Swift v Carpenter: Practical Applications

Swift v Carpenter: Practical Applications

The decision of the Court of Appeal in Swift v Carpenter has rewritten the rules for the calculation of future accommodation costs. Whilst the decision may be subject to efforts to appeal, this should not prevent defendants from considering the impact of the decision on both reserves and negotiation strategy.

To highlight the impact of the decision, we have set out 3 hypothetical examples in which the claimant has no change to their projected life expectancy based on the appropriate Ogden tables and then various examples where the claimant has a reduced life expectancy.

Example 1

A 34 year old man born on 13 January 1986 was seriously injured. He requires a new property which is valued at £1,000,000, and his existing property is valued at £200,000. The trial takes place on 1 November 2020.

Remaining life expectancy

Award towards purchase costs required for new property

Award as % of purchase costs required for new property

No change to life expectancy

£731,251

91.40%

40 years

£686,363

85.79%

35 years

£654,968

81.87%

30 years

£614,898

76.86%

25 years

£563.758

70.47%

20 years

£498,488

62.31%

10 years

£308,869

38.60%

Example 2

A 20 year old woman born on 1 November 2000 who was serious injured. She requires a new property valued at £1,500,000 and her existing property is valued at £150,000. The trial takes place on 1 November 2020.

Remaining life expectancy

Award towards purchase costs for new property

Award as % of purchase costs for new property

No change to life expectancy

£1,303,797

96.57%

55 years

£1,257,759

93.17%

50 years

£1,232,275

91.27%

40 years

£1,158,238

85.79%

35 years

£1,105,258

81.87%

30 years

£1,037,640

76.86%

25 years

£951,341

70.47%

20 years

£841,199

62.31%

10 years

£521,217

38.60%

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Example 3

A 60 year man born on 5 June 1960 has been seriously injured. He requires a new property valued at £550,000 and his existing property is valued at £400,000. The trial takes place on 1 November 2020.

Remaining life expectancy

Award towards purchase costs for new property

Award as % of purchase costs for new property

No change to life expectancy

£105,183

70.12%

20 years

£93,476

62.31%

10 years

£57,913

38.60%

5 years

£32,471

21.65%

Reduced life expectancy

As you can see from the above tables and graph, should a claimant have a reduction in life expectancy, then this will have a dramatic impact in their possible award of purchase costs in contribution to the new property. This may therefore require claimants to use damages from other heads of loss to bridge that shortfall.

However, the Court of Appeal recognised that this guidance should not be regarded as a straitjacket to be applied rigidly and universally”, and that in cases with short life expectancy, then a different approach may be justified. The specific circumstances of when the ‘straitjacket’ of Swift v Carpenter will be loosened are as yet unclear. However, what might an alternative approach look like?

In circumstances where the claimant has a life expectancy of less than 5-10 years, then it may be more appropriate for rental costs to be used. On the same basis, claimants aged 25 or younger will, as can be seen above in Example 2, recover a very substantial percentage of the purchase costs if their life expectancy is not affected by their injuries. Defendants may look to argue the appropriateness of using the Swift v Carpenter methodology where the award would be almost total.

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Swift and Scotland

Whilst the decision is not strictly binding upon the Scottish Courts, the decision is highly persuasive and we expect that the Swift methodology will be utilised in Scotland. Any such move would be unsurprising given that any continued use of Roberts v Johnstone during a time of negative discount rates will continue to produce a nil damages award for future accommodation, the circumstances which prompted the assignation of Swift as a test case.

Upcoming webinar

Clyde & Co will be publishing details of an upcoming webinar to discuss the practical and wider implications of Swift v Carpenter shortly.  The webinar will consider the basis of the judgment, and the consequences such as:

  • What might be considered a ‘short’ life expectancy prompting the use of an alternative methodology?
  • How should defendants address the prospect of overcompensation where the claimant is in their 20s?
  • The range of outcomes of the reversionary interest calculation and possible unintended consequences.
  • Given that many individuals do not own property and rent property, how might Swift be applied in those circumstances?
  • The impact of the judgment in Scotland.
  • Where next?

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