Proper compensation for seriously injured claimants

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The formula for calculating compensation for accommodation costs in cases of serious injury has finally been overturned in a landmark decision taken in October 2020.

People who have suffered life changing injuries as the result of an accident very often have to adapt their existing property or move to a new property to accommodate their needs. They may need additional room for therapy, carers and wheelchair access. Very often such properties are larger and more expensive. Awarding claimants the full capital cost of purchasing new property potentially contravenes the principle that the claimant’s damages should put them back in the position they were in before the accident, but not more than that.

How compensation was previously calculated

The case of Robert v Johnstone in 1989 provided guidance for the courts in deciding how to balance the increased cost to a claimant needing adapted accommodation with the potential windfall gained from owning a more valuable property. The calculation often left them without sufficient capital to purchase a suitable property, so they would have to borrow or use damages awarded for other matters such as care.

In times of soaring house prices and with the new discount rate of -0.75%, the calculation has also often resulted in negative amounts which do not provide any compensation for increased accommodation costs.

The case that overturned the rule

After Charlotte Swift lost her leg in a road accident, she was awarded more than £4 million by the High Court. However, she was told she would not receive the £900,000 needed to pay for the larger accommodation her injury necessitated. She was allowed to appeal, and won the case, with the Court adopting a new formula.

The new formula

The court acknowledged the need to balance the claimant’s requirement for capital to purchase accommodation with the need to avoid a potential windfall, but ruled that the needs of the claimant should always be the priority. They rejected the Robert v Johnstone calculation and after considering a number of alternatives, ruled on a cautious revisionary interest approach, adopting a discount rate of 5%, adding that this figure should not be seen as the standard by which every other case would be measured.

The result is that claimants should be awarded a substantial amount towards their capital purchase costs. Ms Swift was finally awarded £800,000 towards her accommodation costs.

The defendent insurers have indicated their intent to appeal, but it’s hoped that this case resets the focus on compensating seriously injured claimants.

We can help you make sense of the new ruling

We can help start your claim or take over the conduct of your claim from your existing solicitor if you are not happy with the way it is is being handled.

If you have a personal injury or medical negligence claim involving a serious injury which has affected your accommodation please call Jenny Ray on 01273 384 001 or email  Jenny is a specialist in acting for claimants with serious injuries.