Swift v Carpenter: What does it mean for Professional Deputies?

image of a house on some architecture plans

The court’s decision on Swift v Carpenter today is one of the most significant on the calculation of accommodation claims since 1989 when Roberts v Johnstone applied the discount rate.

We have had three decades of injustice to claimants since that decision.  Three decades when, on many occasions, families and the appointed Deputies have been in an invidious position of deciding what compromise to make when trying to balance budgets.  Invariably, that is a compromise between care, therapy and quality of life and the accommodation they need to enable them to live in a way as to promote independence and access that care, therapy and equipment.

The background

It is very common for a seriously injured claimant to find that the current family home is simply no longer suitable for them. Issues could include:

  • Not being able to navigate the stairs.
  • The bathroom is too small for them to access in a wheelchair.
  • The hallway and doorways don’t accommodate a wheelchair.
  • There is no space for equipment or a spare room for a carer if overnight care is required.
  • There are steps to access the property meaning they have become a prisoner in their own home.

There are any number of different reasons.  The reality is the vast majority of the housing stock in the UK is simply not designed with disability in mind.

Over the years, I have seen clients being forced to pull themselves upstairs on their bottoms, or having to live in their downstairs in their living room without access to a toilet or washing facilities, causing great indignity when they need to receive their bowel care in the family living room.

Your home should be your safe space.  It should enable you to live the life you want with those you want to share that life with.  It should enable you to be as independent as you can be.  It shouldn’t be a prison, or create health risks for you and those trying to provide you with care and support.

What did Roberts v Johnstone do?

On the face of it, this decision appears entirely sensible.  It required the claimant to be compensated in full but for that compensation to be fair and reasonable to both the claimant and the defendant.

It set a formula for calculating how much the defendant should pay to compensate the claimant for their future accommodation needs.  The principle took into consideration that a house represents a significant asset and one that (usually) will increase in value over the years, and one where the value (in many cases) passes on to the family on your death.  The formula was aimed at avoiding the claimant being over compensated and took into consideration the difference in value of the existing family home and the required new one.

In Roberts v Johnstone, the claimant was essentially compensated by reference to the interest cost of a loan to fund the additional purchase price.  That interest was calculated by reference to the ‘discount rate’.

Unfortunately, the discount rate didn’t reflect realistic investment rates leaving the claimant under compensated.

Life expectancy also resulted in many challenges where a short life expectancy provided little compensation for a property purchase.

In 2001 the discount rate was 2.5%.  Following a review in 2017 it was reduced to -0.75%.  In August 2019 it increased to -0.25%.  Since becoming a negative figure in 2017, claimants have effectively been unable to recover the costs associated with the new home they now need as a direct result of the significant injuries they sustained.

Image of a wooden house and some house keys

A case study

I am appointed as financial Deputy for an eight-year-old boy.  As a result of serious mismanagement during his mother’s labour and the birth, he has been left with severe spastic quadriplegic cerebral palsy.  He is severely disabled.  He can’t sit independently.  He is immobile.  He should be in school playing football with his friends – that will never happen.

Liability was admitted and this claim was settled in 2016.

It is fair to say he has been fully compensated in every respect, but in relation to accommodation, because of the application of the discount rate and the fact he sadly has a short life expectancy (early 20s).

Expert evidence for this client confirmed he needed a new family home.  His parents previously lived in a lovely, but very small, apartment.  There simply wasn’t sufficient space to meet his equipment, therapy and care needs.  A far larger property was required.

The evidence provided by the experts confirmed this client would require in the region of £750,000.00 to buy a new property.  Application of the Roberts v Johnstone formula meant a sum of only £251,180.00 was awarded.

What did this mean in reality?

We were able to buy a property for this client for £675,000.00.  With only £251,180.00 awarded in the claim to fund this purchase, that left a shortfall of over £420,000.00.

Essentially, the family were forced to compromise on the care they need for their son to ensure they have a home that meets his needs.

I remember very clearly the day I met my client’s mother at their new home when it was being ‘handed over’ by the builders.  I remember standing in their new hallway when she informed me how she had cried at the weekend when they moved in.  The reason for her tears?  Because they now had a lift they could use to take their son upstairs.  This meant she had been able to take him upstairs on the Sunday morning when he woke and lay him on the floor with his siblings in their room.  They were able to play together.  Such a simple joy many families experience on weekends all over this country had been lost to them because he had become so large she couldn’t carry him upstairs anymore.

That one moment has stayed with me.  It has reinforced what a ‘home’ is all about.  The reality is, a ‘home’ is so much more and claimants need to be properly compensated so they can have a home they can enjoy.

What are the facts of Swift v Carpenter?

Charlotte Swift was 39 when she sustained serious injuries in a car accident.  Her left foot and ankle were so badly damaged she required a below the knee amputation.  A second operation was required to improve the stump.  Her right foot was badly damaged requiring the insertion of wires and screws.  Her injuries are disabling.  She requires a wheelchair and a high degree of care.

Liability was admitted by the defendant and her claim was assessed by a judge in April and May 2018.

Whilst the award was significant, it did not provide her with the funds required to by a new home.  She either needed single storey accommodation, or a property that was sufficiently large it could enable a lift to be installed.  Living in West London at the time, bungalows were scarce and expensive.

Whilst Charlotte’s award met many of her needs (prosthetic limbs, wheelchairs, carers costs etc), it didn’t meet her accommodation needs because of the application of the Roberts v Johnstone formula.  She needed an additional £900,000.00 to buy a property that could meet her needs.  The claim did not give her those funds.

It is the appeal of this decision that has been long-awaited, not just by Charlotte Swift, her family and legal team, but also by many other claimants who are currently facing the significant challenges caused by the application of the discount rate.

What decision did the Appeal Court reach?

  1. The Court was not bound to follow the approach formulated in Roberts v Johnstone.
  2. The Roberts v Johnstone formula “is no longer capable in modern conditions of delivering fair and reasonable compensation to a claimant”.
  3. A claimant “is entitled to fair and reasonable, but not excessive, compensation……….the award of damages should seek so far as possible to avoid a “windfall” to a claimant, or more realistically to his or her estate”.
  4. A market valuation is a better approach with an appropriate discount at 5%.
  5. The award should be reduced to reflect the value of the ‘reversionary interest’. This is where someone owns a property but another person has the right to live in it for life.
  6. This guidance is not necessarily appropriate in all cases – for example claimants with reduced life expectancy.

An award of £801,913.00 was therefore Ordered for Charlotte in respect of the cost of buying a property.

What does this mean?

A claimant is now in a better position than they were previously but there will always be a ‘shortfall’ on the purchase price – they will not be awarded the full amount.  That shortfall will need to be met from other elements of the compensation awarded.  Without further guidance, the shortfall will still be greater for a claimant with a short life expectancy.  That will include the elderly and clients such as the eight-year-old boy I have referred to above.

This was always going to be an extremely difficult balancing act for the court.  How do you ensure a claimant is properly compensated to buy the home they need given their injuries but doesn’t receive a ‘windfall’?

Hopefully, the need for a professional Deputy to ‘balance the budget’ and ensure, where possible, their client has sufficient funds to meet all of their needs, will now become a little easier following this decision.  There will inevitably always be compromises to make but hopefully those compromises will become a little less stark.

If you think you, or a loved one, received negligent treatment and have been left in need of suitable housing, please contact us.