FATAL ACCIDENT DAMAGES AND THE CHOUZA CASE (1): THE “PERCENTAGE” DEPENDENCY CLAIM

It is rare for fatal accident dependency cases to reach trial.  A detailed examination of many aspects of fatal accident damages was carried by Mr Justice Martin Spencer in Chouza v Martins & Ors [2021] EWHC 1669 (QB).  This is an important case and I will be doing a series of posts about the judgment and its practical implications.  This post looks at the percentage reduction of income that is made in fatal cases and the fact that the judge felt able, on the evidence, to depart from the “conventional” percentages.

“… I consider that I am entitled, on the basis of the evidence which has been adduced in this case, whilst still abiding by a general percentage approach, to depart from the conventional percentages and adjust them in accordance with the evidence which I accept“

DAY LONG COURSE ON FATAL ACCIDENTS

Along with solicitor and Irwin Mitchell partner,  Hilary Wetherell I am presenting a day long course on fatal accidents on the 12th November 2021. Booking details are available here. 

THE FATAL ACCIDENT DEPENDENCY “PERCENTAGE”

When assessing damages in a fatal case the court does not simply make an award for the deceased’s loss of income.  Some account has to be taken of the sums that the deceased person would have been spending on themselves.  The courts have usually adopted a somewhat “rough and ready” approach set out in Harris v Empress Motors [1984] 1 WLR 212 – that is awarding 75% of lost income when the deceased person had dependant children and 66% with no dependant children.  However this has only been a useful guide never a binding principle of law. There are cases where the courts depart from this, particularly when there is evidence that the deceased person was frugal in relation to their own lifestyle.

THE JUDGMENT IN CHOUZA

In Chouza the judge considered, and accepted, an argument that the “conventional” percentage should not be used.  The deceased person was a lorry driver working away from home a lot and had his living expenses paid when he was working.

THE JUDGMENT ON THIS ISSUE

Issue (8): Is the appropriate dependency ratio, to take into account the deceased’s expenditure solely on himself, 90% pre-retirement and 75% post-retirement or should the court use the conventional 75% with dependant children and 66% with no dependant children?

1. 1. It is contended on behalf of the claimant that the deceased’s frugality and lack of spending on himself should lead the court to adopt percentages other than the conventional ones derived from Harris v Empress Motors [1984] 1 WLR 212. In this regard, five factors or arguments are relied upon:

(i) Whilst working away from home for Andeona, the deceased had his expenses paid including accommodation, flights, travel expenses and meals. This would have reduced his spending on himself.

(ii) The deceased spent very little on himself in any event, on the evidence presented to the court. In her witness statement, Mrs Cacheda said:

“22. Albino spent very little on himself, I would say around 10% of his earnings only. This was made possible because he had very little expenses when working; as accommodation, food and travel was paid, leaving only a small amount needed for personal expenditure and leisure. He would only have one day off a week when working abroad so there was little opportunity to spend anything in any event.

23. Albino would wear David’s old clothes and was not prone to spending any money on himself; he had no particular hobbies or sports to spend money on.”

(iii) The deceased and the claimant paid for the education of the three elder children, and would have done the same for Ana-Belen. It is submitted that as there is no separate claim for Ana-Belen’s dependency, the considerable expenses which would have been incurred in paying for her education should be taken into account in the general dependency percentage (at least for the period when she would have been in education).

(iv) The deceased lavished expensive gifts on his children irrespective of their age: examples given are that he paid for David’s trips abroad and for a car: for Lucas he bought a quad bike, equipment, helmets and also a car; for Alberto he bought a motorbike, bicycles and gave money towards a car.

(v) Finally, the claimant relies upon the evidence of Ms Fyffe who, at paragraph 6.02 to 6.22 carries out an analysis supporting the higher dependency ratios sought. Based upon the evidence presented to her, Ms Fyffe sets out at paragraph 6.21 a table applying a formula for calculation of the dependency which arrives at a dependency percentage of 94.2% before retirement and 87% after retirement and these calculations are said to support the claimed percentages of 90% and 75% respectively.

1. 1. For the defendants, Mr James reminds the court that the level of dependency is always, in the end, a question of fact. He points to the complete lack of documentary evidence by way of bank statements, household bills and the like which, he submits, is a prerequisite for any claimant wishing to depart from the conventional percentages. He submits that to assert that the deceased was frugal does not amount to proof of a 90% dependency. He submits that Ms Fyffe’s calculations are flawed because they are based upon an assumption that the deceased was not spending any money on himself at all which, if to be substantiated, would need to be based on evidence. For example, he asks how much the deceased spent on telephones or on the Internet, particularly given that he would have wanted to stay in close communication with his family whilst away. However, no phone bills or Internet bills have been produced. Furthermore, he submits that it is fanciful to suggest that the deceased would not have spent anything on himself whilst working away. In fact the opposite is true: if away from home, the deceased would have been more likely to go out in the evening for a drink with his colleagues than if he was living at home, and the court cannot assume that he would have lived like a hermit whilst away.

Discussion

1. 1. The starting point is the judgment of O’Connor LJ in Harris where he said at page 216/217:

“In the course of time the courts have worked out a simple solution to the similar problem of calculating the net dependency under the Fatal Accidents Acts in cases where the dependence of a wife and children. In times past the calculation called for a tedious enquiry into how much for housekeeping money was paid to the wife, who paid how much for the children’s shoes, et cetera. This has all been swept away in the modern practice is to deduct a percentage from the net income figure to represent what the deceased would have spent exclusively on himself. The percentages have become conventional in the sense that they are used unless there are striking evidence to make the conventional figure inappropriate because there is no departure from the principle that each case must be decided upon its own facts. Where the family unit was husband-and-wife the conventional figure is 33% and the rationale for this is that broadly speaking the net income was spent as to 1/3 for the benefit of each and one third for their joint benefit. Clothing is an example of several benefit, rent an example of joint benefit. No deduction is made in respect of the joint portion because one cannot buy or drive half a motorcar. Part of the net income may be spent for the benefit of neither husband nor wife. If the facts be, for example, that out of the net income of £8000 pa the deceased was paying £2000 to a charity the percentage would be applied to £6000 and not £8000. Where there are children the deduction falls to 25% as was the agreed figure in the Harris case.”

In Owen v Martin (1992) WL 895670, Parker LJ, having cited the above passage of O’Connor LJ, commented:

“O’Connor LJ did not intend to lay down any rule that in the absence of striking evidence to the contrary two thirds of net income must be regarded as the value of the dependency I have no doubt. If he did he would clearly have been wrong. It is clear that the value of the dependency cannot be taken at such an arbitrary figure and must always depend on facts.”

Parker LJ went on to refer to other well-known authorities including Mallett v McMonagle [1970] AC 167, Taylor v O’Connor [1977] AC 115 and Coward v Comex.

1. 1. In my judgment, a distinction needs to be drawn between 2 aspects: first, as referred to by O’Connor LJ in Harris, there is the methodology, namely whether the court embarks upon a painstaking and tedious examination of the household expenses or whether it adopts a more broad-brush percentage approach; second, if the percentage approach is to be adopted, what the appropriate percentage should be in any particular case. With respect to him, it seems to me that Mr James has conflated these two matters. Thus, he suggests that the absence of documentary evidence about the household expenses should lead the court away from adopting anything other than the conventional percentages of 75% (with dependant children) and 66% (husband and wife alone). To my mind, though, O’Connor LJ 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.

1. In the circumstances, I consider that I am entitled, on the basis of the evidence which has been adduced in this case, whilst still abiding by a general percentage approach, to depart from the conventional percentages and adjust them in accordance with the evidence which I accept. I do accept the evidence that the deceased was a man who spent very little on himself and that it is appropriate to adjust the percentages to reflect this. Furthermore, with the depletion of the family finances arising from the economic crisis and the collapse of Excavaciones, I consider that the deceased would have been careful to save as much as he could rather than spend money on himself. He would, nevertheless, have needed to pay for his own toiletries, underwear, shoes and other items of unalienable personal expenditure and he would have needed to feed himself whilst at home. In my judgment, the appropriate percentage to adopt is 85% pre-retirement and 70% post-retirement by when the family finances would have been replenished and there would no longer have been dependent children.