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Accommodation Costs


Posted in [Blog] on Wednesday, December 22nd, 2021

The team at Cantillons have a wealth of experience in dealing with catastrophic injury claims.  Invariably, the injured person’s home is not suitable for their needs.   We assess the injured person’s home situation with the assistance of experts to include an Occupational Therapy expert, who will make recommendations that a new construction will have to be built or an appropriate house adapted to accommodate the injured person and their Carers, together with range of aids and equipment which will assist the injured party in engaging with their activities of daily living.  I imagine that the general public would not have any difficulty in accepting that an injured party should be able to live in a specially adapted home that would cater for his/her disability where the injuries have been caused by another’s negligence.  However, the accommodation aspect in a legal case is far from straightforward.  In order to understand the reason as to why it has become so fraught, one has to have an understanding of a couple of fundamental legal principles in respect of awarding damages (compensation) in negligence claims.  Restitutio ad integrum is a Latin phrase which means ‘restoration to original condition’. The “Restitutio Principle” infers that the amount of compensation awarded should put the injured parson in the position he/she would have been had the wrong not been committed.  It is uncontroversial to compensate an injured person for medical expenses, care costs, equipment costs.  However, where it gets controversial is in the area of accommodation.  The reason that it is controversial is because of another legal principle which requires compensation to be fair, reasonable and just to both the injured party and the paying party (the Defendant), putting the injured party in the position he/she would have been in but for the Defendant’s negligence whilst not over-compensating him/her.  This is also a fundamental principle in assessing compensation.  Under this principle, it is deemed wrong to award the full cost of acquiring the new accommodation as that is considered not restitution but over-compensation. The reason why it would be deemed over-compensation to award the full costs of the purchase of a property is because at death, the injured party’s Estate would benefit from an asset (there was an assumption that property prices inevitably increase over the life time of the injured party), thus, over-compensating the injured party and creating a windfall for the Estate.

The Court of Appeal in a UK case called Roberts v Johnstone (1989 QB 878) decided that the award should be made equivalent to the loss of income which would have been achieved if the capital had been invested, not in the property, but as a “risk-free” investment, thus, removing the windfall argument to the Estate of the injured party.  A formula was devised which established that the injured party could recover the capital cost of the new accommodation, along with adaptations, moving and increased running costs, less the capital value of an injured parties existing home (or a notional home that the injured party would have bought).  This figure was then multiplied by 2.5%, in line with the discount rate. However, to get an annual return of 2.5% is unrealistic and the injured party would have to invest in high risk (not risk free) investment strategy to get such a return.

In Charlotte Barry (A Minor) suing by her Mother and Next Friend Aisling Campbell -v- The National Maternity Hospital [2016 IESC 41] in the High Court, O’Neill J. considered Roberts v Johnstone.   However, he decided that the Plaintiff) was entitled to all of the additional cost of accommodation for the adult portion of her life but credit had to go to the Defendant for the value of the benefit of accommodation provided by her parents during her minority.  The extent of that credit was to be limited and he concluded that the benefit was equivalent to one-twelfth of the value of the house.   The Defendant appealed the decision. MacMenamin J. in delivering the Judgment of the Supreme Court noted, that while O’Neill Js’ approach was “unorthodox”,the outcome achieved proper compensation without injustice to either party”. It did not “create any new paradigm for calculation of damages in these cases, [nor] does it create any further burden on indemnifiers.” 

On the 9th October 2020, the UK Court of Appeal delivered a Judgment in the case of Swift v Carpenter [2020] EWCA Civ 1295.  Lord Justice Irwin stated as follows:

In the context of modern property prices and a negative discount rate, the formula in Roberts v Johnstone no longer achieves fair and reasonable compensation for an injured Claimant. In my view, it cannot be regarded as full, fair or reasonable compensation to award nil damages in respect of a large established need, on the basis that, if all the relevant predictions hold good over many decades to come, there will arise a windfall to a Claimant’s estate.”

Ultimately, it was decided that the Defendant will give the injured party the additional capital required to purchase the new accommodation minus the value of the reversionary interest which was set at 5%, a figure which the Judge described as “cautious” given the difficulty of predicting future house prices and other economic factors

The Judgments in Barry and Carpenter demonstrate that that Courts recognise that the principle of fair and reasonable compensation had usurped the needs of the Plaintiff.  Lord Justice Irwin put it succinctly as follows:

“I recognise the need to avoid a windfall to the Claimant’s estate if that can be achieved without prejudice to the cardinal principle of fair and reasonable compensation.  But to withhold all damages for the purpose of avoiding an eventual windfall seems to me to put a secondary principle before a primary principle: to put the cart before the horse…”

At last, the pendulum had swung in favour of the injured.

Contact our personal injury solicitors Cork at Cantillons Solicitors at +353 (0)21 4275673 or info@cantillons.com if you would like more information.

*In contentious business, a Solicitor may not calculate fees or other charges as a percentage or proportion of any award or settlement. 

Brigid O’Donnell

Associate

Experience

Brigid joined Cantillons in 2018, having previously spent 10 years working in firms in Tipperary and Limerick which specialised in medical negligence, defective product liability and personal injuries actions.

Brigid works as an Associate Solicitor in the General Litigation Department and advises clients in relation to all aspects of civil litigation; to include personal injury claims, workplace accidents, road traffic accidents, public liability claims,  product liability claims, claims against local authorities and claims against the HSE.  She also advises clients in the area of Employment and Defamation Law. She has extensive experience in medical negligence and cases involving defective products.

She has successfully represented clients before the District Court, Circuit Court, High Court, Supreme Court and Court of Appeal and has been involved in a number of high profile personal injuries cases. She is proud to be part of the Litigation Team at Cantillons and is focused, at all times, on achieving the best possible outcome for clients.

Qualifications

  • Joint Honours Bachelor’s Degree in Civil Law and French, University College Cork
  • Masters in Law (Criminal Justice), University College Cork
  • Completed Law Society Professional Practice Courses at Blackhall Place, Dublin
  • Admitted as a Solicitor in Ireland, England and Wales
  • Advanced Diploma in Employment Law, King’s Inns, Dublin
  • Advanced Diploma in Medical Law, King’s Inns, Dublin

Related Experts

Ernest J. Cantillon

Managing Partner

Pat Daly

Partner

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