of moving to suitable accommodation following an accident.
Field Overell LLP have decades of experiencing assisting clients with significant personal injury claims. Our expert solicitors in Coventry and Leamington Spa are able to advise on all aspects of potential claims.
This article is provided for information only and is not intended to constitute legal advice. No reliance should be placed on this article. You should always take legal advice from a qualified lawyer before deciding whether to pursue legal action.