In the case of Charlotte Swift v Malcolm Carpenter  Mrs Justice Lambert had to decide whether to adopt alternative approaches to Roberts v Johnstone including those put forward by the Personal Injuries Bar Association (PIBA).
The Claimant was a 43 year old who suffered serious lower limb injuries in a road traffic accident. She had a below knee amputation of the left leg as well as a significant crushing injury to her right foot. The Court had to determine a number of issues including the Claimant’s accommodation needs.
The Claimant lived in West London in a property which the Judge estimated at £1.45m. Having heard evidence from both parties accommodation experts she found that the appropriate figure for special accommodation was £2.35m i.e. additional capital costs of £900k.
In Roberts v Johnstone the Court of Appeal held the extra cost of accommodation should not be calculated by the capital sum or the current mortgage rate because both approaches would result in overcompensation to the Claimant. The correct approach would be to allow the “going rate” of temporarily foregoing the use of the money required to fund the purchase of special accommodation. Stocker LJ found the “going rate” to be 2% per annum. He reasoned that, where the capital asset in respect of which the cost is incurred consists of house property, the inflation and risk element were secured by the rising value of such a property as bricks and mortar will maintain their value.
Lord Lloyd in Wells v Wells, saw no reason to regard the figure of 2% as sacrosanct. In light of expert evidence on the average net return on low risk Index-Linked Government Stock in the conjoined appeals before him, he increased the figure to 3%, thus bringing it in line with the discount rate to be applied for the calculation of multipliers for future loss.
In March 2017, the Government changed the discount rate to -0.75 %. The Judge explained that given the current negative discount rate to be applied for the purpose of calculating multipliers of future loss, the Claimant would, adopting the Roberts v Johnstone formulation, recover a nil award in respect of the £900k additional capital cost for special accommodation.
The Parties Submissions
The Claimant argued for four alternative approaches none of which link the multiplicand to the current discount rate:
1. The cost of an interest only mortgage based on the current rate which was circa 3.8%. This percentage applied to the additional £900k and a full life multiplier would produce a figure of £1.89m.
2. The Defendant to pay an interest only mortgage in the form of a Periodical Payments Order. Once again, if the Claimant achieved her predicted life expectancy this would exceed the difference in the capital cost between the Claimant’s injured and uninjured accommodation needs.
3. To adopt the Roberts v Johnstone approach but to substitute a different rate of return namely 2%.
4. An award to reflect the cost of renting special accommodation although the Claimant’s Counsel accepted this was not a serious option. The annual rent would be in the order of £48k which would once again produce a total sum well over the capital value of the property.
The Judge noted (1) – (3) reflected the submission of PIBA when they intervened in the appeal in JR (Protected Party via his mother and litigation friend) v Sheffield Teaching Hospitals NHS Foundation Trust . In JR the Judge was urged to either award a lump sum to reflect the difference in value between the two properties or an award reflecting the difference subject to a deduction of the general damages figure. However, the Judge considered he was bound by Roberts v Johnstone and awarded nothing for this head of damage.
The Judge felt the real point being made by the Claimant was that the Roberts v Johnstone formula was no longer fit for purpose in the modern context of a negative discount rate. She noted the problems the formula could produce; she also noted the Court of Appeal had observed its imperfect principles which have held sway since George v Pinnock. She had no doubt she was bound by Roberts v Johnstone and it could not be sensibly argued otherwise. Each alternative formulation advanced by the Claimant would produce, if capitalised, a final figure greater than the loss which the formula is intended to address. In the circumstances she made no award in respect of the additional costs associated with the purchase of special accommodation.
The Claimant’s lawyers have been arguing with some confidence in JSM’s that Roberts v Johnstone is ripe for challenge even at the Court of first instance. In practice the argument which is pursued with the most conviction by Claimants is an award based on the interest only rate. Notwithstanding these submissions by the PIBA, Mrs Justice Lambert had no hesitation in concluding she was bound by Roberts v Johnstone. It follows that it will take an appeal to the Supreme Court to overrule Roberts v Johnstone.
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