Moving Swiftly on…

It was 10am on 23^rd June 2020.Around 200 people were waiting, according to the YouTube channel, to listen to proceedings streamed live from the Court of Appeal, in the case of Swift v Carpenter.

For me, this had been a long time coming. Not the event, but the process of testing evidence to support the departure from a calculation which had long since passed its use-by date. Both Richard and I have written and talked extensively for many years about the financial problems caused by application of the Roberts v Johnstone calculation. Along the way we have had some really interesting discussions with counsel, some of whom are now themselves members of the judiciary.

In an era of ultra-low interest rates, and a negative personal injury discount rate, the Roberts v Johnstone calculation simply produced no award. And yet, a claimant who is forced to tie up part of their award in a property has some real losses, which currently remain uncompensated.

The hearing itself was conducted remotely, with only one of the three Appeal Judges, Lady Davies, actually in Court. Lords Underhill and Irwin, Counsel and expert witnesses all appeared remotely. The YouTube event itself was a little disappointing. Issues with audio and video connections caused some problems with the Judges being able to hear clearly, and there were periods when connections were lost altogether. However, there was enough patience and flexibility to carry on, and the first day ended pretty much on schedule. The second day ran a little more smoothly. Inevitably, the first day and second morning, which were taken up with cross examination of the experts, did not make particularly riveting listening. This being an appeal, there was no opportunity to hear or read the evidence upon which cross examination was being made. Some of the exchanges got a little feisty, but, to me at any rate, it seemed the evidence survived the process.

As Lord Underhill said at the outset, it was clear that both legal teams and all of the experts had put a lot of work into preparation for this hearing and, importantly, had narrowed their differences. In essence, Lord Underhill said that the task facing the Court could be put as follows:

• To consider the workings and pros and cons of the Roberts v Johnstone calculation; and,
• Whether the value of a reversionary interest in capital provided by a defendant (to enable a claimant to purchase property) might provide an acceptable and workable alternative.

Put simply, the question is whether the evidence, and the law, permits departure from Roberts v Johnstone. If so, the Court must decide if the reversionary interest route is an acceptable alternative – any of the other possible alternatives have effectively been ruled out by agreement between the parties.

The evidence showed there are two approaches to valuing a reversionary interest:

• Market value, i.e. what a willing investor would pay in order to acquire the reversionary interest in property, on the basis that the claimant lives there for life; or
• Fair and reasonable value, i.e. the value that an actuary would attach to the reversionary interest, having regard to balancing the interests of the parties.

The experts acknowledged that neither of these approaches provides a perfect solution.

The Respondent’s primary case remains that simply awarding all of the additional capital required is the most appropriate solution.

Now is not the time to delve into the mechanics of this, not least because Richard was one of the experts called to give evidence. However, it is perhaps appropriate for me to reiterate what both of us have said many times before: there are many ‘moving parts’ in any of the calculations. On occasions, some of them are obscure, and difficult (or impossible) to measure objectively. It has been my experience that this area, which essentially hinges on the treatment of expenditure that is capital in nature (as opposed to revenue) is at a crossroads where there is often a conflict between financial and legal solutions.

I am genuinely looking forward to reading the Judgment, to see how those conflicts may be resolved and whether, at last, a workable alternative to Roberts v Johnstone can be found.