FATAL ACCIDENT DAMAGES AND THE CHOUZA CASE (2): WHO IS A DEPENDANT?

This is the second post in a  detailed examination of the judgment in  Chouza v Martins & Ors [2021] EWHC 1669 (QB).  Here the we look at the position as to whether adult children were in fact “dependants” entitled to damages.   The judge rejected an argument that one son, who had provided money to the family following his father’s death, had a dependency claim. Similarly the other two sons had changed their jobs and taken steps to help out the family company following the death, however this did not give rise to a dependency claim.

“… I do not consider that there is a dependency claim by reference to the lost income of David and Lucas separate to that derived from the lost income of the deceased. As Mr James submitted, and as I accept, this is a claim for the lost earnings of David and Lucas dressed up as a dependency claim and, as Jay J said in Rupasinghe’s case, a claim for loss of earnings simpliciter (which is what this is, in reality) cannot be accommodated within the relevant statutory provision. These claims therefore fail.”

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THE CASE

The claimants brought an action for damages under the Fatal Accidents Act.  One issue the court had to determine was whether three of the deceased person’s children, all of whom were adult at the time of their father’s death, were dependants.  They came within the statutory definition of potential dependants, the question was whether there was any dependency as conventionally understood and for which damages are recoverable.

THE JUDGMENT ON THIS ISSUE

The judge found that none of the adult sons were dependants in the sense that they were entitled to recover damages for any losses they had incurred.

Issue (9): Do these dependency claims fall within the scope of s3(1) of the Fatal Accident Act 1976 and are they recoverable in law?

1. 1. Although Mr Swoboda grouped the dependency claims of David, Alberto and Lucas together in his list of issues, Alberto’s position is in fact rather different to that of his brothers, and it is convenient to consider his claim first.

Alberto’s Claim

1. 1. In his witness statement, Alberto says:

“17. I made several payments, in cash to support the family and before we received the interim payment from the responsible driver’s insurers.

18. As these were cash payments, there are no bank records, but we did record this in our family book and I attach relevant extracts to my statement.”

The so-called “family book” shows the various payments made by Alberto, the entries in fact being made by David. For example, on 1 September 2015, Alberto made a payment of €440 recorded by David as “Alberto paga prestamo” which translates as “Alberto pays loan”. On 21 October 2015, €800 is recorded as having been paid by Alberto, recorded by David as “Alberto paga taller” which translates as “Alberto pays workshop.”

1. 1. When questioned by Mr James about the first of these payments, Alberto said that this meant he was paying the mortgage. He was asked whether this was on the family home or on the commercial premises owned by Excavaciones, to which he replied that it was for the house, to cover needs as they arose. Mr James put to Alberto that there was no mortgage on the family home, to which he replied: “it is paying for stuff in the house – food, clothing.” He said that “prestamo” means “loan” and it was loan to the family rather than to his mother specifically. In relation to the second payment, he said that “taller” means workshop or garage and it relates to cars. Mr James asked if it was to pay for maintenance on his mother’s car, to which he replied: “I think there was only one car in the house at this time. It is a loan – money is paid when needed.” Mr James asked if the intention was for Alberto to be repaid in due course to which Alberto replied: “there was no thought about getting the money back – it was simply a need at that time.” Mr James asked if Alberto expected to be repaid from the compensation recovered in the case, to which he replied: “I’m not thinking about it like that, I am not thinking of it as a debt.” These two payments, and Alberto’s evidence in relation to them, give a flavour of the overall payments made by Alberto totalling €10,962 which are claimed to be separately payable under the claim as part of Alberto’s dependency.

1. 1. For the claimant, Mr Swoboda submits that these payments are properly to be regarded as part of Alberto’s dependency. He submitted that Alberto relied on his father to manage the family finances in order to ensure financial security for the family and, to ensure that his family, by which he meant his mother and sister, did not fall into penury following the death of the deceased given that there was no longer any income derived from the work of the deceased, Alberto gave this money to the family to keep them financially afloat. Mr Swoboda disputed that the payments were made as a loan upon the expectation that such sums would be repaid but, relying on Alberto’s evidence, he submitted that it was “money given to ensure his family did not fall into hardship, which of course is another way of saying to ensure the financial security of the family, the very thing he depended on his father for.”

1. 1. For the defendants, Mr James submitted that, even if the payments are properly to be characterised as gifts rather than loans, they are essentially included in the financial dependency claims of Mrs Cacheda and Alberto’s sister and it will be a matter for them whether they repay Alberto from their damages.

Discussion

1. 1. In my judgment, the fact that these payments were diligently recorded by David in the family book shows that they were intended as loans, to be repaid from the damages in due course. In any event, I accept Mr James’ submissions that these payments are included in the financial dependency claim of Mrs Cacheda. The clue is in Alberto’s statement where he says that he made the payments “to support the family and before we received the interim payment from the responsible driver’s insurers.” This shows that the problem was essentially one of “cash flow” and supports the contention that these were loans, to be repaid in due course. In any event, I consider that it does not convert these payments into a proper dependency claim to characterise them as payments to ensure that the family did not fall into penury. In my judgment, there is no proper basis upon which these payments fall into a separate head of claim and the reality is that Alberto was not dependent upon his father at all at the time of the deceased’s death.

The claims of David and Lucas

1. 1. The claims of David and Lucas are rather different to that of Alberto. The principles attaching to the recoverability of their claims are common to both.

1. 1. So far as David is concerned, when his father died, he essentially took 6 months’ leave of absence from Deloitte in order to attend to the affairs of Excavaciones. He had entered into a one-year training contract with Deloitte in April 2014 which he said, in normal circumstances, would have led to a permanent contract from 7 April 2015. However, he informed Deloitte that he would not be seeking a permanent contract upon the expiry of his training contract for “family reasons”. He re-joined Deloitte on 7 September 2015 on an extension to his training contract but by this time the customers with whom he was associated had been reassigned to other colleagues and no permanent contract was available for him when his training contract finished in September 2016. He decided to relocate back to Galicia: his family home is near the coast in a popular tourist area, and he now works in the hotel industry. Although he accepts that he is now paid as much as he would have been paid if he had remained a Financial Consultant, he claims that the disruption to his career has resulted in a total loss of € 96,101.00.

1. 1. He explained his position in his witness statement as follows:

“47. … I was forced to leave my employment at Deloitte in order to attend to the family business and generally look after the family after this devastating blow. I effectively had to become the head of the household.

48. It was an uphill struggle and a steep learning curve to get a grip with the company, suddenly and with no preparation as well as dealing with my grief and supporting my mother and siblings. I found myself taking over a company without knowing the numbers, the clients, the suppliers, the bank arrangements.

49. I handled absolutely everything from invoicing, dealing with clients, legal aspects, debts, recovery of debts owed to the company, accounting. All this work, on top of dealing with all the house admin and taking my mother to appointments and other tasks, meant that I was effectively working full-time on the company, when I was not otherwise working for Deloitte or undertaking my studies.

50. If my father had not died, I would have expected to continue with my independent career as a financial consultant with Deloitte or similar companies. I would not have expected to have been involved in the company much and, in any event, the intention was to wind the company up as soon as commercially and practically possible.”

1. 1. In relation to Lucas, he too gave up what he was doing in order to attend to Excavaciones. He says, in his witness statement:

“19. At the time of the accident, I was not working in the family business, but was studying and doing an internship. I was 20 years old. I was studying to be a heating engineer. However, following my father’s death I felt compelled to abandon my studies and internship so that I could assist with Excavaciones. I undertook non-administrative work for the company. In particular I sought and undertook work which the company could invoice for. I would deal with the clients, visit sites to budget for the work, undertake maintenance and other tasks.

20. This was necessary as the company had standing costs which had to be met and which could only be met if the company had an income. In common with my brother David, I received no salary or payment for my work for the company. However it was necessary that I do this work so the company could be kept afloat until 2018, in order that the commercial vehicles, the company’s substantial assets could be sold. My brother David was in charge of the administrative details of the company and its winding up …”

1. 1. Lucas’ claim is based upon the fact that, but for his father’s death, he would have completed his training as a heating engineer and would have obtained work earning €18,200 net per year. A claim is made on his behalf in the sum of €48,962.43 calculated in Appendix 4 to the schedule of loss by deducting his actual earnings in the period to the winding up of Excavaciones from the earnings he would have had as a heating engineer (incongruously pleaded as earnings with Deloittes as a financial consultant, but I shall assume this is an error).

The argument for the claimant

1. 1. For the claimant, Mr Swoboda submits that the claim falls within the scope of section 3(1) of the Fatal Accidents Act 1976 which, he says, is a “wide gateway” to pass through which, all that is required is to identify a pecuniary loss caused by the death or, alternatively, “a reasonable expectation of pecuniary advantage from the continuance of the life of the deceased” (quoting from Pym v The Great Northern Railway Company [1863] 4 B&S 396). This quotation was cited by Latham LJ in O’Loughlin v Cape Distributions Limited [2001] EWCA Civ 178. Reliance is placed on the following dictum in the judgment of Latham LJ at paragraph 14:

“It follows, it seems to me, that the court’s task in any case is to examine the particular facts of the case to determine whether or not any loss in money or in monies worth has been occasioned to the dependents and if it determines that it has, it must then use whatever material appears best to fit the facts of the particular case in order to determine the extent of that loss.”

1. 1. Mr Swoboda submits that both David and Lucas have suffered pecuniary loss as a result of their father’s death, in David’s case his inability to pursue his career as a financial consultant with Deloitte because he was “forced to leave” in order to take over the administration of Excavaciones upon the death of his father. He submits that David “had a reasonable expectation of pecuniary advantage from the continuation of his father’s life, namely the money he would have been able to earn at work which was enabled by the deceased ensuring the financial stability of the family by his running of the family business. Similarly, with Lucas, it is submitted that he had the same reasonable expectation of pecuniary advantage from the continuation of his father’s life, in his case the money he would have earned as a heating engineer. He too was effectively forced, it is said, to abandon his training and his work as a heating engineer for a number of years so as to be able to devote himself to Excavaciones until that company could be wound up in 2018.

1. 1. Mr Swoboda submits that any pecuniary loss is sufficient to show a dependency and as long as the loss arises from the familial relationship, as opposed to being a business loss, for example, it is claimable as a dependency loss provided the loss was incurred reasonably. Thus, he submits that recoverability depends upon an affirmative answer being given to each of the following questions:

(i) Is the person a dependant within the provisions of the Fatal Accident Act 1976;

(ii) Has the person suffered a financial loss consequent upon the death of the deceased;

(iii) Did the loss arise from the person’s familial relationship with the deceased; and

(iv) Was the loss incurred reasonably.

It is the claimant’s case that each of these questions is to be answered in the affirmative in relation to the claims of David and Lucas which are accordingly recoverable in law.

The argument for the defendants

1. 1. For the defendants, Mr James submits that these claims are essentially claims for loss of earnings for David and Lucas in consequence of the death of their father and such claims are not recoverable in law. He submits that the correct principle is that only damages arising from the financial dependency on the father at the time of death are recoverable, citing Burgess v Florence Nightingale Hospital for Gentlewomen [1955] 1 QB 349 and Malyon v Plummer [1964] 1 QB 330. Neither David nor Lucas were financially dependent on the deceased at the time of death.

1. 1. Essentially, what David and Lucas were saying in their evidence was that Excavaciones needed to be kept going until 2018 in order to uphold the “honour” or “reputation” of the family because if Excavaciones had been allowed to go under in 2015, the realisation of its assets would have been insufficient to pay off the external creditors of the company. By doing what they did, they enabled Excavaciones’ assets to be sold for full value with the advantage of the transport licence, the external creditors’ debts were thereby satisfied and the “honour” of the family was preserved. Mr James submitted that there is in fact no evidence or evidential basis for arguing that the honour or reputation of the family would have been affected in any way by Excavaciones being wound up in 2015 given that this would have been a consequence of the premature death of the deceased which was not the fault of the deceased or any member of his family and would have been regarded as simply an unfortunate consequence of the tragedy which had befallen the family. In any event, it is submitted that issues of honour and reputation do not usually sound in damages in negligence and although, pursuant to O’Loughlin v Cape Distributions Limited [2001] EWCA Civ 178, dependency is broad, it is not that broad.

1. 1. Mr James submitted that the alternative basis upon which the claimant is put, namely that the actions of David and Lucas were required to maintain the financial stability of the family, fails at the outset, being inconsistent with an established body of case law. For example, in Burgess v Florence Nightingale Hospital for Gentlewomen [1955] 1 QB 349 the husband’s death undoubtedly affected the financial stability of his wife who had been his dancing partner, but despite this there was no recovery. Here, the loss is even more remote than in Burgess as, unlike in that case, the death of the deceased had no direct effect on the income of David or Lucas. Mr James submitted that Malyon v Plummer [1964] 1 QB 330 is direct authority against recovery of these claims, citing the judgment of Diplock LJ at page 351 where he said:

“It is, I think, beyond argument that had the wife, as so often happens today, been employed by some independent employer her salary, even though paid into her husband’s bank account, would form no part of “the dependency” for it would continue after her husband’s death. It would not be a benefit arising out of the relationship of husband and wife which she would lose upon his death. It seems to me to be equally clear that if she were generally employed at the market rate of wages or other services which she performed, whether directly by her husband by a one-man company which he controlled, the position would be no different. Her salary would not arise from the relationship of husband and wife but out of the relationship of employer and employee. If one looks to the future as the Act requires it would not be a benefit which she would lose upon her husband’s death, for her earning capacity would remain unimpaired and she could continue to earn similar wages from another employer. If one looks to the past for the purpose of making the common estimate of “the dependency” her wages, although paid to her by her husband, should be ignored. The family income would have been augmented to that extent by her own efforts, not those of her husband, for if she had not been performing the services her husband would have had to pay wages to someone else for the services and the amount available from him for the family expenses would have been correspondingly reduced. It would be the converse of the position in Sykes v North Easter Railway Co.“

Mr James also submitted that the claim is inconsistent with Sykes.

1. 1. In any event, Mr James submitted that if the criterion for recoverability is reasonableness, it was unreasonable for David and Lucas to have given up their jobs in order to preserve a company which had debts which were not covered by personal guarantees. Mr James also made submissions relating to causation in respect of the claim by David.

Discussion

1. 1. A dependency claim arising out of death is a creature of statute and the starting point must be the provisions of the Fatal Accidents Act 1976. A “dependant” is defined in section 1(3) and includes any child or other descendant of the deceased. David and Lucas are therefore undoubtedly dependants for the purposes of the Act. The assessment of damages is governed by section 3 which provides:

“(1) in the action such damages, other than damages for bereavement, may be awarded as are proportioned to the injury resulting from the death to the dependents respectively.”

1. 1. Commenting on this provision, the late Dr Harvey McGregor stated in his seminal book, McGregor on Damages:

“This is both wide and vague, but the interpretation of the Courts, before the introduction of a separate entitlement of some to a limited recovery for bereavement, restricted recovery to damages for the loss of the pecuniary benefit arising from the relationship which would be derived from the continuance of the life. In short, the measure recoverable by a dependant is

what is often called the value of the dependency…”

As Jay J said in Rupasinghe v West Hertfordshire Hospital NHS Trust [2016] EWHC 2848 (QB), this strikes at the heart of the issue.

1. 1. Rupasinghe’s case was mainly a case concerned with the quantification of loss of services but I am indebted to Jay J for his statement of the general principles, which I adopt:

“25. First, as Diplock LJ explained in Malyon v Plummer [1964] 1 QB 330:

“It has, however, long been established, despite these wide words [of what is now section 3(1) of the 1976 Act], first: that the pecuniary loss to the persons for whose benefit the action is brought is the only damage recoverable, and, secondly, that the pecuniary loss recoverable is limited to the loss of a benefit in money or money’s worth, which if the deceased had survived, would have accrued to a person within the defined relationship to the deceased, and would have arisen from that relationship and not otherwise.” [at page 349]

To my mind, this second principle is, for present purposes, at least as valuable as the first. The circumscribing principle is that damages are awarded as recompense for the loss of the benefits which would have enured to the dependants if the deceased had survived, flowing from the relationship between the deceased and these dependants. This aspect of the matter is reinforced by consideration of what Diplock LJ said two pages later in the Law Report, namely that the wife’s salary, however paid, could form no part of “the dependency”, as it would continue after her husband’s death – “it would not be a benefit arising out of the relationship of husband and wife which she would lose on his death”. However, I do not agree with Miss Bradley that this short passage provides a conclusive answer to the present claim as formulated on the Claimant’s behalf. What it does serve to demonstrate is that a claim for loss of earnings simpliciter cannot be accommodated within the relevant statutory provision.

26. Secondly, as Smith LJ explained in Welsh Ambulance Services NHS Trust v Williams [2008] EWCA Civ 81, at paragraph 50:

“…the dependency is fixed at the moment of death; it is what the dependants would probably have received as benefit from the deceased, had the deceased not died. What decisions people make afterwards is irrelevant.”

This dictum was uttered in the context of a claim for financial rather than services dependency. Whether it applies to the latter, and in what precise respect, remains to be considered.” [emphasis added]

The question is whether, as Mr James submitted, the claims on behalf of David and Lucas are, in reality, claims for loss of earnings dressed up as dependency claims and are unrecoverable, or whether, as Mr Swoboda submitted, the “financial stability of the family” and family honour or reputation as represented by the maintenance of Excavaciones through until 2018 elevate the losses of David and Lucas into genuine dependency claims.

1. 1. Mr Swoboda submitted that the case of Mehmet v Perry [1977] 2 All ER 529 shows that loss of earnings may amount to a genuine dependency claim. However, in my judgment, this case does not assist Mr Swoboda because the husband’s loss of wages was simply used as the means of assessing the quantum of a genuine dependency claim, namely damages for loss of the deceased wife’s housekeeping services. This was also the interpretation of that case of Jay J in Rupasinghe’s case where counsel for the claimant had sought to rely on Mehmet’s case for what was said to be a “more open-textured approach” to dependency claims. As Jay J said:

“In Mehmet v Perry (1977) 2 AER 529, Brian Neill QC (sitting as a Deputy High Court Judge) held that it was reasonable on the facts of the case before him for the male plaintiff, now solely responsible for the upbringing of five children, two of whom had a serious medical condition, to give up work to look after them. In such circumstances, the damages for the loss of the deceased’s housekeeping services should be assessed by reference to the plaintiff’s loss of wages, because:

“It represents the cost and the circumstances of providing the

services of the plaintiff as a full-time housekeeper in

substitution for the deceased” [at 536F].

On my reading of this authority, the judge took the plaintiff’s earnings as a proxy for the value of the deceased’s lost services.”

1. 1. A central pillar to Mr Swoboda’s submissions was his reliance on the decision of the Court of Appeal in O’Loughlin v Cape Distributions Limited [2001] EWCA Civ 178 where Latham LJ, commenting on section 3(1) of the 1976 Act, said:

“This provision replicates, though not in precisely the same words, the basis upon which damages have been assessed since the passing of the Fatal Accidents Act 1846. The task of the court, in answering this question was originally the province of the jury. Neither successive statutes nor, in my judgment, any decisions of the courts lay down any prescriptive method

by which such damage is to be identified, or calculated apart from the principle that it requires that some damage capable of being quantified in money terms must be established.”

Latham LJ went on to say, in a passage upon which Mr Swoboda places particular reliance:

“13. This principle has been applied time and time again by the court in cases where the claimant has lost the services of a wife or mother. It has also been applied to the loss of a husband’s services as handiman, gardener, or any other such service activity as has been lost and has a money value in the sense that it will cost money to replace. I can see no difference in principle between the loss of services of that domestic nature, and the loss of services which have a positive financial value to the family. For example, a husband may be so skilled and successful in dealing with the family’s investments that he has no need of a stockbroker or other financial adviser. His death, whatever other loss may result, will mean that the family will have to replace that expertise and advice at the appropriate market cost. That cost is as much a loss to the family as could be the cost of a gardener. And, clearly, the position cannot be different, indeed it is a fortiori, if the family’s sole source of support is the investment portfolio managed by such a husband.

14. It follows, it seems to me, that the court’s task in any case is to examine the particular facts of the case to determine whether or not any loss in money or in monies worth has been occasioned to the dependants and if it determines that it has, it must then use whatever material appears best to fit the facts of the particular case in order to determine the extent of that loss.”

Again, however, it seems to me that this passage does not bear the same wide interpretation which Mr Swoboda places on it. What the court is saying is that a deceased’s “services” can take many forms and includes, for example, a deceased applying his expert knowledge to the management of a family’s investments. This is, in essence, no different to a deceased who applied his expertise to plumbing, thereby relieving the need for the family engage the services of a plumber, or car maintenance, thereby relieving the need to engage the services of a garage. In the present case, the deceased kept Excavaciones going by applying to it the income derived from the contract with Andeona which itself was derived from the deceased’s work. In the end, it all came down to the deceased’s earned income when working for Andeona and it was the loss of this income which made Excavaciones unviable without the intervention of David and Lucas. Their services to Excavaciones were, as it seems to me, essentially replacement of the deceased’s income which is otherwise covered by the claim for the loss of that income. This means that the claims on behalf of David and Lucas are, in reality, double recovery for the loss of the deceased’s income and in my judgment it does not assist in the recovery of those claims to characterise what they did as being the upholding of honour or reputation, or the maintenance of the family’s financial stability.

1. 1. Mr Swoboda also placed important reliance on the report of the Law Commission Claims For Wrongful Death (Law Comm. No. 263, November 1999) where the following was stated:

” (2) Nature of the pecuniary loss

2.9 Apart from funeral expenses (which we consider separately below), damages awarded under the Fatal Accidents Act 1976 generally compensate the loss of any non-business benefit that the claimant reasonably expected to receive from the deceased had the deceased continued to live (often referred to as “loss of dependency”). Thus, damages under the Act may provide compensation for the loss of money brought into the household by the deceased, for the loss of gratuitous services performed by the deceased (including domestic work) and for the loss of fringe benefits, such as a company car.

2.10 Damages can be claimed for the loss of one-off benefits: it is not necessary that a benefit had previously been enjoyed. The lost benefits for which dependants are able to claim damages under the 1976 Act may also include the loss of greater benefits which they would have received had the deceased continued to live. However, a mere speculative possibility of receipt is insufficient.

2.11 The restriction on the “reasonable expectation” test is that benefits expected as the product of a business relationship with the deceased are not recoverable. For example, in Burgess v Florence Nightingale Hospital for Gentlewomen a husband and wife were dancing partners. Although their earning capacity as a couple was greater than their individual abilities to earn an income, the husband could not recover for the loss of his income as a dancer after her death.

2.12 In addition to damages for the loss of reasonably expected non-business benefits, damages can be recovered for pecuniary expense incurred to replace the loss of reasonably expected non-business benefits. For example, damages are recoverable for the cost incurred in employing someone to do work previously done by the deceased, such as a housekeeper, child-minder or gardener.”

On the basis that this passage is an accurate statement of the law, Mr Swoboda submitted that the loss of non-business benefit that David and Lucas reasonably expected to receive from the deceased had the deceased continued to live was the family name and reputation which would have been lost had they not acted as they did. In my judgment, however, maintenance of family reputation or honour or name is too inchoate or intangible to be able to amount to a services-type benefit which gives rise to the alleged dependency claims of David and Lucas.

1. 1. In my judgment, the submissions and argument of Mr James are to be preferred to those of Mr Swoboda and I do not consider that there is a dependency claim by reference to the lost income of David and Lucas separate to that derived from the lost income of the deceased. As Mr James submitted, and as I accept, this is a claim for the lost earnings of David and Lucas dressed up as a dependency claim and, as Jay J said in Rupasinghe’s case, a claim for loss of earnings simpliciter (which is what this is, in reality) cannot be accommodated within the relevant statutory provision. These claims therefore fail.

(10) If the dependency claims of David, Lucas and Alberto are recoverable in law what is the loss?

1. Given my conclusions in relation to Issue 9 vis a vis David and Lucas, this issue does not arise, but in case I am found to be wrong about Issue 9, I would have found that the loss was that claimed, namely € 96,101.00 in the case of David and € 48,962.00 in the case of Lucas.