Roberts v Johnstone Claims: JR v Sheffield Teaching Hospitals NHS Trust Update
November 20, 2017
By Catherine Howells
In an earlier edition of this newsletter (click here to read) I discussed the future of accommodation claims post the change in the discount rate. Of course, since then there has been a consultation and the Government’s response was published here: https://consult.justice.gov.uk/digital-communications/personal-injury-discount-rate/results/discount-rate-response-consultation-web.pdf. We await with interest the developments legislative reform and where it will take us (and when).
- In the meantime: how do we approach valuing accommodation claims? We know the problem of shortfall in recovery in a Roberts v Johnstone calculation. That approach has been impossible to put in practice since the negative discount rate was introduced in March of this year. In May the issue came before the High Court in the case of JR v Sheffield Teaching Hospitals NHS Trust (William Davis J May 2017)
- The Claimant had significant accommodation needs arising from severe spastic cerebral palsy. The Claimant argued that the 2.5% used in Roberts v Johnstone calculations was arbitrary. The appellant argued that the Court of Appeal should revisit the approach to accommodation claims based upon a multiplier/multiplicand formula and instead award damages based upon the difference between the accommodation that the Claimant would have purchased or rented uninjured and his needs arising out of his disability. That was rejected by the trial Judge, William Davis J. The Judge reviewed the law and noted that the Court of Appeal had “expressly approved the proposition that damages for accommodation costs should not represent the full capital value of the asset since that would remain intact at the claimant’s death and thereby represent a windfall to the claimant’s estate” and that as a result the Court of Appeal had considered the loss by reference to the cost of the lost income. He recognised that there had been numerous criticisms and attacks on the Roberts v Johnstone However, he was bound by Roberts v Johnstone and, given the negative discount rate, he had to consider the return on a risk free investment as representing JR’s loss. On the evidence (and discount rates) there was thus no loss.
- The Claimant also tried to argue that awarding no sum would require him to use capitalised sums from other heads, thus depriving him of monies intended to compensate him for other losses and that that solution meant that he would not recover his full loss, as required by Wells. The Judge rejected that argument, reminding the Claimant that “this submission ignores the long accepted consequence of the Roberts v Johnstone approach as described by Tomlinson LJ in Manna. JR in the long run will recover his full loss because his estate will have the benefit of the full value of the accommodation.”
- He did however go on to add that there was an urgent need to “find a proper solution to the accommodation conundrum“.
- This is an unsurprising decision as the first instance Court had to be bound by Roberts v Johnstone. However, it does not appear that there was any evidence before the Court as to the either or the cost of alternative methods of evaluating the cost of the capital purchase alternative funding solutions – for example, the cost of obtaining a mortgage to buy the property.
- The Judge said: “it might have been possible to say that the interest element on an appropriate mortgage (say £600,000 as the cost of a property less the amount of general damages) over a 25 year term would provide a reasonable figure, the cost of annual mortgage interest being the alternative method of assessment suggested in George v Pinnock“, even though such an approach had been rejected in Roberts v Johnstone.
- Permission to appeal was granted; personal injury practitioners have eagerly been awaiting the outcome. The argument to the Court of Appeal would have been that they should revisit the approach to accommodation claims based upon a multiplier/multiplicand formula and instead award damages based upon the difference between the accommodation that the Claimant would have purchased or rented uninjured and his needs arising out of his disability.
- However, the appeal was compromised. Reports by those Counsel involved indicate the Claimant accepted an offer of £800,000, being the cost of alternative accommodation less a reasonable valuation for the accommodation that the Claimant would have purchased or rented uninjured.
- Before approving the settlement Lord Justice Jackson, observed that: “It is clear that sooner or later this Court is going to have to grapple with the Roberts v Johnstone issues in the new world. There may be cases on the list in due course doing that. Nothing that we say today must be taken as pre-empting what this court will decide following argument…The Defendant has the luxury of choosing the case that will be argued…There can be no dispute that this settlement is favourable to JR”.
- So, in short, we are no further forward. If we have a change to a positive discount rate in the New Year there may be a modest sum recoverable on R v J principles. However, that does not really grasp the nettle of what is a very real difficulty for Claimant’s in getting full compensation for their housing needs. Let us hope that there are other cases heading to the Court of Appeal where this issue can be clarified to give certainty to both Claimants and Defendants on this issue.