Areas of Core Excellence (ACE)
Introducing our Fatal ACE Group
Led by Mark Treacher and Julia Messervy-Whiting, our Fatal ACE group offers clients direct access to our expert lawyers skilled in handling fatal accident claims and fatal incidents. This team can provide practical experience to identify key areas of dispute at the outset and provide guidance for proactive resolution of claims within realistic reserves. The aim of this group is to share insights and advice on a practical level with our clients, circulate advice on areas of potential changes both legislative and via case law, consider the impact of jurisdiction, and provide insights from different aspects of the legal process.The Fatal Accidents Act 1976 provides that dependents of the deceased are able to bring a claim for dependency which includes financial dependency. Often the most significant head of loss in such a claim will be that of a spouse/partner or child in reliance on the lost income of the deceased.
The conventional percentage approach
The basis for assessing financial dependency was decided by the cases of Harris v Empress Motors Limited [1984] 1 WLR 212 and Coward v Comex [1988] EWCA Civ 18. These cases provided us with a general rule of thumb: where the deceased was part of a couple with no dependent children, then dependency was to be assessed at 66% of the joint family income, less the income of the surviving partner. Where the deceased was part of a couple with dependent children, then dependency was to be assessed at 75% of the joint family income, less the income of the surviving partner.
The rationale for these percentages is that a member of a couple without dependent children would spend 1/3 of the family purse on themselves leaving 2/3 of the family purse available for the dependency claim. Whereas a member of a couple with dependent children would have less income available for themselves and so spend 25% of the family purse on themselves leaving 75% available for the purpose of the dependency claim.
However, when the Court of Appeal heard these cases, almost 40 years ago, the family unit was very different. Since the 80s the Office for National Statistics (ONS) data confirms there has been a decline in marriage and birth rates. There have been increased opportunities for women in the work place (House of Commons Library Data) which has meant an increase in couples with a dual income and no dependent children who might be more inclined to keep separate finances. There has also been an increase in divorce rates and blended families (Millenium Cohort Data Study). This means that often the cost of looking after a child will be split across more than two parents in two households. Additionally, the cost of living crisis and reduction in benefits means that lower earners are struggling more than ever to make ends meet and may not have sufficient resources to meet the basic needs of their partner or children in life (House of Commons Library, Poverty in the UK). In all of these changing circumstances, the conventional approach could produce an unfair outcome.
What can we learn from subsequent case law?
In the case of Owen v Martins [1992] PIQR Q151, CA the deceased was a high earner who died 11 months into a childless marriage where his wife (the Claimant) had been married before and since and a lump sum award was made. Similarly, albeit 20 years later in the case of Taafe v East of England Ambulance Services NHS Trust [2012] EWCH 1335 (QB) the deceased was married and both she and her husband were high earners. The limited evidence available suggested that the couple had maintained separate finances. They did not have a joint account, and the Claimant had paid the mortgage solely. The judge allowed only £6,000 per annum as dependency which is the figure which it was estimated the deceased had paid for household bills and outgoings from her salary. So, in a situation with two high earners maintaining separate finances, the court again departed from a percentage approach entirely.
In Dhaliwal v Personal Representatives of Hunt (decd) [1995] PIQR Q56, both parents had died and the judge said a more subjective view of how much was spent by the parents should be undertaken. The result was a 50% allowance of the aggregate wages (but here the deceased had a property portfolio, and the mortgage payments were found to be an investment and not for the benefit of the children). In the case of a single parent family, a similar assessment would be carried out, but the result would be very fact specific.
ATH v MS [2002] EWCA Civ 792 was a case where the deceased had divorced the father of her children and both her and her ex-husband had found new partners. Here it was found the children would never really be solely dependent upon the deceased's income in view of the income brought into the family from the father and his new partner and the deceased's new partner and the dependency percentage was reduced to 60%. So in a blended family situation, with additional streams of income, a lower percentage was awarded.
The previous cases mostly feature higher earnings, however in the case of Cox v Hockenhull [2000] PIQR Q230, the Claimant and the deceased were low earners and survived solely on benefits. It was found that a dependency percentage for a surviving spouse of 2/3 was too high because this took no account of the fact that some of the most significant expenses were joint and the dependency percentage was reduced to 50%. So where the deceased's income was very low the Court were willing to utilise a lower percentage.
The above are all examples of where departing from the conventional approach has benefitted the Defendant. However, this is not always the case. There have been several cases where the deceased was a high earner and the evidence showed they spent very little on themselves and so a higher percentage had been awarded e.g. Paton v MOD LTLPI 13/3/2006 in which an 85% dependency percentage was used and Williams v Welsh Ambulance Services NHS Trust [2008] EWCA Civ 81, where an 82.5% dependency percentage was used for the initial period.
Legal Landscape
As can be seen above, the judiciary have always shown willing to depart from the conventional approach in the right case. Mr Justice Spencer commented in the recent case of Chouza v Martins [2021] P.I.Q.R. Q4 that, O'Connor LJ in Harris v Empress "only intended to suggest that the absence of the painstaking or tedious approach should lead to a broader, percentage approach, but not necessarily to what those percentages should be. If the court decides on the percentage approach, it may be more ready to depart from the conventional percentages on the basis of more general evidence about the lifestyles of the family and adjust the percentages accordingly. In other words, it is not necessary, in order to depart from the conventional percentages, to descend into the nitty-gritty of the family finances and work out precisely how much was spent on the various individual items of expenditure". Arguably therefore this is evidence of ever more willingness not to be bound by the conventional approach.
The obvious advantage of the conventional approach is that it offers certainty for the parties. The risk of departing from the conventional approach conversely is the lack of certainty. In the Chouza case an 85% dependency percentage pre- retirement and 70% post-retirement (when the children would no longer be dependent) was applied despite evidence the family business was struggling.
Challenging the conventional approach?
Each case is fact specific, but you may want to consider it in the following circumstances:
- When the deceased is part of a couple of high earners without children who maintain separate finances
- When the deceased's relationship with the Claimant was brief despite meeting the dependency criteria
- When the deceased has children but has separated from their co-parent
- When the deceased was a low earner
How do you challenge the conventional approach?
Firstly, gather all of the relevant financial information to assess the position. This might include:
- Bank and building society statements for the deceased, their partner and/or ex-partner and any joint accounts
- OH/personnel/earnings records for the deceased, their partner and/or ex-partner
- Utility and grocery invoices
- Rent and mortgage documentation
- Where there are children, seek invoices for their extra-curricular activities and childcare
Then decide whether, on the face of it, there are good arguments to depart from the conventional approach and what impact doing so is likely to have.
When dealing with these complex issues our team are always on hand to assist. Hannah Fitzgerald is a member of our ACE Fatal group and can be contacted here.
