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Landmark Ruling Clarifies Accommodation Claims - Claire Burnell, Higgs & Sons

24/01/21. The long-awaited Swift v Carpenter ruling gives solicitors some welcome clarity on how to assess accommodation claims for those suffering serious injury in the wake of an era of low interest rates.

That’s the opinion of Higgs & Sons’ Associate Solicitor, Claire Burnell, who welcomes the judgment in the landmark Swift v Carpenter case in the Court of Appeal.

The ruling dramatically changes the calculation used when people require more expensive accommodation as a result of injury.

Ms Burnell said: “I welcome this judgment and it is certainly a positive one for claimants. It helpfully provides a clear formula to calculate the claim for suitable accommodation without the need for complex expert financial evidence.

“It is also likely to provide a greater proportion of the extra cost of the accommodation than the old formula when the claimant has a long life expectancy, as in the Swift v Carpenter case where the claimant was expected to live for another 43 years.”

But, however, Ms Burnell warns the new ruling is not without its drawbacks.

“The biggest problem will be when a claimant is only expected to live for a shorter period of time,” she explained. “In such cases there is likely to be a large shortfall when using this calculation.

“It is unknown how the Courts will deal with such cases. It is likely that the Court of Appeal may have to revisit this issue and provide guidance on how to fairly and most appropriately deal with a case involving a much shorter life expectancy.

“In his leading judgment, Irwin LJ acknowledged this and said the guidance should not be regarded ‘as a straitjacket to be applied universally and rigidly’ where it is ‘inappropriate’.”

Swift v Carpenter centred around a serious injury suffered by Charlotte Swift in a road collision.

It ruled that Ms Swift should receive around £800,000 compensation for suitable, larger accommodation in addition to her £4.1m damages.

Since the 1989 Court of Appeal ruling in Roberts v Johnstone, the formula had calculated the value of the lost investment income on the extra capital tied up in buying suitable and more expensive accommodation. However, this formula often left a significant shortfall in what a Claimant was able to recover as against the actual cost of purchasing the property which often meant that other elements of their compensation had to be used to proceed with the purchase.

Since 2017 this formula failed altogether due to interest rates used in the calculation plummeted from 2.5 per cent to -0.75 per cent which actually meant that a Claimant could not recover anything for the additional costs of more expensive accommodation. 

The Swift v Carpenter judgment now provides a formula whereby the Claimant is awarded the cost of the property needed because of a disability,  after deducting the costs of the property he or she would have incurred but for the accident and the notional value of the property at the date of death known as the reversionary interest.  The revisionary interest is calculated by using the predicted life expectancy and applying a 5 per cent discount rate.

However, defendant lawyers in the case are expected to challenge the ruling.  If so, it remains to be seen whether the Supreme Court will uphold this decision which is so important for people who need to be able to buy suitable accommodation following a serious injury.

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